What is a transferable letter of credit?
A transferable letter of credit specifically permits a beneficiary (transferor) to transfer all or some of the rights and protection afforded to it under the letter of credit to a third party (transferee), who then becomes a second beneficiary on the letter of credit. Transferable letters of credit are typically used in transactions where the first letter of credit beneficiary is a middleman and the second letter of credit beneficiary is the middleman’s supplier.
