A transferable documentary credit is a credit under which the beneficiary (first beneficiary) may request the authorised bank to pay, incur a deferred payment undertaking, accept or negotiate (the transferring bank).
In the event of a freely negotiable credit, the bank specifically authorised in the credit as a transferring bank to make the documentary credit available in whole or in part to one or more other beneficiary/ies) (second beneficiary/ies).
Transferrable document credit allows the beneficiary to transfer his rights to a third party. Two methods can apply:
The beneficiary assigns or transfers the right to his proceeds to a third party.
The beneficiary assigns or transfers to the third party his right to perform under the documentary credit the (second beneficiary/ies).