What does assignment of Proceeds mean?

An assignment of proceeds occurs when a beneficiary transfers all or part of the proceeds from a letter of credit to a third-party beneficiary.

Can you assign a letter of credit?

(b) A beneficiary may assign its right to part or all of the proceeds of a letter of credit. The beneficiary may do so before presentation as a present assignment of its right to receive proceeds contingent upon its compliance with the terms and conditions of the letter of credit.

Is UCP 600 legally binding?

Is the UCP 600 legally binding? The UCP 600 rules are voluntarily incorporated into contracts and have to be specifically outlined in trade finance contracts in order to apply. The UCP 600 are the most successful rules ever developed in relation to trade and most Letters of Credit are subject to them.

What is a complying presentation?

A complying presentation is one that meets the requirements of the credit and the applicable provisions of the UCP 600 and international standard banking practice (UCP 600 Article 2). The Bank has a maximum of 5 banking days following the day of presentation to determine if a presentation is complying.

Which is not stated to be transferable Under UCP 600?

Int’l Rules – Trade‎ > ‎UCP 600‎ > ‎G. Article 39. The fact that a credit is not stated to be transferable shall not affect the right of the beneficiary to assign any proceeds to which it may be or may become entitled under the credit, in accordance with the provisions of applicable law.

Is the UCP 600 an accompaniment to the ISBP?

They also allow flexibility for the international parties involved. An accompaniment to the UCP 600 is the International Standard Banking Practice for the Examination of Documents under Documentary Credits (ISBP), ICC Publication 745. It assists with understanding whether a document complies with the terms of Letters of Credit.

How are proceeds assigned under a letter of credit?

If it is an accepted draft, the beneficiary (assignor) can assign his right to receive the proceeds under the draft by endorsement to another party (assignee) who later on may continue to assign his right to receive the proceeds by endorsement to any subsequent beneficiary.

When to use an assignment of proceeds agreement?

Assignment of proceeds would also occur where the beneficiary who acts as a trader requests the bank to remit the proceeds to the ultimate supplier or manufacturer in accordance with an assignment of proceeds agreement with the bank. In your case, the Chinese bank made presentation to your bank on behalf and at the request of the beneficiary.