The Legal Nature of Transfer of Credit in the Uniform Customs and Practice for Documentary Credits (UCP) Regulations

In a documentary credit relationship، the person for the favor of whom the credit is openned، is not necessarily the last supplier. In fact، he hopes to buy goods from the last supplier and deliver it to the buyer. Transfer of credit is the third alternative rather than the beneficiary of the credit. It gives the first beneficiary right to benefit from differce of transferred credit and original credit prices. It also allows him/her to assign his/her obligations about that credit document delivery. There is disagreement about the legal nature of transfer of credit. The group argued that the benefits of credit can be transferred to a third party conditionally، so the legal nature of transfer is similar to the assignment of benefits. Others believe that as transfer of credit take places، the original legal relation will nullify، and a new relation between the second beneficiary and the transferring bank will be created. So، they believe that the legal nature of transfer of credit is more likely to novation. Various studies’ assessment shows that، despite of some differences between novation and transfer of credit، legal nature of the former is very similar to novation rather than other legal establishments.