Clause 5 contains provisions allowing the Beneficiary to assign the benefit of the letter of credit to any person. In practice, this means that the Beneficiary gives away its rights to receive any payments under the letter of credit to a specified third party. In a film transaction, this clause is usually necessary because a bank lending to the film partnership will require security. The film partnership is Beneficiary of both the right to receive payments under the Distribution Agreement and the right to receive payment under the letter of credit. Therefore, this gives the film partnership two income streams to offer to its lending bank as security. It can, therefore, assign in favour of its lending bank the benefit of the letter of credit together with the benefit of the right to receive payments under the Distribution Agreement. The nature of the charge and assignment is discussed elsewhere in the chapter.
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