Illinois Compiled Statutes
810 ILCS 5/ - Uniform Commercial Code.
Article 5 - Letters Of Credit

(810 ILCS 5/Art. 5 heading)

(810 ILCS 5/5-101) (from Ch. 26, par. 5-101)
Sec. 5-101.
Short title.
This Article may be cited as Uniform Commercial
Code--Letters of Credit.

(Source: P.A. 89-534, eff. 1-1-97.)

(810 ILCS 5/5-102) (from Ch. 26, par. 5-102)
Sec. 5-102.
Definitions.
(a) In this Article:
(b) Definitions in other Articles applying to this Article and the
Sections in which they appear are:
"Accept" or "Acceptance" Section 3-409
"Value" Sections 3-303, 4-211
(c) Article 1 contains certain additional general definitions and
principles of construction and interpretation applicable throughout this
Article.

(Source: P.A. 89-534, eff. 1-1-97.)

(810 ILCS 5/5-103) (from Ch. 26, par. 5-103)
Sec. 5-103. Scope.
(a) This Article applies to letters of credit and to certain rights and
obligations arising out of transactions involving letters of credit.
(b) The statement of a rule in this Article does not by itself require,
imply, or negate application of the same or a different rule to a situation not
provided for, or to a person not specified, in this Article.
(c) With the exception of this subsection, subsections (a) and (d),
Sections 5-102(a)(9) and (10), 5-106(d), and 5-114(d), and except to the
extent prohibited in Sections 1-302
and 5-117(d), the effect of this Article
may be varied by agreement or by a provision stated or incorporated by
reference in an undertaking. A term in an agreement or undertaking
generally excusing liability or generally limiting remedies for failure to
perform obligations is not sufficient to vary obligations prescribed by this
Article.
(d) Rights and obligations of an issuer to a beneficiary or a
nominated person under a letter of credit are independent of the existence,
performance, or nonperformance of a contract or arrangement out of which
the letter of credit arises or which underlies it, including contracts or
arrangements between the issuer and the applicant and between the
applicant and the beneficiary.

(Source: P.A. 95-895, eff. 1-1-09.)

(810 ILCS 5/5-104) (from Ch. 26, par. 5-104)
Sec. 5-104.
Formal requirements.

A letter of credit,
confirmation, advice, transfer, amendment, or cancellation may be issued in
any form that is a record and is authenticated (i) by a signature or (ii) in
accordance with the agreement of the parties or the standard practice
referred to in Section 5-108(e).

(Source: P.A. 89-534, eff. 1-1-97.)

(810 ILCS 5/5-105) (from Ch. 26, par. 5-105)
Sec. 5-105.
Consideration.
Consideration is not required to issue, amend,
transfer, or cancel a letter of credit, advice, or confirmation.

(Source: P.A. 89-534, eff. 1-1-97.)

(810 ILCS 5/5-106) (from Ch. 26, par. 5-106)
Sec. 5-106.
Issuance, amendment, cancellation, and duration.
(a) A letter of credit is issued and becomes enforceable according
to its terms against the issuer when the issuer sends or otherwise transmits it
to the person requested to advise or to the beneficiary. A letter of credit is
revocable only if it so provides.
(b) After a letter of credit is issued, rights and obligations of a
beneficiary, applicant, confirmer, and issuer are not affected by an
amendment or cancellation to which that person has not consented except to
the extent the letter of credit provides that it is revocable or that the
issuer may amend or cancel the letter of credit without that consent.
(c) If there is no stated expiration date or other provision that
determines its duration, a letter of credit expires one year after its stated
date of issuance or, if none is stated, after the date on which it is issued.
(d) A letter of credit that states that it is perpetual expires 5
years after its stated date of issuance, or if none is stated, after the date
on which it is issued.

(Source: P.A. 89-534, eff. 1-1-97.)

(810 ILCS 5/5-107) (from Ch. 26, par. 5-107)
Sec. 5-107.

Confirmer, nominated person, and
adviser.
(a) A confirmer is directly obligated on a letter of credit and has
the rights and obligations of an issuer to the extent of its confirmation. The
confirmer also has rights against and obligations to the issuer as if the
issuer were an applicant and the confirmer had issued the letter of credit at
the request and for the account of the issuer.
(b) A nominated person who is not a confirmer is not obligated to
honor or otherwise give value for a presentation.
(c) A person requested to advise may decline to act as an adviser.
An adviser that is not a confirmer is not obligated to honor or give value for
a presentation. An adviser undertakes to the issuer and to the beneficiary
accurately to advise the terms of the letter of credit, confirmation,
amendment, or advice received by that person and undertakes to the
beneficiary to check the apparent authenticity of the request to advise. Even
if the advice is inaccurate, the letter of credit, confirmation, or amendment
is enforceable as issued.
(d) A person who notifies a transferee beneficiary of the terms of a
letter of credit, confirmation, amendment, or advice has the rights and
obligations of an adviser under subsection (c). The terms in the notice to
the transferee beneficiary may differ from the terms in any notice to the
transferor beneficiary to the extent permitted by the letter of credit,
confirmation, amendment, or advice received by the person who so notifies.

(Source: P.A. 89-534, eff. 1-1-97.)

(810 ILCS 5/5-108) (from Ch. 26, par. 5-108)
Sec. 5-108.
Issuer's rights and obligations.
(a) Except as otherwise provided in Section 5-109, an issuer shall
honor a presentation that, as determined by the standard practice referred to
in subsection (e), appears on its face strictly to comply with the terms and
conditions of the letter of credit. Except as otherwise provided in Section
5-113 and unless otherwise agreed with the applicant, an issuer shall
dishonor a presentation that does not appear so to comply.
(b) An issuer has a reasonable time after presentation, but not
beyond the end of the seventh business day of the issuer after the day of its
receipt of documents:
(c) Except as otherwise provided in subsection (d), an issuer is
precluded from asserting as a basis for dishonor any discrepancy if timely
notice is not given, or any discrepancy not stated in the notice if timely
notice is given.
(d) Failure to give the notice specified in subsection (b) or to
mention fraud, forgery, or expiration in the notice does not preclude the
issuer from asserting as a basis for dishonor fraud or forgery as described in
Section 5-109(a) or expiration of the letter of credit before presentation.
(e) An issuer shall observe standard practice of financial institutions
that regularly issue letters of credit. Determination of the issuer's
observance of the standard practice is a matter of interpretation for the
court. The court shall offer the parties a reasonable opportunity to present
evidence of the standard practice.
(f) An issuer is not responsible for:
(g) If an undertaking constituting a letter of credit under Section
5-102(a)(10) contains nondocumentary conditions, an issuer shall disregard
the nondocumentary conditions and treat them as if they were not stated.
(h) An issuer that has dishonored a presentation shall return the
documents or hold them at the disposal of, and send advice to that effect to,
the presenter.
(i) An issuer that has honored a presentation as permitted or
required by this Article:
(Source: P.A. 89-534, eff. 1-1-97.)

(810 ILCS 5/5-109) (from Ch. 26, par. 5-109)
Sec. 5-109.
Fraud and forgery.
(a) If a presentation is made that appears on its face strictly to
comply with the terms and conditions of the letter of credit, but a required
document is forged or materially fraudulent, or honor of the presentation
would facilitate a material fraud by the beneficiary on the issuer or
applicant:
(b) If an applicant claims that a required document is forged or
materially fraudulent or that honor of the presentation would facilitate a
material fraud by the beneficiary on the issuer or applicant, a court of
competent jurisdiction may temporarily or permanently enjoin the issuer
from honoring a presentation or grant similar relief against the issuer or
other persons only if the court finds that:
(Source: P.A. 89-534, eff. 1-1-97.)

(810 ILCS 5/5-110) (from Ch. 26, par. 5-110)
Sec. 5-110.
Warranties.
(a) If its presentation is honored, the beneficiary warrants:
(b) The warranties in subsection (a) are in addition to warranties
arising under Articles 3, 4, 7, and 8 because of the presentation or transfer
of
documents covered by any of those Articles.

(Source: P.A. 89-534, eff. 1-1-97.)

(810 ILCS 5/5-111) (from Ch. 26, par. 5-111)
Sec. 5-111.
Remedies.
(a) If an issuer wrongfully dishonors or repudiates its obligation to
pay money under a letter of credit before presentation, the beneficiary,
successor, or nominated person presenting on its own behalf may recover
from the issuer the amount that is the subject of the dishonor or repudiation.
If the issuer's obligation under the letter of credit is not for the payment of
money, the claimant may obtain specific performance or, at the claimant's
election, recover an amount equal to the value of performance from the
issuer. In either case, the claimant may also recover incidental but not
consequential damages. The claimant is not obligated to take action to
avoid damages that might be due from the issuer under this subsection. If,
although not obligated to do so, the claimant avoids damages, the claimant's
recovery from the issuer must be reduced by the amount of damages
avoided. The issuer has the burden of proving the amount of damages
avoided. In the case of repudiation the claimant need not present any
document.
(b) If an issuer wrongfully dishonors a draft or demand presented
under a letter of credit or honors a draft or demand in breach of its
obligation to the applicant, the applicant may recover damages resulting
from the breach, including incidental but not consequential damages, less any
amount saved as a result of the breach.
(c) If an adviser or nominated person other than a confirmer
breaches an obligation under this Article or an issuer breaches an obligation
not covered in subsection (a) or (b), a person to whom the obligation is
owed may recover damages resulting from the breach, including incidental
but not consequential damages, less any amount saved as a result of the
breach. To the extent of the confirmation, a confirmer has the liability of an
issuer specified in this subsection and subsections (a) and (b).
(d) An issuer, nominated person, or adviser who is found liable
under subsection (a), (b), or (c) shall pay interest on the amount owed
thereunder from the date of wrongful dishonor or other appropriate date.
(e) Reasonable attorney's fees and other expenses of litigation must
be awarded to the prevailing party in an action in which a remedy is sought
under this Article.
(f) Damages that would otherwise be payable by a party for breach
of an obligation under this Article may be liquidated by agreement or
undertaking, but only in an amount or by a formula that is reasonable in
light of the harm anticipated.

(Source: P.A. 89-534, eff. 1-1-97.)

(810 ILCS 5/5-112) (from Ch. 26, par. 5-112)
Sec. 5-112.
Transfer of letter of credit.
(a) Except as otherwise provided in Section 5-113, unless a letter of
credit provides that it is transferable, the right of a beneficiary to draw or
otherwise demand performance under a letter of credit may not be
transferred.
(b) Even if a letter of credit provides that it is transferable, the
issuer may refuse to recognize or carry out a transfer if:
(Source: P.A. 89-534, eff. 1-1-97.)

(810 ILCS 5/5-113) (from Ch. 26, par. 5-113)
Sec. 5-113.
Transfer by operation of law.
(a) A successor of a beneficiary may consent to amendments, sign
and present documents, and receive payment or other items of value in the
name of the beneficiary without disclosing its status as a successor.
(b) A successor of a beneficiary may consent to amendments, sign
and present documents, and receive payment or other items of value in its
own name as the disclosed successor of the beneficiary. Except as otherwise
provided in subsection (e), an issuer shall recognize a disclosed successor of
a beneficiary as beneficiary in full substitution for its predecessor upon
compliance with the requirements for recognition by the issuer of a transfer
of drawing rights by operation of law under the standard practice referred to
in Section 5-108(e) or, in the absence of such a practice, compliance with
other reasonable procedures sufficient to protect the issuer.
(c) An issuer is not obliged to determine whether a purported
successor is a successor of a beneficiary or whether the signature of a
purported successor is genuine or authorized.
(d) Honor of a purported successor's apparently complying
presentation under subsection (a) or (b) has the consequences specified in
Section 5-108(i) even if the purported successor is not the successor of a
beneficiary. Documents signed in the name of the beneficiary or of a
disclosed successor by a person who is neither the beneficiary nor the
successor of the beneficiary are forged documents for the purposes of
Section 5-109.
(e) An issuer whose rights of reimbursement are not covered by
subsection (d) or substantially similar law and any confirmer or nominated
person may decline to recognize a presentation under subsection (b).
(f) A beneficiary whose name is changed after the issuance of a
letter of credit has the same rights and obligations as a successor of a
beneficiary under this Section.

(Source: P.A. 89-534, eff. 1-1-97.)

(810 ILCS 5/5-114) (from Ch. 26, par. 5-114)
Sec. 5-114.

Assignment of proceeds.
(a) In this Section, "proceeds of a letter of credit" means the cash,
check, accepted draft, or other item of value paid or delivered upon honor
or giving of value by the issuer or any nominated person under the letter of
credit. The term does not include a beneficiary's drawing rights or
documents presented by the beneficiary.
(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.
(c) An issuer or nominated person need not recognize an
assignment of proceeds of a letter of credit until it consents to the
assignment.
(d) An issuer or nominated person has no obligation to give or
withhold its consent to an assignment of proceeds of a letter of credit, but
consent may not be unreasonably withheld if the assignee possesses and
exhibits the letter of credit and presentation of the letter of credit is a
condition to honor.
(e) Rights of a transferee beneficiary or nominated person are
independent of the beneficiary's assignment of the proceeds of a letter of
credit and are superior to the assignee's right to the proceeds.
(f) Neither the rights recognized by this Section between an assignee
and an issuer, transferee beneficiary, or nominated person nor the issuer's or
nominated person's payment of proceeds to an assignee or a third person
affect the rights between the assignee and any person other than the issuer,
transferee beneficiary, or nominated person. The mode of creating and
perfecting a security interest in or granting an assignment of a beneficiary's
rights to proceeds is governed by Article 9 or other law. Against persons
other than the issuer, transferee beneficiary, or nominated person, the rights
and obligations arising upon the creation of a security interest or other
assignment of a beneficiary's right to proceeds and its perfection are
governed by Article 9 or other law.

(Source: P.A. 89-364, eff. 1-1-96; 89-534, eff. 1-1-97.)

(810 ILCS 5/5-115) (from Ch. 26, par. 5-115)
Sec. 5-115.
Statute of limitations.
An action to enforce
a right or obligation arising under this Article must be commenced within one
year after the expiration date of the relevant letter of credit or one year
after the cause of action accrues, whichever
occurs later. A cause of action accrues when
the breach occurs, regardless of the aggrieved party's lack of knowledge of the
breach.

(Source: P.A. 89-534, eff. 1-1-97.)

(810 ILCS 5/5-116) (from Ch. 26, par. 5-116)
Sec. 5-116.
Choice of law and forum.
(a) The liability of an issuer, nominated person, or adviser for
action or omission is governed by the law of the jurisdiction chosen by an
agreement in the form of a record signed or otherwise authenticated by the
affected parties in the manner provided in Section 5-104 or by a provision in
the person's letter of credit, confirmation, or other undertaking. The
jurisdiction whose law is chosen need not bear any relation to the
transaction.
(b) Unless subsection (a) applies, the liability of an issuer,
nominated person, or adviser for action or omission is governed by the law
of the jurisdiction in which the person is located. The person is considered
to be located at the address indicated in the person's undertaking. If more
than one address is indicated, the person is considered to be located at the
address from which the person's undertaking was issued. For the purpose of
jurisdiction, choice of law, and recognition of interbranch letters of credit,
but not enforcement of a judgment, all branches of a bank are considered
separate juridical entities and a bank is considered to be located at the place
where its relevant branch is considered to be located under this subsection.
(c) Except as otherwise provided in this subsection, the liability of
an issuer, nominated person, or adviser is governed by any rules of custom
or practice, such as the Uniform Customs and Practice for Documentary
Credits, to which the letter of credit, confirmation, or other undertaking is
expressly made subject. If (i) this Article would govern the liability of an
issuer, nominated person, or adviser under subsection (a) or (b), (ii) the
relevant undertaking incorporates rules of custom or practice, and (iii) there
is conflict between this Article and those rules as applied to that
undertaking, those rules govern except to the extent of any conflict with the
nonvariable provisions specified in Section 5-103(c).
(d) If there is conflict between this Article and Article 3, 4, 4A, or
9, this Article governs.
(e) The forum for settling disputes arising out of an undertaking
within this Article may be chosen in the manner and with the binding effect
that governing law may be chosen in accordance with subsection (a).

(Source: P.A. 89-534, eff. 1-1-97.)

(810 ILCS 5/5-117) (from Ch. 26, par. 5-117)
Sec. 5-117.
Subrogation of issuer, applicant, and nominated person.
(a) An issuer that honors a beneficiary's presentation is subrogated
to the rights of the beneficiary to the same extent as if the issuer were a
secondary obligor of the underlying obligation owed to the beneficiary and of
the applicant to the same extent as if the issuer were the secondary obligor
of the underlying obligation owed to the applicant.
(b) An applicant that reimburses an issuer is subrogated to the
rights of the issuer against any beneficiary, presenter, or nominated person
to the same extent as if the applicant were the secondary obligor of the
obligations owed to the issuer and has the rights of subrogation of the issuer
to the rights of the beneficiary stated in subsection (a).
(c) A nominated person who pays or gives value against a draft or
demand presented under a letter of credit is subrogated to the rights of:
(d) Notwithstanding any agreement or term to the contrary, the
rights of subrogation stated in subsections (a) and (b) do not arise until the
issuer honors the letter of credit or otherwise pays and the rights in
subsection (c) do not arise until the nominated person pays or otherwise
gives value. Until then, the issuer, nominated person, and the applicant do
not derive under this Section present or prospective rights forming the basis
of a claim, defense, or excuse.

(Source: P.A. 89-534, eff. 1-1-97.)

(810 ILCS 5/5-118)
Sec. 5-118.
Security interest of issuer or nominated person.
(a) An issuer or nominated person has a security interest in a
document presented under a letter of credit to the extent that the issuer or
nominated person honors or gives value for the presentation.
(b) So long as and to the extent that an issuer or nominated person
has not been reimbursed or has not otherwise recovered the value given with
respect to a security interest in a document under subsection (a), the security
interest continues and is subject to Article 9, but:
(Source: P.A. 91-893, eff. 7-1-01.)