(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.
Structure New York Laws
5-106 - Issuance, Amendment, Cancellation, and Duration.
5-107 - Confirmer, Nominated Person, and Advisor.
5-108 - Issuer's Rights and Obligations.
5-112 - Transfer of Letter of Credit.
5-113 - Transfer by Operation of Law.
5-114 - Assignment of Proceeds.
5-115 - Statute of Limitations.
5-116 - Choice of Law and Forum.
5-117 - Subrogation of Issuer, Applicant, and Nominated Person.