§ 6A-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:
(1) The issuer against the applicant to the same extent as if the nominated person were a secondary obligor of the obligation owed to the issuer by the applicant;
(2) The beneficiary to the same extent as if the nominated person were a secondary obligor of the underlying obligation owed to the beneficiary; and
(3) The applicant to the same extent as if the nominated person were a secondary obligor of the underlying obligation owed to the applicant.
(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.
History of Section.P.L. 2000, ch. 182, § 4; P.L. 2000, ch. 420, § 4.
Structure Rhode Island General Laws
Title 6A - Uniform Commercial Code
Chapter 6A-5 - Letters of Credit
Section 6A-5-101. - Short title.
Section 6A-5-102. - Definitions.
Section 6A-5-104. - Formal requirements.
Section 6A-5-105. - Consideration.
Section 6A-5-106. - Issuance, amendment, cancellation, and duration.
Section 6A-5-107. - Confirmer, nominated person, and adviser.
Section 6A-5-108. - Issuer’s rights and obligations.
Section 6A-5-109. - Fraud and forgery.
Section 6A-5-110. - Warranties.
Section 6A-5-112. - Transfer of letter of credit.
Section 6A-5-113. - Transfer by operation of law.
Section 6A-5-114. - Assignment of proceeds.
Section 6A-5-115. - Statute of limitations.
Section 6A-5-116. - Choice of law and forum.
Section 6A-5-117. - Subrogation of issuer, applicant, and nominated person.
Section 6A-5-118. - Security interest of issuer or nominated person.