§ 554.5114 — Assignment of proceeds

Iowa § 554.5114

• Jurisdiction: Iowa
• Title XIII: COMMERCE
• Ch. 554: UNIFORM COMMERCIAL CODE

Text

1. 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.
2. 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.
3. Anissuerornominatedpersonneednotrecognizeanassignmentofproceedsofaletter
of credit until it consents to the assignment.
4. 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.
5. 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.
6. 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.

Legislative History

[C66, 71, 73, 75, 77, 79, 81, §554.5114]