§ 554.5117 — Subrogation of issuer, applicant, and nominated person

Iowa § 554.5117

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

Text

1. 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.
2. 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 1.
3. Anominatedpersonwhopaysorgivesvalueagainstadraftordemandpresentedunder
a letter of credit is subrogated to the rights of:
a. 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;
b. the beneficiary to the same extent as if the nominated person were a secondary obligor
of the underlying obligation owed to the beneficiary; and
c. the applicant to the same extent as if the nominated person were a secondary obligor
of the underlying obligation owed to the applicant.
4. Notwithstandinganyagreementortermtothecontrary,therightsofsubrogationstated
in subsections 1 and 2 do not arise until the issuer honors the letter of credit or otherwise
pays and the rights in subsection 3 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.

Legislative History

[C66, 71, 73, 75, 77, 79, 81, §554.5117]