§ 26-1-5.1-117 — Rights of subrogation

Indiana § 26-1-5.1-117

• Jurisdiction: Indiana
• Title 26: COMMERCIAL LAW
• Art. 1: UNIFORM COMMERCIAL CODE
• Ch. 5.1: Letters of Credit

Text

(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, the 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

As added by P.L.183-1996, SEC.4.