§ 26-1-9.1-409 — Restrictions on assignment of letter-of-credit rights ineffective

Indiana § 26-1-9.1-409

• Jurisdiction: Indiana
• Title 26: COMMERCIAL LAW
• Art. 1: UNIFORM COMMERCIAL CODE
• Ch. 9.1: Secured Transactions

Text

(a) A term in a letter-of-credit or a rule
of law, statute, regulation, custom, or practice applicable to the
letter-of-credit that prohibits, restricts, or requires the consent of an
applicant, issuer, or nominated person to a beneficiary's assignment of
or creation of a security interest in a letter-of-credit right is ineffective
to the extent that the term or rule of law, statute, regulation, custom, or
practice:
(1) would impair the creation, attachment, or perfection of a
security interest in the letter-of-credit right; or
(2) provides that the assignment, transfer, creation, attachment, or
perfection of the security interest may give rise to a default,
breach, right of recoupment, claim, defense, termination, right of
termination, or remedy under the letter-of-credit right.
(b) To the extent that a term in a letter-of-credit is ineffective under
subsection (a) but would be effective under law other than IC 26-1-9.1
or a custom or practice applicable to the letter-of-credit, to the transfer
of a right to draw or otherwise demand performance under the
letter-of-credit, or to the assignment of a right to proceeds of the
letter-of-credit, the creation, attachment, or perfection of a security
interest in the letter-of-credit right:
(1) is not enforceable against the applicant, issuer, nominated
person, or transferee beneficiary;
(2) imposes no duties or obligations on the applicant, issuer,
nominated person, or transferee beneficiary; and
(3) does not require the applicant, issuer, nominated person, or
transferee beneficiary to recognize the security interest, pay or
render performance to the secured party, or accept payment or
other performance from the secured party.

Legislative History

As added by P.L.57-2000, SEC.45.