Pennsylvania § 9409 Restrictions on assignment of letter-of-credit rights ineffective

Pennsylvania Statutes

§ 9409 — Restrictions on assignment of letter-of-credit rights ineffective

Pennsylvania § 9409

Title 13COMMERCIAL CODE

Ch. 94RIGHTS OF THIRD PARTIES

This text of Pennsylvania § 9409 (Restrictions on assignment of letter-of-credit rights ineffective) is published on Counsel Stack Legal Research, covering Pennsylvania primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook

13 Pa. Cons. Stat. § 9409 (2026).

Text

(a)Term or law restricting assignment generally ineffective.--A term in a letter of credit or a rule of law, statute, regulation, custom or practice applicable to the letter of credit which 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 or the 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

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(a) Term or law restricting assignment generally ineffective.--A term in a letter of credit or a rule of law, statute, regulation, custom or practice applicable to the letter of credit which 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 or the 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) Limitation on ineffectiveness under subsection (a).--To the extent that a term in a letter of credit is ineffective under subsection (a) but would be effective under law other than this division 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.