California Financial Code 6526 – An association may issue commercial and standby letters of credit in …
An association may issue commercial and standby letters of credit in conformance with the Uniform Commercial Code or the Uniform Customs and Practice for Documentary Credits Act and may pledge collateral to secure its obligations thereunder. Except as otherwise provided by regulations of the commissioner, such issuance shall be subject to the following requirements:
(a) Each letter of credit must conspicuously state that it is a letter of credit.
Terms Used In California Financial Code 6526
- Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
- Dependent: A person dependent for support upon another.
- Obligation: An order placed, contract awarded, service received, or similar transaction during a given period that will require payments during the same or a future period.
- Uniform Commercial Code: A set of statutes enacted by the various states to provide consistency among the states' commercial laws. It includes negotiable instruments, sales, stock transfers, trust and warehouse receipts, and bills of lading. Source: OCC
(b) The issuer’s undertaking must contain a specified expiration date or be for a definite term, and must be limited in amount.
(c) The issuer’s obligation to pay must be solely dependent upon the presentation of conforming documents as specified in the letter of credit, and not upon the factual performance or non-performance by the parties to the underlying transaction.
(d) The account party must have an unqualified obligation to reimburse the issuer for payments made under the letter of credit.
To the extent funds are advanced under a letter of credit without compensation from the account party, the amount shall be treated as an extension of credit subject to percentage of assets limits and other requirements under an applicable provision of this division.
(Added by Stats. 1983, Ch. 1091, Sec. 2.)