(a) An issuer or nominated person has a security interest in a document presented under a letter of credit to the extent that the issuer or nominated person honors or gives value for the presentation.

(b) So long as and to the extent that an issuer or nominated person has not been reimbursed or has not otherwise recovered the value given with respect to a security interest in a document under subdivision (a), the security interest continues and is subject to Division 9 (commencing with Section 9101), subject to all of the following:

Terms Used In California Commercial Code 5118

  • agreement: means the total legal obligation that results from the parties' agreement as determined by this code and as supplemented by any other applicable laws. See California Commercial Code 1201
  • Document of title: includes a bill of lading, dock warrant, dock receipt, warehouse receipt, or order for the delivery of goods, and also any other document which in the regular course of business or financing is treated as adequately evidencing that the person in possession of it is entitled to receive, hold, and dispose of the document and the goods it covers. See California Commercial Code 1201
  • Person: means an individual, corporation, business trust, estate, trust, partnership, limited liability company, association, joint venture, government, governmental subdivision, agency, or instrumentality, or any other legal or commercial entity. See California Commercial Code 1201
  • Security interest: includes any interest of a consignor and a buyer of accounts, chattel paper, a payment intangible, or a promissory note in a transaction that is subject to Division 9 (commencing with Section 9101). See California Commercial Code 1201

(1) A security agreement is not necessary to make the security interest enforceable under paragraph (3) of subdivision (b) of section 9203.

(2) If the document is presented in a medium other than a written or other tangible medium, the security interest is perfected.

(3) If the document is presented in a written or other tangible medium and is not a certificated security, chattel paper, a document of title, an instrument, or a letter of credit, the security interest is perfected and has priority over a conflicting security interest in the document so long as the debtor does not have possession of the document.

(Added by Stats. 1999, Ch. 991, Sec. 29.5. Effective January 1, 2000. Operative July 1, 2001, by Sec. 75 of Ch. 991.)