Illinois Compiled Statutes 810 ILCS 5/9-409 – Restrictions on assignment of letter-of-credit rights ineffective
Current as of: 2024 | Check for updates
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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
(1) would impair the creation, attachment, or
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perfection of a security interest in the letter-of-credit right; or
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(2) provides that the assignment or the creation,
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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.
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(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 Article 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,
Terms Used In Illinois Compiled Statutes 810 ILCS 5/9-409
- Attachment: A procedure by which a person's property is seized to pay judgments levied by the court.
- Beneficiary: A person who is entitled to receive the benefits or proceeds of a will, trust, insurance policy, retirement plan, annuity, or other contract. Source: OCC
- Statute: A law passed by a legislature.
(1) is not enforceable against the applicant, issuer,
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nominated person, or transferee beneficiary;
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(2) imposes no duties or obligations on the
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applicant, issuer, nominated person, or transferee beneficiary; and
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(3) does not require the applicant, issuer, nominated
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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.
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