Maine Revised Statutes Title 11 Sec. 5-1117 – Subrogation of issuer, applicant and nominated person
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(1). An issuer that honors a beneficiary‘s presentation is subrogated to the rights of the beneficiary to the same extent as if the issuer were a secondary obligor of the underlying obligation owed to the beneficiary and of the applicant to the same extent as if the issuer were the secondary obligor of the underlying obligation owed to the applicant.
[PL 1997, c. 429, Pt. A, §2 (NEW); PL 1997, c. 429, Pt. A, §4 (AFF).]
Terms Used In Maine Revised Statutes Title 11 Sec. 5-1117
- Applicant: means a person at whose request or for whose account a letter of credit is issued. See Maine Revised Statutes Title 11 Sec. 5-1102
- 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
- Beneficiary: means a person who under the terms of a letter of credit is entitled to have its complying presentation honored. See Maine Revised Statutes Title 11 Sec. 5-1102
- Issuer: means a bank or other person that issues a letter of credit, but does not include an individual who makes an engagement for personal, family or household purposes. See Maine Revised Statutes Title 11 Sec. 5-1102
- Letter of credit: means a definite undertaking that satisfies the requirements of section 5?1104 by an issuer to a beneficiary at the request or for the account of an applicant or, in the case of a financial institution, to itself or for its own account, to honor a documentary presentation by payment or delivery of an item of value. See Maine Revised Statutes Title 11 Sec. 5-1102
- Nominated person: means a person whom the issuer: (i) Designates or authorizes to pay, accept, negotiate or otherwise give value under a letter of credit; and(ii) Undertakes by agreement or custom and practice to reimburse. See Maine Revised Statutes Title 11 Sec. 5-1102
- 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.
- Presentation: means delivery of a document to an issuer or nominated person for honor or giving of value under a letter of credit. See Maine Revised Statutes Title 11 Sec. 5-1102
- Presenter: means a person making a presentation as or on behalf of a beneficiary or nominated person. See Maine Revised Statutes Title 11 Sec. 5-1102
(2). An applicant that reimburses an issuer is subrogated to the rights of the issuer against any beneficiary, presenter or nominated person to the same extent as if the applicant were the secondary obligor of the obligations owed to the issuer and has the rights of subrogation of the issuer to the rights of the beneficiary stated in subsection (1).[PL 1997, c. 429, Pt. A, §2 (NEW); PL 1997, c. 429, Pt. A, §4 (AFF).]
(3). A nominated person who pays or gives value against a draft or demand presented under a letter of credit is subrogated to the rights of:(a). The issuer against the applicant to the same extent as if the nominated person were a secondary obligor of the obligation owed to the issuer by the applicant; [PL 1997, c. 429, Pt. A, §2 (NEW); PL 1997, c. 429, Pt. A, §4 (AFF).](b). The beneficiary to the same extent as if the nominated person were a secondary obligor of the underlying obligation owed to the beneficiary; and [PL 1997, c. 429, Pt. A, §2 (NEW); PL 1997, c. 429, Pt. A, §4 (AFF).](c). The applicant to the same extent as if the nominated person were a secondary obligor of the underlying obligation owed to the applicant. [PL 1997, c. 429, Pt. A, §2 (NEW); PL 1997, c. 429, Pt. A, §4 (AFF).][PL 1997, c. 429, Pt. A, §2 (NEW); PL 1997, c. 429, Pt. A, §4 (AFF).]
(4). Notwithstanding any agreement or term to the contrary, the rights of subrogation stated in subsections (1) and (2) do not arise until the issuer honors the letter of credit or otherwise pays and the rights in subsection (3) do not arise until the nominated person pays or otherwise gives value. Until then, the issuer, nominated person, and the applicant do not derive under this section present or prospective rights forming the basis of a claim, defense or excuse.[PL 1997, c. 429, Pt. A, §2 (NEW); PL 1997, c. 429, Pt. A, §4 (AFF).]
SECTION HISTORYPL 1997, c. 429, §A2 (NEW). PL 1997, c. 429, §A4 (AFF).