(1)  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.

Terms Used In Utah Code 70A-5-118

  • Document: means a draft or other demand, document of title, investment security, certificate, invoice, or other record, statement, or representation of fact, law, right, or opinion:
(a) which is presented in a written or other medium permitted by the letter of credit or, unless prohibited by the letter of credit, by the standard practice referred to in Subsection 70A-5-108(5); and
(b) which is capable of being examined for compliance with the terms and conditions of the letter of credit. See Utah Code 70A-5-102
  • 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 Utah Code 70A-5-102
  • Letter of credit: means a definite undertaking that satisfies the requirements of Section 70A-5-104 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 Utah Code 70A-5-102
  • Nominated person: means a person whom the issuer:
    (a) designates or authorizes to pay, accept, negotiate, or otherwise give value under a letter of credit; and
    (b) undertakes by agreement or custom and practice to reimburse. See Utah Code 70A-5-102
  • Person: means :Utah Code 68-3-12.5
  • Presentation: means delivery of a document to an issuer or nominated person for honor or giving of value under a letter of credit. See Utah Code 70A-5-102
  • 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
  • (2)  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 Subsection (1), the security interest continues and is subject to Chapter 9a, Uniform Commercial Code – Secured Transactions, but:

    (a)  a security agreement is not necessary to make the security interest enforceable under Subsection 70A-9a-203(2)(c);

    (b)  if the document is presented in a medium other than a written or other tangible medium, the security interest is perfected; and

    (c)  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.

    Repealed and Re-enacted by Chapter 252, 2000 General Session