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Can you summarize 3 NJAC Chapter 11, Subchapter 9?
INVESTMENTS > STANDBY LETTERS OF CREDIT
Short Summary
This legal document found in the New Jersey Administrative Code under the section on Investments governs standby letters of credit. Standby letters of credit represent an obligation to the beneficiary on the part of the issuer. The obligations can include repaying money borrowed or advanced to the account party, making payment on account of any indebtedness undertaken by the account party, or making payment on account of any default by the account party in the performance of an obligation. However, commercial or traveler’s letters of credit issued pursuant to section 25(3) of the Banking Act of 1948 are exempted from the definition of standby letters of credit. These exemptions include letters of credit used to facilitate the purchase and sale of goods, where the issuing bank has obtained or will obtain documents of title covering the goods, or where the credit is reasonably related to the actual value of the goods at the time of purchase and sale. The document also specifies liability limitations for standby letters of credit and requires them to be combined with any other nonexempt extension of credit unless certain conditions are met. It further outlines the conditions under which a bank may issue a standby letter of credit on behalf of its customers. The subchapter in which this document is found aims to establish parity between banks and national banks in accordance with section 25.2 of the Banking Act of 1948.
Whom does it apply to?
Issuers and beneficiaries of standby letters of credit
What does it govern?
Standby letters of credit
What are exemptions?
Commercial or traveler's letter of credit issued pursuant to section 25(3) of the Banking Act of 1948
What are the Penalties?
No specific penalties mentioned
Jurisdiction
New Jersey