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Can you summarize IACO 554.5114?
UNIFORM COMMERCIAL CODE > Assignment of proceeds.
Short Summary
This section of the Iowa Code, specifically under the Uniform Commercial Code, governs the assignment of proceeds of a letter of credit. It defines ‘proceeds of a letter of credit’ as the cash, check, accepted draft, or other item of value paid or delivered upon honor or giving of value by the issuer or any nominated person under the letter of credit. The section allows a beneficiary to assign its right to part or all of the proceeds of a letter of credit, contingent upon compliance with the terms and conditions of the letter of credit. However, the assignment of proceeds is not recognized by the issuer or nominated person until their consent is obtained. The rights of a transferee beneficiary or nominated person are independent of the beneficiary’s assignment of proceeds and superior to the assignee’s right to the proceeds. It is important to note that the rights and obligations between an assignee and any person other than the issuer, transferee beneficiary, or nominated person are not affected by the assignment. The creation and perfection of a security interest or assignment of a beneficiary’s rights to proceeds are governed by Article 9 or other applicable law. The rights and obligations arising from the creation and perfection of a security interest or other assignment of a beneficiary’s right to proceeds, against persons other than the issuer, transferee beneficiary, or nominated person, are also governed by Article 9 or other applicable law.
Whom does it apply to?
Beneficiaries, issuers, nominated persons, assignees, transferee beneficiaries
What does it govern?
Proceeds of a letter of credit
What are exemptions?
No exemptions are mentioned.
What are the Penalties?
No penalties are mentioned.
Jurisdiction
Iowa