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Can you summarize IACO 554.5117?
UNIFORM COMMERCIAL CODE > Subrogation of issuer, applicant, and nominated person.
Short Summary
This legal document, governed by the Iowa Code under the Uniform Commercial Code, addresses the subrogation rights of issuers, applicants, and nominated persons in letter of credit transactions. According to the document, an issuer that honors a beneficiary’s presentation is subrogated to the rights of the beneficiary and the applicant as if the issuer were a secondary obligor of the underlying obligation. Similarly, an applicant that reimburses an issuer is subrogated to the rights of the issuer against any beneficiary, presenter, or nominated person. Additionally, 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 the issuer, beneficiary, and applicant. The document clarifies that the rights of subrogation do not arise until the issuer honors the letter of credit or otherwise pays, and the rights of the nominated person do not arise until they pay or give value. Until then, the issuer, nominated person, and applicant do not have present or prospective rights forming the basis of a claim, defense, or excuse.
Whom does it apply to?
Issuers, beneficiaries, presenters, nominated persons, and applicants involved in letter of credit transactions
What does it govern?
Subrogation of issuer, applicant, and nominated person
What are exemptions?
No exemptions are mentioned.
What are the Penalties?
No penalties are mentioned.
Jurisdiction
Iowa