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Uniform Commercial Code > Uniform Commercial Code - Letters of Credit
Short Summary
The legal document reviewed governs the issuance, amendment, cancellation, and duration of letters of credit. It applies to issuers, beneficiaries, applicants, and confirmers of letters of credit. The document states that a letter of credit becomes enforceable against the issuer when it is sent or transmitted to the person requested to advise or to the beneficiary. The document also specifies that a letter of credit is revocable only if it explicitly provides for revocation. Amendments or cancellations to a letter of credit do not affect the rights and obligations of the parties unless they have consented or the letter of credit allows for amendment or cancellation without consent. The document further outlines the expiration dates and durations of letters of credit, depending on whether an expiration date is stated or if the letter of credit is perpetual. It also clarifies that consideration is not required to issue, amend, transfer, or cancel a letter of credit, advice, or confirmation. The document provides guidelines on the form and authentication of letters of credit, confirmations, advice, transfers, amendments, or cancellations. It also addresses the rights, obligations, and interests flowing from transactions arising out of or associated with letters of credit issued before July 1, 1997. The document specifies that such transactions are governed by the statutes or other laws amended or repealed by this act. The document applies to letters of credit issued on or after July 1, 1997. It also governs the security interest of an issuer or nominated person in a document presented under a letter of credit. The document states that the issuer or nominated person has a security interest in the document to the extent that they honor or give value for the presentation. It further specifies that a security agreement is not necessary to make the security interest enforceable. The document also governs the subrogation rights of issuers, applicants, and nominated persons in relation to letters of credit. It outlines the rights and obligations of these parties when an issuer honors a beneficiary’s presentation or when an applicant reimburses an issuer. The document also addresses the liability of issuers, nominated persons, or advisers for their actions or omissions in relation to letters of credit, confirmations, or other undertakings. It specifies that the liability is determined based on the jurisdiction chosen by an agreement between the parties or by a provision in the person’s letter of credit, confirmation, or undertaking. The document also allows for the settlement of disputes in a chosen forum as determined by the governing law. It further governs the assignment of proceeds of a letter of credit, specifying that a beneficiary can assign its right to part or all of the proceeds, contingent upon compliance with the terms and conditions of the letter of credit. The document clarifies that the assignment of proceeds is not recognized by the issuer or nominated person until they consent to the assignment. It also addresses the transfer of drawing rights by operation of law in the context of letters of credit, outlining the rights and obligations of successors of beneficiaries, issuers, and purported successors. The document specifies that a successor of a beneficiary may consent to amendments, sign and present documents, and receive payment or other items of value in the name of the beneficiary without disclosing its status as a successor. Alternatively, a successor may consent to amendments, sign and present documents, and receive payment or other items of value in its own name as the disclosed successor of the beneficiary. The document also addresses the transferability of a beneficiary’s right to draw or demand performance under a letter of credit, specifying that unless a letter of credit provides that it is transferable, the right of a beneficiary to draw or demand performance may not be transferred. However, even if a letter of credit provides that it is transferable, the issuer may refuse to recognize or carry out a transfer under certain circumstances. The document also governs the remedies available in cases of wrongful dishonor or repudiation of obligations under a letter of credit. It outlines the rights of beneficiaries, successors, and nominated persons to recover the amount subject to dishonor or repudiation from the issuer. The document also addresses the remedies available to applicants if an issuer wrongfully dishonors a draft or demand, and the remedies available to persons owed an obligation by an adviser or nominated person. It specifies that interest on the amount owed is payable from the date of wrongful dishonor or other appropriate date. The document also allows for the liquidation of damages by agreement or undertaking, as long as the amount or formula is reasonable in light of the anticipated harm. Lastly, the document governs the handling of fraud and forgery in relation to letters of credit. It outlines the circumstances under which a presentation that appears to comply with the terms and conditions of the letter of credit should be honored, even if a required document is forged or materially fraudulent. The document allows an applicant to seek relief from a court to temporarily or permanently enjoin the issuer from honoring a presentation if forgery or material fraud can be demonstrated.
Whom does it apply to?
The document applies to issuers, beneficiaries, applicants, and confirmers of letters of credit.
What does it govern?
The legal document governs the issuance, amendment, cancellation, and duration of letters of credit.
What are exemptions?
The document does not specify any exemptions.
What are the Penalties?
The document does not specify any penalties for non-compliance or violation of its provisions.
Jurisdiction
Utah