400.5-114. Proceeds of letter of credit, definition, assignment. - Missouri Statutes

Proceeds of letter of credit, definition, assignment.

400.5-114. (a) In this section, "proceeds of a letter of credit"means the cash, check, accepted draft or other item of value paid ordelivered upon honor or giving of value by the issuer or any nominatedperson under the letter of credit. The term does not include abeneficiary's drawing rights or documents presented by the beneficiary.

(b) A beneficiary may assign its right to part or all of the proceedsof a letter of credit. The beneficiary may do so before presentation as apresent assignment of its right to receive proceeds contingent upon itscompliance with the terms and conditions of the letter of credit.

(c) An issuer or nominated person need not recognize an assignment ofproceeds of a letter of credit until it consents to the assignment.

(d) An issuer or nominated person has no obligation to give orwithhold its consent to an assignment of proceeds, but consent may not beunreasonably withheld if the assignee possesses and exhibits the letter ofcredit and presentation of the letter of credit is a condition to honor.

(e) Rights of a transferee beneficiary or nominated person areindependent of the beneficiary's assignment of the proceeds of a letter ofcredit and are superior to the assignee's right to the proceeds.

(f) Neither the rights recognized by this section between an assigneeand an issuer, transferee beneficiary or nominated person nor the issuer'sor nominated person's payment of proceeds to an assignee or a third persondo not affect the rights between the assignee and any person other than theissuer, transferee beneficiary or nominated person. The mode of creatingand perfecting a security interest in or granting an assignment of abeneficiary's rights to proceeds is governed by article 9 of this chapteror other law. Against persons other than the issuer, transfereebeneficiary, or nominated person, the rights and obligations arising uponthe creation of a security interest or other assignment of a beneficiary'sright to proceeds and its perfection are governed by article 9 of thischapter or other law.

(L. 1963 p. 503 § 5-114, A.L. 1992 S.B. 448, A.L. 1997 S.B. 6)

*No continuity with § 400.5-114 as repealed by L. 1997 S.B. 6 § A.