8.5A-114 - A-114. Assignment of proceeds. - Virginia Statutes

§ 8.5A-114. Assignment of proceeds.

(a) In this section, "proceeds of a letter of credit" means the cash,check, accepted draft, or other item of value paid or delivered upon honor orgiving of value by the issuer or any nominated person under the letter ofcredit. The term does not include a beneficiary's drawing rights or documentspresented by the beneficiary.

(b) A beneficiary may assign its right to part or all of the proceeds of aletter of credit. The beneficiary may do so before presentation as a presentassignment of its right to receive proceeds contingent upon its compliancewith 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 or withhold itsconsent to an assignment of proceeds of a letter of credit, but consent maynot be unreasonably withheld if the assignee possesses and exhibits theletter of credit and presentation of the letter of credit is a condition tohonor.

(e) Rights of a transferee beneficiary or nominated person are independent ofthe beneficiary's assignment of the proceeds of a letter of credit and aresuperior to the assignee's right to the proceeds.

(f) Neither the rights recognized by this section between an assignee and anissuer, transferee beneficiary, or nominated person nor the issuer's ornominated person's payment of proceeds to an assignee or a third personaffect the rights between the assignee and any person other than the issuer,transferee beneficiary, or nominated person. The mode of creating andperfecting a security interest in or granting an assignment of abeneficiary's rights to proceeds is governed by Title 8.9A or other law.Against persons other than the issuer, transferee beneficiary, or nominatedperson, the rights and obligations arising upon the creation of a securityinterest or other assignment of a beneficiary's right to proceeds and itsperfection are governed by Title 8.9A or other law.

(1997, c. 343.)