8.5A-117 - A-117. Subrogation of issuer, applicant, and nominated person. - Virginia Statutes

§ 8.5A-117. Subrogation of issuer, applicant, and nominated person.

(a) An issuer that honors a beneficiary's presentation is subrogated to therights of the beneficiary to the same extent as if the issuer were asecondary obligor of the underlying obligation owed to the beneficiary and ofthe applicant to the same extent as if the issuer were the secondary obligorof the underlying obligation owed to the applicant.

(b) An applicant that reimburses an issuer is subrogated to the rights of theissuer against any beneficiary, presenter, or nominated person to the sameextent as if the applicant were the secondary obligor of the obligations owedto the issuer and has the rights of subrogation of the issuer to the rightsof the beneficiary stated in subsection (a).

(c) A nominated person who pays or gives value against a draft or demandpresented under a letter of credit is subrogated to the rights of:

(1) the issuer against the applicant to the same extent as if the nominatedperson were a secondary obligor of the obligation owed to the issuer by theapplicant;

(2) the beneficiary to the same extent as if the nominated person were asecondary obligor of the underlying obligation owed to the beneficiary; and

(3) the applicant to same extent as if the nominated person were a secondaryobligor of the underlying obligation owed to the applicant.

(d) Notwithstanding any agreement or term to the contrary, the rights ofsubrogation stated in subsections (a) and (b) do not arise until the issuerhonors the letter of credit or otherwise pays, and the rights in subsection(c) do not arise until the nominated person pays or otherwise gives value.Until then, the issuer, nominated person, and the applicant do not deriveunder this section present or prospective rights forming the basis of aclaim, defense, or excuse.

(1997, c. 343.)