§ 25-5-114. Assignment of proceeds.
§25‑5‑114. Assignment of proceeds.
(a) In this section,"proceeds of a letter of credit" means the cash, check, accepteddraft, or other item of value paid or delivered upon honor or giving of valueby the issuer or any nominated person under the letter of credit. The term doesnot include a beneficiary's drawing rights or documents presented by thebeneficiary.
(b) A beneficiary mayassign its right to part or all of the proceeds of a letter of credit. Thebeneficiary may do so before presentation as a present assignment of its rightto receive proceeds contingent upon its compliance with the terms andconditions of the letter of credit.
(c) An issuer ornominated person need not recognize an assignment of proceeds of a letter ofcredit until it consents to the assignment.
(d) An issuer ornominated person has no obligation to give or withhold its consent to anassignment of proceeds of a letter of credit, but consent may not beunreasonably withheld if the assignee possesses and exhibits the letter of creditand presentation of the letter of credit is a condition to honor.
(e) Rights of atransferee beneficiary or nominated person are independent of the beneficiary'sassignment of the proceeds of a letter of credit and are superior to theassignee's right to the proceeds.
(f) Neither the rightsrecognized by this section between an assignee and an issuer, transfereebeneficiary, or nominated person nor the issuer's or nominated person's paymentof proceeds to an assignee or a third person affect the rights between theassignee and any person other than the issuer, transferee beneficiary, ornominated person. The mode of creating and perfecting a security interest in orgranting an assignment of a beneficiary's rights to proceeds is governed byArticle 9 of this Chapter or other law. Against persons other than the issuer,transferee beneficiary, or nominated person, the rights and obligations arisingupon the creation of a security interest or other assignment of a beneficiary'sright to proceeds and its perfection are governed by Article 9 of this Chapteror other law. (1999‑73, s. 1.)