Restrictions on Assignment of Letter of Credit Rights Ineffective

  1. Law
  2. Georgia Code
  3. Commercial Code
  4. Secured Transactions
  5. Rights of Third Parties
  6. Restrictions on Assignment of Letter of Credit Rights Ineffective

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  1. Term or law restricting assignment generally ineffective. A term in a letter of credit or a rule of law, statute, regulation, custom, or practice applicable to the letter of credit which prohibits, restricts, or requires the consent of an applicant, issuer, or nominated person to a beneficiary's assignment of or creation of a security interest in a letter of credit right is ineffective to the extent that the term or rule of law, statute, regulation, custom, or practice:
    1. Would impair the creation, attachment, or perfection of a security interest in the letter of credit right; or
    2. Provides that the assignment, transfer, creation, attachment, or perfection of the security interest may give rise to a default, breach, right of recoupment, claim, defense, termination, right of termination, or remedy under the letter of credit right.
  2. Limitation on ineffectiveness under subsection (a) of this Code section. To the extent that a term in a letter of credit is ineffective under subsection (a) of this Code section but would be effective under law other than this article or a custom or practice applicable to the letter of credit, to the transfer of a right to draw or otherwise demand performance under the letter of credit, or to the assignment of a right to proceeds of the letter of credit, the creation, attachment, or perfection of a security interest in the letter of credit right:
    1. Is not enforceable against the applicant, issuer, nominated person, or transferee beneficiary;
    2. Imposes no duties or obligations on the applicant, issuer, nominated person, or transferee beneficiary; and
    3. Does not require the applicant, issuer, nominated person, or transferee beneficiary to recognize the security interest, pay or render performance to the secured party, or accept payment or other performance from the secured party.

(Code 1981, §11-9-409, enacted by Ga. L. 2001, p. 362, § 1.)

RESEARCH REFERENCES

U.L.A.

- Uniform Commercial Code (U.L.A.) § 9-409.

PART 5 FILING

Cross references.

- Applicability of part to default by buyer of goods sold in "home solicitation sale," as defined in § 10-1-2, § 10-1-10.

Respective rights of buyer, seller, etc., following repossession of motor vehicle sold under retail installment contract, § 10-1-36.

Law reviews.

- For article discussing secured creditors' legal and equitable remedies and debtors' protections under the Uniform Commercial Code, see 3 Ga. L. Rev. 198 (1968). For annual survey of commercial law, see 38 Mercer L. Rev. 85 (1986). For article, "Nonjudicial Foreclosures in Georgia: Fresh Doubts, Issues and Strategies," see 23 Ga. St. B.J. 123 (1987).

JUDICIAL DECISIONS

Prerequisites for deficiency claim allowable under this article.

- O.C.G.A. § 10-1-36 provides cumulative additional rights and remedies which must be fulfilled before any deficiency claim under this former article and former part will lie against a buyer. Georgia Cent. Credit Union v. Coleman, 155 Ga. App. 547, 271 S.E.2d 681 (1980).

RESEARCH REFERENCES

C.J.S.

- 79 C.J.S., Secured Transactions, § 144 et seq.

PART 1 FILING OFFICE; CONTENTS AND EFFECTIVENESS OF FINANCING STATEMENT


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