13 Pa.C.S. § 9409 Restrictions On Assignment of Letter-Of-Credit Rights Ineffective

• Library: Pennsylvania Statutes
• Edition: 2023
• Currency: Current through P.A. Acts 2023-66
• Year: 2023
• Citation: 13 Pa.C.S. § 9409

(a) 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 or the 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.

(b) Limitation on ineffectiveness under subsection (a).--To the extent that a term in a letter of credit is ineffective under subsection (a) but would be effective under law other than this division 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: