This section of the law states that the division can be referred to as the Uniform Commercial Code concerning letters of credit.

This law section provides definitions for key terms related to letters of credit, which are agreements where an issuer (usually a bank) promises to pay a beneficiary when certain conditions are met. An 'adviser' notifies parties about the issuance of a letter of credit. An 'applicant' requests the letter for themselves or someone else and agrees to reimburse the issuer. A 'beneficiary' is the person entitled to payment upon meeting the conditions. 'Confirmer' and 'nominated person' play roles in ensuring payments under these letters. 'Dishonor' occurs when these commitments are not met on time.

Terms such as 'presentation' and 'presenter' detail the process of delivering required documents under the letter's terms. The law also covers what constitutes 'honor' or fulfillment of the credit, defines 'good faith' and 'document', and outlines what happens if a beneficiary's rights are transferred.

This law deals with letters of credit, which are financial instruments used in transactions to guarantee payment. It states that the application of certain rules to letters of credit doesn't imply they apply to other situations not covered by this division. In general, the rules can be changed by agreement, except in specific situations outlined in the law. Importantly, rights and responsibilities related to a letter of credit stand independently from the contracts that may have led to the creation of that letter.

This law explains that various financial instruments, like letters of credit and related documents such as confirmations or amendments, can be legally issued as long as they are in a written form and signed.

This law states that you don't need to give anything of value (consideration) to issue, change, transfer, or cancel a letter of credit, advice, or confirmation.

A letter of credit becomes valid when sent to the intended person or beneficiary, and is only revocable if it explicitly says so. Once issued, any changes or cancellations to a letter of credit don't affect the involved parties unless they agree, unless it's specified as revocable. Without an expiration date, it defaults to expiring one year after issuance. If it's marked as perpetual, it expires five years after issuance.

This law outlines the roles and obligations of different parties involved in a letter of credit. A 'confirmer' is someone who directly supports the letter and has the same responsibilities and rights as the issuer, essentially treating the issuer like a customer. If you're a 'nominated person' who isn't a confirmer, you're not required to pay or fulfill a presentation. Similarly, an 'adviser' can refuse to act, but if they do, they must accurately share the letter terms, and check the authenticity of requests, but they're not liable for their advice being wrong. Lastly, anyone who tells a transferee (the new recipient) about the letter's terms acts like an adviser, even if the terms differ from those given to the original recipient, as long as it's allowed by the letter itself.

This section outlines the rules for an issuer of a letter of credit. The issuer must honor requests that match the credit's terms on face value unless otherwise specified. It has up to seven business days to accept or reject a presentation, or to notify the presenter of any discrepancies. If they don't notify in time, they can't use discrepancies as a reason for rejection, but can still claim fraud, forgery, or expiration. Issuers must follow the standard practices of financial institutions and can't be blamed for factors outside their control or for not knowing trade customs beyond those practices. Non-documentary conditions in a letter of credit are ignored. If refused, documents should either be returned to the presenter or held at their disposal. If accepted, the issuer must be reimbursed and then holds the documents free of other claims, is released from most liabilities and cannot reclaim any money paid by mistake unless specific exceptions apply.

This law deals with situations involving letters of credit, where documents might be forged or fraudulent. If everything on a document looks right but a document is actually fake or fraud would occur by paying, the bank or issuer must still pay if the request comes from someone who acted in good faith, wasn't aware of the forgery, and has certain legitimate claims. In other cases, the issuer can choose to pay or not.

If someone claims a document is fake or fraudulent, a court can stop the issuer from paying if it finds that there's legal support, the parties affected are protected, the legal conditions for relief are met, and it's likely the forgery or fraud claim will succeed. The person requesting payment shouldn't be protected by the rules mentioned before the court can issue such a stop.

This law states that when a letter of credit is presented and accepted, the party benefiting from it (the beneficiary) guarantees two things. First, that there's no fraud or forgery as defined in another legal section. Second, that the transaction doesn’t break any agreements between the parties involved. These guarantees are in addition to other legal promises that apply when documents related to these types of transactions are used or transferred.

This law deals with what happens if someone responsible for a letter of credit, like a bank, doesn't pay when they're supposed to. If they refuse to pay before someone asks for the money, or pay when they shouldn't, the person expecting the money can get back the amount they lost. They can also request the value of what was promised. However, only extra costs that naturally come with the breach can be claimed, not any indirect losses. If costs are avoided, the payout is reduced, and it's on the bank to prove those savings. There's no need to show any documents if the promise is broken early. If someone breaks their promise under the letter of credit, they must pay interest on what they owe from when they were supposed to pay. If you win a lawsuit over this, the loser has to pay for your legal costs. Any damages agreed upon in advance for a potential breach need to be reasonable compared to the expected harm.

This law says that unless a letter of credit states it can be transferred, the person who benefits from it can't transfer their right to receive payment or demand action. If the letter of credit does allow transfers, the bank or issuer can still refuse the transfer if it breaks any laws or if the original or new person involved hasn't met specific requirements listed in the letter or set by the issuer, as long as these requirements are standard or reasonable.

This section addresses how successors of beneficiaries can act on behalf of beneficiaries concerning financial documents or payments. A successor can make changes or accept payments either by using the beneficiary's name or by disclosing their role as a successor. The issuer of the original document doesn't need to check if the successor is legitimate or if their signature is valid. If a successor's actions appear proper, they are generally honored even if the person wasn't the rightful successor. If there's any dispute about rights of reimbursement, the issuer or relevant parties may refuse to accept documentation from a successor. Additionally, if a beneficiary's name changes after a letter of credit is issued, they get the same rights as a successor.

This section clarifies the rules around assigning the right to the proceeds of a letter of credit, which means receiving money or items of value when fulfilling the conditions of the credit. A beneficiary can transfer this right to someone else, but the issuer (the bank or financial institution) must first agree to this assignment. Beneficiaries can do this before they claim the proceeds as long as they meet the credit’s conditions.

The issuer or another nominated party doesn’t have to approve just because an assignment is requested, though they can't unreasonably deny the request if the letter of credit is shown. However, the rights of those who are directly given the proceeds are stronger than anyone who the beneficiary assigns them to. The rules on creating and securing interests in these rights are covered by a separate law, affecting only parties other than the issuer or nominated person.

This law states that if you want to enforce a right or obligation related to a letter of credit, you have one year to start legal action. This countdown starts either from when the letter of credit expires or when the issue (breach) occurs—whichever comes later. It doesn't matter if you didn't know about the breach when it happened.

This section explains how to determine which jurisdiction's laws apply when there's a dispute involving a letter of credit or a similar financial document. The parties can choose the jurisdiction in their agreement, even if it's unrelated to the transaction. If they haven't chosen, the law where the issuer, nominated person, or adviser is located will apply, based on their address.

Banks are treated as separate entities for these purposes; each branch is considered located at its address in the undertaking. Custom rules like the Uniform Customs and Practice for Documentary Credits govern if they are incorporated into the undertaking unless they conflict with non-changeable rules in Section 5103. This section will override conflicting divisions in other laws. Parties can also choose where to settle disputes similarly to selecting the governing law.

This section explains how different parties involved in a letter of credit transaction can gain the rights of the party they reimburse or pay. If a bank (issuer) pays on behalf of a beneficiary, it gets the beneficiary's rights as if it were also responsible for paying the underlying debt. Similarly, if a person or company (applicant) reimburses the bank, they get the bank's rights against others involved, like the beneficiary. If another party (nominated person) pays against a letter of credit, they also obtain certain rights akin to those held by the issuer, beneficiary, and applicant. However, these rights only kick in after the issuer or nominated person has made the payment.

This section explains that when a bank or a similar entity (issuer or nominated person) honors or gives value for a document under a letter of credit, they get a security interest in it.

If they haven't been paid back yet, their security interest stays intact according to specific rules starting in another section of the law.

Firstly, the security interest doesn't require a security agreement to be enforceable. Secondly, if the document isn't in a physical form, the security interest is considered automatically perfected, which means it is legally recognized and protected.

Finally, if the document is on paper and isn't a specific type of legal item, their security interest is also automatically perfected and takes precedence over any other claims on it, as long as the debtor doesn't physically have the document.