State Codes and Statutes

Statutes > Oregon > Vol2 > 075

Chapter 75 — Lettersof Credit

 

2009 EDITION

 

 

LETTERSOF CREDIT

 

COMMERCIALTRANSACTIONS

 

75.1010     Shorttitle

 

75.1020     Definitions

 

75.1030     Applicationof chapter

 

75.1040     Formalrequirements

 

75.1050     Consideration

 

75.1060     Issuance,amendment, cancellation and duration

 

75.1070     Confirmer,nominated person and adviser

 

75.1080     Issuer’srights and obligations

 

75.1090     Fraudand forgery

 

75.1100     Warranties

 

75.1110     Remedies

 

75.1120     Transferof letter of credit

 

75.1130     Successorof beneficiary

 

75.1140     Assignmentof proceeds

 

75.1150     Statuteof limitations

 

75.1160     Choiceof law and forum

 

75.1170     Subrogationof issuer, applicant and nominated person

 

75.1180     Securityinterest of issuer or nominated person

 

      75.010,75.020, 75.030, 75.040, 75.050, 75.060, 75.070, 75.080, 75.090, 75.100, 75.110,75.120, 75.130, 75.140, 75.150, 75,160, 75.170, 75.180, 75.190, 75.200, 75.210,75.220, 75.230, 75.240, 75.250, 75.260, 75.270, 75.280, 75.290, 75.300, 75.310,75.320, 75.330, 75.340, 75.350, 75.360, 75.370, 75.380, 75.390, 75.400, 75.410,75.420, 75.430, 75.440, 75.450, 75.460, 75.470, 75.480, 75.490, 75.500, 75.510,75.520, 75.530, 75.540, 75.550, 75.560, 75.570, 75.580, 75.590, 75.600, 75.610,75.620, 75.630, 75.640, 75.650, 75.660, 75.670, 75.680, 75.690, 75.700, 75.710,75.720, 75.730, 75.740, 75.750, 75.760, 75.770, 75.780 [Repealed by1961 c.726 §427]

 

      75.1010Short title.This chapter may be cited as Uniform Commercial Code–Letters of Credit. [1961c.726 §75.1010]

 

      75.1020Definitions.(1) As used in this chapter:

      (a)“Adviser” means a person who, at the request of the issuer, a confirmer oranother adviser, notifies or requests another adviser to notify the beneficiarythat a letter of credit has been issued, confirmed or amended.

      (b)“Applicant” means a person at whose request or for whose account a letter ofcredit is issued. “Applicant” includes a person who requests that an issuerissue a letter of credit on behalf of another if the person making the requestundertakes an obligation to reimburse the issuer.

      (c)“Beneficiary” means a person who under the terms of a letter of credit isentitled to have its complying presentation honored. “Beneficiary” includes aperson to whom drawing rights have been transferred under a transferable letterof credit.

      (d)“Confirmer” means a nominated person who undertakes, at the request or with theconsent of the issuer, to honor a presentation under a letter of credit issuedby another.

      (e)“Dishonor” of a letter of credit means failure timely to honor or to take aninterim action, such as acceptance of a draft, that may be required by theletter of credit.

      (f)“Document” means a draft or other demand, document of title, investmentsecurity, certificate, invoice or other record, statement or representation offact, law, right or opinion:

      (A)That is presented in a written or other medium permitted by the letter ofcredit or, unless prohibited by the letter of credit, by the standard practicereferred to in ORS 75.1080 (5); and

      (B)That is capable of being examined for compliance with the terms and conditionsof the letter of credit. A document may not be oral.

      (g)“Good faith” means honesty in fact in the conduct of the transaction concerned.

      (h)“Honor” of a letter of credit means performance of the issuer’s undertaking inthe letter of credit to pay or deliver an item of value. Unless the letter ofcredit otherwise provides, “honor” occurs:

      (A)Upon payment;

      (B)If the letter of credit provides for acceptance, upon acceptance of a draftand, at maturity, its payment; or

      (C)If the letter of credit provides for incurring a deferred obligation, uponincurring the obligation and, at maturity, its performance.

      (i)“Issuer” means a bank or other person that issues a letter of credit, but doesnot include an individual who makes an engagement for personal, family orhousehold purposes.

      (j)“Letter of credit” means a definite undertaking that satisfies the requirementsof ORS 75.1040 by an issuer to a beneficiary at the request or for the accountof an applicant or, in the case of a financial institution, to itself or forits own account, to honor a documentary presentation by payment or delivery ofan item of value.

      (k)“Nominated person” means a person whom the issuer:

      (A)Designates or authorizes to pay, accept, negotiate or otherwise give valueunder a letter of credit; and

      (B)Undertakes by agreement or custom and practice to reimburse.

      (L)“Presentation” means delivery of a document to an issuer or nominated personfor honor or giving of value under a letter of credit.

      (m)“Presenter” means a person making a presentation as or on behalf of abeneficiary or nominated person.

      (n)“Record” means information that is inscribed on a tangible medium or that isstored in an electronic or other medium and is retrievable in perceivable form.

      (o)“Successor of a beneficiary” means a person who succeeds to substantially allof the rights of a beneficiary by operation of law, including a corporationwith or into which the beneficiary has been merged or consolidated, an administrator,executor, personal representative, trustee in bankruptcy, debtor in possession,liquidator and receiver.

      (2)Other definitions applying to this chapter and the sections in which theyappear are:

 

      “Acceptance”                                                                    ORS73.0409

      “Value”                                                                             ORS73.0303,

                                                                                                ORS74.2110

 

      (3)ORS chapter 71 contains certain additional general definitions and principlesof construction and interpretation applicable throughout this chapter. [1961c.726 §75.1020; 1997 c.150 §5]

 

      75.1030Application of chapter. (1) This chapter applies to letters of credit andto certain rights and obligations arising out of transactions involving lettersof credit.

      (2)The statement of a rule in this chapter does not by itself require, imply ornegate application of the same or different rule to a situation not providedfor, or to a person not specified in this chapter.

      (3)With the exception of this subsection, subsections (1) and (4) of this sectionand ORS 75.1020 (1)(i) and (j), 75.1060 (4) and 75.1140 (4), and except to theextent prohibited in ORS 71.3020 and 75.1170 (4), the effect of this chaptermay be varied by agreement or by a provision stated or incorporated byreference in an undertaking. A term in an agreement or undertaking generallyexcusing liability or generally limiting remedies for failure to performobligations is not sufficient to vary obligations prescribed by this chapter.

      (4)Rights and obligations of an issuer to a beneficiary or a nominated personunder a letter of credit are independent of the existence, performance ornonperformance of a contract or arrangement out of which the letter of creditarises or which underlies it, including contracts or arrangements between theissuer and the applicant and between the applicant and the beneficiary. [1961c.726 §75.1030; 1993 c.545 §119; 1997 c.150 §6; 2009 c.181 §49]

 

      75.1040Formal requirements.A letter of credit, confirmation, advice, transfer, amendment or cancellationmay be issued in any form that is a record and is authenticated:

      (1)By a signature; or

      (2)In accordance with the agreement of the parties to the standard practicereferred to in ORS 75.1080 (5). [1961 c.726 §75.1040; 1997 c.150 §7]

 

      75.1050Consideration.Consideration is not required to issue, amend, transfer or cancel a letter ofcredit, advice or confirmation. [1961 c.726 §75.1050; 1997 c.150 §8]

 

      75.1060Issuance, amendment, cancellation and duration. (1) A letter ofcredit is issued and becomes enforceable according to its terms against theissuer when the issuer sends or otherwise transmits it to the person requestedto advise or to the beneficiary. A letter of credit is revocable only if it soprovides.

      (2)After a letter of credit is issued, rights and obligations of a beneficiary,applicant, confirmer and issuer are not affected by an amendment orcancellation to which that person has not consented except to the extent theletter of credit provides that it is revocable or that the issuer may amend orcancel the letter of credit without that consent.

      (3)If there is no stated expiration date or other provision that determines itsduration, a letter of credit expires one year after its stated date of issuanceor, if none is stated, one year after the date on which it is issued.

      (4)A letter of credit that states that it is perpetual expires five years afterits stated date of issuance, or if none is stated, five years after the date onwhich it is issued. [1961 c.726 §75.1060; 1997 c.150 §9]

 

      75.1070Confirmer, nominated person and adviser. (1) A confirmer is directly obligatedon a letter of credit and has the rights and obligations of an issuer to theextent of its confirmation. The confirmer also has rights against andobligations to the issuer as if the issuer were an applicant and the confirmerhad issued the letter of credit at the request and for the account of theissuer.

      (2)A nominated person who is not a confirmer is not obligated to honor orotherwise give value for a presentation.

      (3)A person requested to advise may decline to act as an adviser. An adviser thatis not a confirmer is not obligated to honor or give value for a presentation.An adviser undertakes to the issuer and to the beneficiary to advise themaccurately concerning the terms of the letter of credit, confirmation,amendment or advice received by that person and undertakes to the beneficiaryto check the apparent authenticity of the request to advise. Even if the adviceis inaccurate, the letter of credit, confirmation or amendment is enforceableas issued.

      (4)A person who notifies a transferee beneficiary of the terms of a letter ofcredit, confirmation, amendment or advice has the rights and obligations of anadviser under subsection (3) of this section. The terms in the notice to thetransferee beneficiary may differ from the terms in any notice to the transferorbeneficiary to the extent permitted by the letter of credit, confirmation,amendment or advice received by the person who so notifies. [1961 c.726 §75.1070;1997 c.150 §10]

 

      75.1080Issuer’s rights and obligations. (1) Except as provided in ORS 75.1090,an issuer shall honor a presentation that, as determined by the standardpractice referred to in subsection (5) of this section, appears on its facestrictly to comply with the terms and conditions of the letter of credit.Except as provided in ORS 75.1130 and unless otherwise agreed with theapplicant, an issuer shall dishonor a presentation that does not appear tocomply with the terms and conditions of the letter of credit.

      (2)An issuer has a reasonable time after presentation, but not later than the seventhbusiness day after the issuer receives the documents:

      (a)To honor;

      (b)If the letter of credit provides for honor to be completed more than sevenbusiness days after presentation, to accept a draft or incur a deferredobligation; or

      (c)To give notice to the presenter of discrepancies in the presentation.

      (3)Except as otherwise provided in subsection (4) of this section, an issuer isprecluded from asserting as a basis for dishonor:

      (a)Any discrepancy if timely notice is not given; or

      (b)Any discrepancy not stated in the notice if timely notice is given.

      (4)Failure to give the notice specified in subsection (2) of this section or tomention fraud, forgery or expiration in the notice does not preclude the issuerfrom asserting, as a basis for dishonor, fraud or forgery as described in ORS75.1090 (1) or expiration of the letter of credit before presentation.

      (5)An issuer shall observe standard practice of financial institutions thatregularly issue letters of credit. Determination of the issuer’s observance ofthe standard practice is a matter of interpretation for the court. The courtshall offer the parties a reasonable opportunity to present evidence of thestandard practice.

      (6)An issuer is not responsible for:

      (a)The performance or nonperformance of the underlying contract, arrangement, ortransaction;

      (b)An act or omission of another person; or

      (c)Observance or knowledge of the usage of a particular trade other than thestandard practice referred to in subsection (5) of this section.

      (7)If an undertaking constituting a letter of credit under ORS 75.1020 (1)(j)contains nondocumentary conditions, an issuer shall disregard thenondocumentary conditions and treat them as if they were not stated.

      (8)An issuer that has dishonored a presentation shall return the documents or holdthem at the disposal of, and send advice to that effect to, the presenter.

      (9)An issuer that has honored a presentation as permitted or required by thischapter:

      (a)Is entitled to be reimbursed by the applicant in immediately available fundsnot later than the date of its payment of funds;

      (b)Takes the documents free of claims of the beneficiary or presenter;

      (c)Is precluded from asserting a right of recourse on a draft under ORS 73.0414and 73.0415;

      (d)Except as provided in ORS 75.1100 and 75.1170, is precluded from restitution ofmoney paid or other value given by mistake to the extent the mistake concernsdiscrepancies in the documents or tender that are apparent on the face of thepresentation; and

      (e)Is discharged to the extent of its performance under the letter of creditunless the issuer honored a presentation in which a required signature of abeneficiary was forged. [1961 c.726 §75.1080; 1997 c.150 §11]

 

      75.1090Fraud and forgery.(1) If a presentation is made that appears on its face strictly to comply withthe terms and conditions of the letter of credit, but a required document isforged or materially fraudulent, or honor of the presentation would facilitatea material fraud by the beneficiary on the issuer or applicant:

      (a)The issuer shall honor the presentation, if honor is demanded by:

      (A)A nominated person who has given value in good faith and without notice offorgery or material fraud;

      (B)A confirmer who has honored its confirmation in good faith;

      (C)A holder in due course of a draft drawn under the letter of credit that wastaken after acceptance by the issuer or nominated person; or

      (D)An assignee of the issuer’s or nominated person’s deferred obligation that wastaken for value and without notice of forgery or material fraud after theobligation was incurred by the issuer or nominated person; and

      (b)The issuer, acting in good faith, may honor or dishonor the presentation in anyother case.

      (2)If an applicant claims that a required document is forged or materiallyfraudulent or that honor of the presentation would facilitate a material fraudby the beneficiary on the issuer or applicant, a court of competentjurisdiction may temporarily or permanently enjoin the issuer from honoring apresentation or grant similar relief against the issuer or other persons onlyif the court finds that:

      (a)The relief is not prohibited under the law applicable to an accepted draft ordeferred obligation incurred by the issuer;

      (b)A beneficiary, issuer or nominated person who may be adversely affected isadequately protected against loss that it may suffer because the relief isgranted;

      (c)All of the conditions to entitle a person to the relief under the law of thisstate have been met; and

      (d)On the basis of the information submitted to the court, the applicant is morelikely than not to succeed under its claim of forgery or material fraud and theperson demanding honor does not qualify for protection under subsection (1)(a)of this section. [1961 c.726 §75.1090; 1997 c.150 §12]

 

      75.1100Warranties.(1) If its presentation is honored, the beneficiary warrants:

      (a)To the issuer, any other person to whom presentation is made and to theapplicant that there is no fraud or forgery of the kind described in ORS75.1090 (1); and

      (b)To the applicant that the drawing does not violate any agreement between theapplicant and beneficiary or any other agreement intended by them to beaugmented by the letter of credit.

      (2)The warranties in subsection (1) of this section are in addition to warrantiesarising under ORS chapters 73, 74, 77 and 78 because of the presentation ortransfer of documents covered by ORS chapters 73, 74, 77 and 78. [1961 c.726 §75.1100;1997 c.150 §13]

 

      75.1110Remedies.(1) If an issuer wrongfully dishonors or repudiates its obligation to pay moneyunder a letter of credit before presentation, the beneficiary, successor ornominated person presenting on its own behalf may recover from the issuer theamount that is the subject of the dishonor or repudiation. If the issuer’sobligation under the letter of credit is not for the payment of money, theclaimant may obtain specific performance or, at the claimant’s election,recover an amount equal to the value of performance from the issuer. In eithercase, the claimant may also recover incidental but not consequential damages.The claimant is not obligated to take action to avoid damages that might be duefrom the issuer under this subsection. If, although not obligated to do so, theclaimant avoids damages, the claimant’s recovery from the issuer must bereduced by the amount of damages avoided. The issuer has the burden of provingthe amount of damages avoided. In the case of repudiation, the claimant neednot present any document.

      (2)If an issuer wrongfully dishonors a draft or demand presented under a letter ofcredit or honors a draft or demand in breach of its obligation to theapplicant, the applicant may recover damages resulting from the breach,including incidental but not consequential damages, less any amount saved as aresult of the breach.

      (3)If an adviser or nominated person other than a confirmer breaches an obligationunder this section or an issuer breaches an obligation not covered insubsection (1) or (2) of this section, a person to whom the obligation is owedmay recover damages resulting from the breach, including incidental but notconsequential damages, less any amount saved as a result of the breach. To theextent of the confirmation, a confirmer has the liability of an issuerspecified in this subsection and subsections (1) and (2) of this section.

      (4)An issuer, nominated person or adviser who is found liable under subsection(1), (2) or (3) of this section shall pay interest on the amount owed thereunderfrom the date of wrongful dishonor or other appropriate date.

      (5)Reasonable attorney fees and other expenses of litigation shall be awarded tothe prevailing party in an action in which a remedy is sought under thissection.

      (6)Damages that would otherwise be payable by a party for breach of an obligationunder this section may be liquidated by agreement or undertaking, but only inan amount or by a formula that is reasonable in light of the harm anticipated. [1961c.726 §75.1110; 1997 c.150 §14]

 

      75.1120Transfer of letter of credit. (1) Except as provided in ORS 75.1130,unless a letter of credit provides that it is transferable, the right of abeneficiary to draw or otherwise demand performance under a letter of creditmay not be transferred.

      (2)Even if a letter of credit provides that it is transferable, the issuer mayrefuse to recognize or carry out a transfer if:

      (a)The transfer would violate applicable law; or

      (b)The transferor or transferee has failed to comply with any requirement statedin the letter of credit or any other requirement relating to transfer imposedby the issuer that is within the standard practice referred to in ORS 75.1080(5) or is otherwise reasonable under the circumstances. [1961 c.726 §75.1120;1997 c.150 §15]

 

      75.1130Successor of beneficiary. (1) A successor of a beneficiary may consent toamendments, sign and present documents and receive payment or other items ofvalue in the name of the beneficiary without disclosing its status as asuccessor.

      (2)A successor of a beneficiary may consent to amendments, sign and presentdocuments and receive payment or other items of value in its own name as thedisclosed successor of the beneficiary. Except as provided in subsection (5) ofthis section, an issuer shall recognize a disclosed successor of a beneficiaryas beneficiary in full substitution for its predecessor upon compliance withthe requirements for recognition by the issuer of a transfer of drawing rightsby operation of law under the standard practice referred to in ORS 75.1080 (5)or, in the absence of such a practice, compliance with other reasonableprocedures sufficient to protect the issuer.

      (3)An issuer is not obliged to determine whether a purported successor is asuccessor of a beneficiary or whether the signature of a purported successor isgenuine or authorized.

      (4)Honor of a purported successor’s apparently complying presentation undersubsection (1) or (2) of this section has the consequences specified in ORS75.1080 (9) even if the purported successor is not the successor of abeneficiary. Documents signed in the name of the beneficiary or of a disclosedsuccessor by a person who is neither the beneficiary nor the successor of thebeneficiary are forged documents for the purposes of ORS 75.1090.

      (5)An issuer whose rights of reimbursement are not covered by subsection (4) ofthis section or substantially similar law and any confirmer or nominated personmay decline to recognize a presentation under subsection (2) of this section.

      (6)A beneficiary whose name is changed after the issuance of a letter of credithas the same rights and obligations as a successor of a beneficiary under thissection. [1961 c.726 §75.1130; 1997 c.150 §16]

 

      75.1140Assignment of proceeds. (1) As used in this section, “proceeds of a letterof credit” means the cash, check, accepted draft or other item of value paid ordelivered upon honor or giving of value by the issuer or any nominated personunder the letter of credit. “Proceeds of a letter of credit” does not include abeneficiary’s drawing rights or documents presented by the beneficiary.

      (2)A beneficiary may assign its right to part or all of the proceeds of a letterof credit. The beneficiary may do so before presentation as a presentassignment of its right to receive proceeds contingent upon its compliance withthe terms and conditions of the letter of credit.

      (3)An issuer or nominated person need not recognize an assignment of proceeds of aletter of credit until it consents to the assignment.

      (4)An issuer or nominated person has no obligation to give or withhold its consentto an assignment of proceeds of a letter of credit, but consent may not beunreasonably withheld if the assignee possesses and exhibits the letter ofcredit and presentation of the letter of credit is a condition to honor.

      (5)Rights of a transferee beneficiary or nominated person are independent of thebeneficiary’s assignment of the proceeds of a letter of credit and are superiorto the assignee’s right to the proceeds.

      (6)Neither the rights recognized by this section between an assignee and anissuer, transferee beneficiary or nominated person nor the issuer’s ornominated person’s payment of proceeds of a letter of credit to an assignee ora third person affect the rights between the assignee and any person other thanth

State Codes and Statutes

Statutes > Oregon > Vol2 > 075

Chapter 75 — Lettersof Credit

 

2009 EDITION

 

 

LETTERSOF CREDIT

 

COMMERCIALTRANSACTIONS

 

75.1010     Shorttitle

 

75.1020     Definitions

 

75.1030     Applicationof chapter

 

75.1040     Formalrequirements

 

75.1050     Consideration

 

75.1060     Issuance,amendment, cancellation and duration

 

75.1070     Confirmer,nominated person and adviser

 

75.1080     Issuer’srights and obligations

 

75.1090     Fraudand forgery

 

75.1100     Warranties

 

75.1110     Remedies

 

75.1120     Transferof letter of credit

 

75.1130     Successorof beneficiary

 

75.1140     Assignmentof proceeds

 

75.1150     Statuteof limitations

 

75.1160     Choiceof law and forum

 

75.1170     Subrogationof issuer, applicant and nominated person

 

75.1180     Securityinterest of issuer or nominated person

 

      75.010,75.020, 75.030, 75.040, 75.050, 75.060, 75.070, 75.080, 75.090, 75.100, 75.110,75.120, 75.130, 75.140, 75.150, 75,160, 75.170, 75.180, 75.190, 75.200, 75.210,75.220, 75.230, 75.240, 75.250, 75.260, 75.270, 75.280, 75.290, 75.300, 75.310,75.320, 75.330, 75.340, 75.350, 75.360, 75.370, 75.380, 75.390, 75.400, 75.410,75.420, 75.430, 75.440, 75.450, 75.460, 75.470, 75.480, 75.490, 75.500, 75.510,75.520, 75.530, 75.540, 75.550, 75.560, 75.570, 75.580, 75.590, 75.600, 75.610,75.620, 75.630, 75.640, 75.650, 75.660, 75.670, 75.680, 75.690, 75.700, 75.710,75.720, 75.730, 75.740, 75.750, 75.760, 75.770, 75.780 [Repealed by1961 c.726 §427]

 

      75.1010Short title.This chapter may be cited as Uniform Commercial Code–Letters of Credit. [1961c.726 §75.1010]

 

      75.1020Definitions.(1) As used in this chapter:

      (a)“Adviser” means a person who, at the request of the issuer, a confirmer oranother adviser, notifies or requests another adviser to notify the beneficiarythat a letter of credit has been issued, confirmed or amended.

      (b)“Applicant” means a person at whose request or for whose account a letter ofcredit is issued. “Applicant” includes a person who requests that an issuerissue a letter of credit on behalf of another if the person making the requestundertakes an obligation to reimburse the issuer.

      (c)“Beneficiary” means a person who under the terms of a letter of credit isentitled to have its complying presentation honored. “Beneficiary” includes aperson to whom drawing rights have been transferred under a transferable letterof credit.

      (d)“Confirmer” means a nominated person who undertakes, at the request or with theconsent of the issuer, to honor a presentation under a letter of credit issuedby another.

      (e)“Dishonor” of a letter of credit means failure timely to honor or to take aninterim action, such as acceptance of a draft, that may be required by theletter of credit.

      (f)“Document” means a draft or other demand, document of title, investmentsecurity, certificate, invoice or other record, statement or representation offact, law, right or opinion:

      (A)That is presented in a written or other medium permitted by the letter ofcredit or, unless prohibited by the letter of credit, by the standard practicereferred to in ORS 75.1080 (5); and

      (B)That is capable of being examined for compliance with the terms and conditionsof the letter of credit. A document may not be oral.

      (g)“Good faith” means honesty in fact in the conduct of the transaction concerned.

      (h)“Honor” of a letter of credit means performance of the issuer’s undertaking inthe letter of credit to pay or deliver an item of value. Unless the letter ofcredit otherwise provides, “honor” occurs:

      (A)Upon payment;

      (B)If the letter of credit provides for acceptance, upon acceptance of a draftand, at maturity, its payment; or

      (C)If the letter of credit provides for incurring a deferred obligation, uponincurring the obligation and, at maturity, its performance.

      (i)“Issuer” means a bank or other person that issues a letter of credit, but doesnot include an individual who makes an engagement for personal, family orhousehold purposes.

      (j)“Letter of credit” means a definite undertaking that satisfies the requirementsof ORS 75.1040 by an issuer to a beneficiary at the request or for the accountof an applicant or, in the case of a financial institution, to itself or forits own account, to honor a documentary presentation by payment or delivery ofan item of value.

      (k)“Nominated person” means a person whom the issuer:

      (A)Designates or authorizes to pay, accept, negotiate or otherwise give valueunder a letter of credit; and

      (B)Undertakes by agreement or custom and practice to reimburse.

      (L)“Presentation” means delivery of a document to an issuer or nominated personfor honor or giving of value under a letter of credit.

      (m)“Presenter” means a person making a presentation as or on behalf of abeneficiary or nominated person.

      (n)“Record” means information that is inscribed on a tangible medium or that isstored in an electronic or other medium and is retrievable in perceivable form.

      (o)“Successor of a beneficiary” means a person who succeeds to substantially allof the rights of a beneficiary by operation of law, including a corporationwith or into which the beneficiary has been merged or consolidated, an administrator,executor, personal representative, trustee in bankruptcy, debtor in possession,liquidator and receiver.

      (2)Other definitions applying to this chapter and the sections in which theyappear are:

 

      “Acceptance”                                                                    ORS73.0409

      “Value”                                                                             ORS73.0303,

                                                                                                ORS74.2110

 

      (3)ORS chapter 71 contains certain additional general definitions and principlesof construction and interpretation applicable throughout this chapter. [1961c.726 §75.1020; 1997 c.150 §5]

 

      75.1030Application of chapter. (1) This chapter applies to letters of credit andto certain rights and obligations arising out of transactions involving lettersof credit.

      (2)The statement of a rule in this chapter does not by itself require, imply ornegate application of the same or different rule to a situation not providedfor, or to a person not specified in this chapter.

      (3)With the exception of this subsection, subsections (1) and (4) of this sectionand ORS 75.1020 (1)(i) and (j), 75.1060 (4) and 75.1140 (4), and except to theextent prohibited in ORS 71.3020 and 75.1170 (4), the effect of this chaptermay be varied by agreement or by a provision stated or incorporated byreference in an undertaking. A term in an agreement or undertaking generallyexcusing liability or generally limiting remedies for failure to performobligations is not sufficient to vary obligations prescribed by this chapter.

      (4)Rights and obligations of an issuer to a beneficiary or a nominated personunder a letter of credit are independent of the existence, performance ornonperformance of a contract or arrangement out of which the letter of creditarises or which underlies it, including contracts or arrangements between theissuer and the applicant and between the applicant and the beneficiary. [1961c.726 §75.1030; 1993 c.545 §119; 1997 c.150 §6; 2009 c.181 §49]

 

      75.1040Formal requirements.A letter of credit, confirmation, advice, transfer, amendment or cancellationmay be issued in any form that is a record and is authenticated:

      (1)By a signature; or

      (2)In accordance with the agreement of the parties to the standard practicereferred to in ORS 75.1080 (5). [1961 c.726 §75.1040; 1997 c.150 §7]

 

      75.1050Consideration.Consideration is not required to issue, amend, transfer or cancel a letter ofcredit, advice or confirmation. [1961 c.726 §75.1050; 1997 c.150 §8]

 

      75.1060Issuance, amendment, cancellation and duration. (1) A letter ofcredit is issued and becomes enforceable according to its terms against theissuer when the issuer sends or otherwise transmits it to the person requestedto advise or to the beneficiary. A letter of credit is revocable only if it soprovides.

      (2)After a letter of credit is issued, rights and obligations of a beneficiary,applicant, confirmer and issuer are not affected by an amendment orcancellation to which that person has not consented except to the extent theletter of credit provides that it is revocable or that the issuer may amend orcancel the letter of credit without that consent.

      (3)If there is no stated expiration date or other provision that determines itsduration, a letter of credit expires one year after its stated date of issuanceor, if none is stated, one year after the date on which it is issued.

      (4)A letter of credit that states that it is perpetual expires five years afterits stated date of issuance, or if none is stated, five years after the date onwhich it is issued. [1961 c.726 §75.1060; 1997 c.150 §9]

 

      75.1070Confirmer, nominated person and adviser. (1) A confirmer is directly obligatedon a letter of credit and has the rights and obligations of an issuer to theextent of its confirmation. The confirmer also has rights against andobligations to the issuer as if the issuer were an applicant and the confirmerhad issued the letter of credit at the request and for the account of theissuer.

      (2)A nominated person who is not a confirmer is not obligated to honor orotherwise give value for a presentation.

      (3)A person requested to advise may decline to act as an adviser. An adviser thatis not a confirmer is not obligated to honor or give value for a presentation.An adviser undertakes to the issuer and to the beneficiary to advise themaccurately concerning the terms of the letter of credit, confirmation,amendment or advice received by that person and undertakes to the beneficiaryto check the apparent authenticity of the request to advise. Even if the adviceis inaccurate, the letter of credit, confirmation or amendment is enforceableas issued.

      (4)A person who notifies a transferee beneficiary of the terms of a letter ofcredit, confirmation, amendment or advice has the rights and obligations of anadviser under subsection (3) of this section. The terms in the notice to thetransferee beneficiary may differ from the terms in any notice to the transferorbeneficiary to the extent permitted by the letter of credit, confirmation,amendment or advice received by the person who so notifies. [1961 c.726 §75.1070;1997 c.150 §10]

 

      75.1080Issuer’s rights and obligations. (1) Except as provided in ORS 75.1090,an issuer shall honor a presentation that, as determined by the standardpractice referred to in subsection (5) of this section, appears on its facestrictly to comply with the terms and conditions of the letter of credit.Except as provided in ORS 75.1130 and unless otherwise agreed with theapplicant, an issuer shall dishonor a presentation that does not appear tocomply with the terms and conditions of the letter of credit.

      (2)An issuer has a reasonable time after presentation, but not later than the seventhbusiness day after the issuer receives the documents:

      (a)To honor;

      (b)If the letter of credit provides for honor to be completed more than sevenbusiness days after presentation, to accept a draft or incur a deferredobligation; or

      (c)To give notice to the presenter of discrepancies in the presentation.

      (3)Except as otherwise provided in subsection (4) of this section, an issuer isprecluded from asserting as a basis for dishonor:

      (a)Any discrepancy if timely notice is not given; or

      (b)Any discrepancy not stated in the notice if timely notice is given.

      (4)Failure to give the notice specified in subsection (2) of this section or tomention fraud, forgery or expiration in the notice does not preclude the issuerfrom asserting, as a basis for dishonor, fraud or forgery as described in ORS75.1090 (1) or expiration of the letter of credit before presentation.

      (5)An issuer shall observe standard practice of financial institutions thatregularly issue letters of credit. Determination of the issuer’s observance ofthe standard practice is a matter of interpretation for the court. The courtshall offer the parties a reasonable opportunity to present evidence of thestandard practice.

      (6)An issuer is not responsible for:

      (a)The performance or nonperformance of the underlying contract, arrangement, ortransaction;

      (b)An act or omission of another person; or

      (c)Observance or knowledge of the usage of a particular trade other than thestandard practice referred to in subsection (5) of this section.

      (7)If an undertaking constituting a letter of credit under ORS 75.1020 (1)(j)contains nondocumentary conditions, an issuer shall disregard thenondocumentary conditions and treat them as if they were not stated.

      (8)An issuer that has dishonored a presentation shall return the documents or holdthem at the disposal of, and send advice to that effect to, the presenter.

      (9)An issuer that has honored a presentation as permitted or required by thischapter:

      (a)Is entitled to be reimbursed by the applicant in immediately available fundsnot later than the date of its payment of funds;

      (b)Takes the documents free of claims of the beneficiary or presenter;

      (c)Is precluded from asserting a right of recourse on a draft under ORS 73.0414and 73.0415;

      (d)Except as provided in ORS 75.1100 and 75.1170, is precluded from restitution ofmoney paid or other value given by mistake to the extent the mistake concernsdiscrepancies in the documents or tender that are apparent on the face of thepresentation; and

      (e)Is discharged to the extent of its performance under the letter of creditunless the issuer honored a presentation in which a required signature of abeneficiary was forged. [1961 c.726 §75.1080; 1997 c.150 §11]

 

      75.1090Fraud and forgery.(1) If a presentation is made that appears on its face strictly to comply withthe terms and conditions of the letter of credit, but a required document isforged or materially fraudulent, or honor of the presentation would facilitatea material fraud by the beneficiary on the issuer or applicant:

      (a)The issuer shall honor the presentation, if honor is demanded by:

      (A)A nominated person who has given value in good faith and without notice offorgery or material fraud;

      (B)A confirmer who has honored its confirmation in good faith;

      (C)A holder in due course of a draft drawn under the letter of credit that wastaken after acceptance by the issuer or nominated person; or

      (D)An assignee of the issuer’s or nominated person’s deferred obligation that wastaken for value and without notice of forgery or material fraud after theobligation was incurred by the issuer or nominated person; and

      (b)The issuer, acting in good faith, may honor or dishonor the presentation in anyother case.

      (2)If an applicant claims that a required document is forged or materiallyfraudulent or that honor of the presentation would facilitate a material fraudby the beneficiary on the issuer or applicant, a court of competentjurisdiction may temporarily or permanently enjoin the issuer from honoring apresentation or grant similar relief against the issuer or other persons onlyif the court finds that:

      (a)The relief is not prohibited under the law applicable to an accepted draft ordeferred obligation incurred by the issuer;

      (b)A beneficiary, issuer or nominated person who may be adversely affected isadequately protected against loss that it may suffer because the relief isgranted;

      (c)All of the conditions to entitle a person to the relief under the law of thisstate have been met; and

      (d)On the basis of the information submitted to the court, the applicant is morelikely than not to succeed under its claim of forgery or material fraud and theperson demanding honor does not qualify for protection under subsection (1)(a)of this section. [1961 c.726 §75.1090; 1997 c.150 §12]

 

      75.1100Warranties.(1) If its presentation is honored, the beneficiary warrants:

      (a)To the issuer, any other person to whom presentation is made and to theapplicant that there is no fraud or forgery of the kind described in ORS75.1090 (1); and

      (b)To the applicant that the drawing does not violate any agreement between theapplicant and beneficiary or any other agreement intended by them to beaugmented by the letter of credit.

      (2)The warranties in subsection (1) of this section are in addition to warrantiesarising under ORS chapters 73, 74, 77 and 78 because of the presentation ortransfer of documents covered by ORS chapters 73, 74, 77 and 78. [1961 c.726 §75.1100;1997 c.150 §13]

 

      75.1110Remedies.(1) If an issuer wrongfully dishonors or repudiates its obligation to pay moneyunder a letter of credit before presentation, the beneficiary, successor ornominated person presenting on its own behalf may recover from the issuer theamount that is the subject of the dishonor or repudiation. If the issuer’sobligation under the letter of credit is not for the payment of money, theclaimant may obtain specific performance or, at the claimant’s election,recover an amount equal to the value of performance from the issuer. In eithercase, the claimant may also recover incidental but not consequential damages.The claimant is not obligated to take action to avoid damages that might be duefrom the issuer under this subsection. If, although not obligated to do so, theclaimant avoids damages, the claimant’s recovery from the issuer must bereduced by the amount of damages avoided. The issuer has the burden of provingthe amount of damages avoided. In the case of repudiation, the claimant neednot present any document.

      (2)If an issuer wrongfully dishonors a draft or demand presented under a letter ofcredit or honors a draft or demand in breach of its obligation to theapplicant, the applicant may recover damages resulting from the breach,including incidental but not consequential damages, less any amount saved as aresult of the breach.

      (3)If an adviser or nominated person other than a confirmer breaches an obligationunder this section or an issuer breaches an obligation not covered insubsection (1) or (2) of this section, a person to whom the obligation is owedmay recover damages resulting from the breach, including incidental but notconsequential damages, less any amount saved as a result of the breach. To theextent of the confirmation, a confirmer has the liability of an issuerspecified in this subsection and subsections (1) and (2) of this section.

      (4)An issuer, nominated person or adviser who is found liable under subsection(1), (2) or (3) of this section shall pay interest on the amount owed thereunderfrom the date of wrongful dishonor or other appropriate date.

      (5)Reasonable attorney fees and other expenses of litigation shall be awarded tothe prevailing party in an action in which a remedy is sought under thissection.

      (6)Damages that would otherwise be payable by a party for breach of an obligationunder this section may be liquidated by agreement or undertaking, but only inan amount or by a formula that is reasonable in light of the harm anticipated. [1961c.726 §75.1110; 1997 c.150 §14]

 

      75.1120Transfer of letter of credit. (1) Except as provided in ORS 75.1130,unless a letter of credit provides that it is transferable, the right of abeneficiary to draw or otherwise demand performance under a letter of creditmay not be transferred.

      (2)Even if a letter of credit provides that it is transferable, the issuer mayrefuse to recognize or carry out a transfer if:

      (a)The transfer would violate applicable law; or

      (b)The transferor or transferee has failed to comply with any requirement statedin the letter of credit or any other requirement relating to transfer imposedby the issuer that is within the standard practice referred to in ORS 75.1080(5) or is otherwise reasonable under the circumstances. [1961 c.726 §75.1120;1997 c.150 §15]

 

      75.1130Successor of beneficiary. (1) A successor of a beneficiary may consent toamendments, sign and present documents and receive payment or other items ofvalue in the name of the beneficiary without disclosing its status as asuccessor.

      (2)A successor of a beneficiary may consent to amendments, sign and presentdocuments and receive payment or other items of value in its own name as thedisclosed successor of the beneficiary. Except as provided in subsection (5) ofthis section, an issuer shall recognize a disclosed successor of a beneficiaryas beneficiary in full substitution for its predecessor upon compliance withthe requirements for recognition by the issuer of a transfer of drawing rightsby operation of law under the standard practice referred to in ORS 75.1080 (5)or, in the absence of such a practice, compliance with other reasonableprocedures sufficient to protect the issuer.

      (3)An issuer is not obliged to determine whether a purported successor is asuccessor of a beneficiary or whether the signature of a purported successor isgenuine or authorized.

      (4)Honor of a purported successor’s apparently complying presentation undersubsection (1) or (2) of this section has the consequences specified in ORS75.1080 (9) even if the purported successor is not the successor of abeneficiary. Documents signed in the name of the beneficiary or of a disclosedsuccessor by a person who is neither the beneficiary nor the successor of thebeneficiary are forged documents for the purposes of ORS 75.1090.

      (5)An issuer whose rights of reimbursement are not covered by subsection (4) ofthis section or substantially similar law and any confirmer or nominated personmay decline to recognize a presentation under subsection (2) of this section.

      (6)A beneficiary whose name is changed after the issuance of a letter of credithas the same rights and obligations as a successor of a beneficiary under thissection. [1961 c.726 §75.1130; 1997 c.150 §16]

 

      75.1140Assignment of proceeds. (1) As used in this section, “proceeds of a letterof credit” means the cash, check, accepted draft or other item of value paid ordelivered upon honor or giving of value by the issuer or any nominated personunder the letter of credit. “Proceeds of a letter of credit” does not include abeneficiary’s drawing rights or documents presented by the beneficiary.

      (2)A beneficiary may assign its right to part or all of the proceeds of a letterof credit. The beneficiary may do so before presentation as a presentassignment of its right to receive proceeds contingent upon its compliance withthe terms and conditions of the letter of credit.

      (3)An issuer or nominated person need not recognize an assignment of proceeds of aletter of credit until it consents to the assignment.

      (4)An issuer or nominated person has no obligation to give or withhold its consentto an assignment of proceeds of a letter of credit, but consent may not beunreasonably withheld if the assignee possesses and exhibits the letter ofcredit and presentation of the letter of credit is a condition to honor.

      (5)Rights of a transferee beneficiary or nominated person are independent of thebeneficiary’s assignment of the proceeds of a letter of credit and are superiorto the assignee’s right to the proceeds.

      (6)Neither the rights recognized by this section between an assignee and anissuer, transferee beneficiary or nominated person nor the issuer’s ornominated person’s payment of proceeds of a letter of credit to an assignee ora third person affect the rights between the assignee and any person other thanth


State Codes and Statutes

State Codes and Statutes

Statutes > Oregon > Vol2 > 075

Chapter 75 — Lettersof Credit

 

2009 EDITION

 

 

LETTERSOF CREDIT

 

COMMERCIALTRANSACTIONS

 

75.1010     Shorttitle

 

75.1020     Definitions

 

75.1030     Applicationof chapter

 

75.1040     Formalrequirements

 

75.1050     Consideration

 

75.1060     Issuance,amendment, cancellation and duration

 

75.1070     Confirmer,nominated person and adviser

 

75.1080     Issuer’srights and obligations

 

75.1090     Fraudand forgery

 

75.1100     Warranties

 

75.1110     Remedies

 

75.1120     Transferof letter of credit

 

75.1130     Successorof beneficiary

 

75.1140     Assignmentof proceeds

 

75.1150     Statuteof limitations

 

75.1160     Choiceof law and forum

 

75.1170     Subrogationof issuer, applicant and nominated person

 

75.1180     Securityinterest of issuer or nominated person

 

      75.010,75.020, 75.030, 75.040, 75.050, 75.060, 75.070, 75.080, 75.090, 75.100, 75.110,75.120, 75.130, 75.140, 75.150, 75,160, 75.170, 75.180, 75.190, 75.200, 75.210,75.220, 75.230, 75.240, 75.250, 75.260, 75.270, 75.280, 75.290, 75.300, 75.310,75.320, 75.330, 75.340, 75.350, 75.360, 75.370, 75.380, 75.390, 75.400, 75.410,75.420, 75.430, 75.440, 75.450, 75.460, 75.470, 75.480, 75.490, 75.500, 75.510,75.520, 75.530, 75.540, 75.550, 75.560, 75.570, 75.580, 75.590, 75.600, 75.610,75.620, 75.630, 75.640, 75.650, 75.660, 75.670, 75.680, 75.690, 75.700, 75.710,75.720, 75.730, 75.740, 75.750, 75.760, 75.770, 75.780 [Repealed by1961 c.726 §427]

 

      75.1010Short title.This chapter may be cited as Uniform Commercial Code–Letters of Credit. [1961c.726 §75.1010]

 

      75.1020Definitions.(1) As used in this chapter:

      (a)“Adviser” means a person who, at the request of the issuer, a confirmer oranother adviser, notifies or requests another adviser to notify the beneficiarythat a letter of credit has been issued, confirmed or amended.

      (b)“Applicant” means a person at whose request or for whose account a letter ofcredit is issued. “Applicant” includes a person who requests that an issuerissue a letter of credit on behalf of another if the person making the requestundertakes an obligation to reimburse the issuer.

      (c)“Beneficiary” means a person who under the terms of a letter of credit isentitled to have its complying presentation honored. “Beneficiary” includes aperson to whom drawing rights have been transferred under a transferable letterof credit.

      (d)“Confirmer” means a nominated person who undertakes, at the request or with theconsent of the issuer, to honor a presentation under a letter of credit issuedby another.

      (e)“Dishonor” of a letter of credit means failure timely to honor or to take aninterim action, such as acceptance of a draft, that may be required by theletter of credit.

      (f)“Document” means a draft or other demand, document of title, investmentsecurity, certificate, invoice or other record, statement or representation offact, law, right or opinion:

      (A)That is presented in a written or other medium permitted by the letter ofcredit or, unless prohibited by the letter of credit, by the standard practicereferred to in ORS 75.1080 (5); and

      (B)That is capable of being examined for compliance with the terms and conditionsof the letter of credit. A document may not be oral.

      (g)“Good faith” means honesty in fact in the conduct of the transaction concerned.

      (h)“Honor” of a letter of credit means performance of the issuer’s undertaking inthe letter of credit to pay or deliver an item of value. Unless the letter ofcredit otherwise provides, “honor” occurs:

      (A)Upon payment;

      (B)If the letter of credit provides for acceptance, upon acceptance of a draftand, at maturity, its payment; or

      (C)If the letter of credit provides for incurring a deferred obligation, uponincurring the obligation and, at maturity, its performance.

      (i)“Issuer” means a bank or other person that issues a letter of credit, but doesnot include an individual who makes an engagement for personal, family orhousehold purposes.

      (j)“Letter of credit” means a definite undertaking that satisfies the requirementsof ORS 75.1040 by an issuer to a beneficiary at the request or for the accountof an applicant or, in the case of a financial institution, to itself or forits own account, to honor a documentary presentation by payment or delivery ofan item of value.

      (k)“Nominated person” means a person whom the issuer:

      (A)Designates or authorizes to pay, accept, negotiate or otherwise give valueunder a letter of credit; and

      (B)Undertakes by agreement or custom and practice to reimburse.

      (L)“Presentation” means delivery of a document to an issuer or nominated personfor honor or giving of value under a letter of credit.

      (m)“Presenter” means a person making a presentation as or on behalf of abeneficiary or nominated person.

      (n)“Record” means information that is inscribed on a tangible medium or that isstored in an electronic or other medium and is retrievable in perceivable form.

      (o)“Successor of a beneficiary” means a person who succeeds to substantially allof the rights of a beneficiary by operation of law, including a corporationwith or into which the beneficiary has been merged or consolidated, an administrator,executor, personal representative, trustee in bankruptcy, debtor in possession,liquidator and receiver.

      (2)Other definitions applying to this chapter and the sections in which theyappear are:

 

      “Acceptance”                                                                    ORS73.0409

      “Value”                                                                             ORS73.0303,

                                                                                                ORS74.2110

 

      (3)ORS chapter 71 contains certain additional general definitions and principlesof construction and interpretation applicable throughout this chapter. [1961c.726 §75.1020; 1997 c.150 §5]

 

      75.1030Application of chapter. (1) This chapter applies to letters of credit andto certain rights and obligations arising out of transactions involving lettersof credit.

      (2)The statement of a rule in this chapter does not by itself require, imply ornegate application of the same or different rule to a situation not providedfor, or to a person not specified in this chapter.

      (3)With the exception of this subsection, subsections (1) and (4) of this sectionand ORS 75.1020 (1)(i) and (j), 75.1060 (4) and 75.1140 (4), and except to theextent prohibited in ORS 71.3020 and 75.1170 (4), the effect of this chaptermay be varied by agreement or by a provision stated or incorporated byreference in an undertaking. A term in an agreement or undertaking generallyexcusing liability or generally limiting remedies for failure to performobligations is not sufficient to vary obligations prescribed by this chapter.

      (4)Rights and obligations of an issuer to a beneficiary or a nominated personunder a letter of credit are independent of the existence, performance ornonperformance of a contract or arrangement out of which the letter of creditarises or which underlies it, including contracts or arrangements between theissuer and the applicant and between the applicant and the beneficiary. [1961c.726 §75.1030; 1993 c.545 §119; 1997 c.150 §6; 2009 c.181 §49]

 

      75.1040Formal requirements.A letter of credit, confirmation, advice, transfer, amendment or cancellationmay be issued in any form that is a record and is authenticated:

      (1)By a signature; or

      (2)In accordance with the agreement of the parties to the standard practicereferred to in ORS 75.1080 (5). [1961 c.726 §75.1040; 1997 c.150 §7]

 

      75.1050Consideration.Consideration is not required to issue, amend, transfer or cancel a letter ofcredit, advice or confirmation. [1961 c.726 §75.1050; 1997 c.150 §8]

 

      75.1060Issuance, amendment, cancellation and duration. (1) A letter ofcredit is issued and becomes enforceable according to its terms against theissuer when the issuer sends or otherwise transmits it to the person requestedto advise or to the beneficiary. A letter of credit is revocable only if it soprovides.

      (2)After a letter of credit is issued, rights and obligations of a beneficiary,applicant, confirmer and issuer are not affected by an amendment orcancellation to which that person has not consented except to the extent theletter of credit provides that it is revocable or that the issuer may amend orcancel the letter of credit without that consent.

      (3)If there is no stated expiration date or other provision that determines itsduration, a letter of credit expires one year after its stated date of issuanceor, if none is stated, one year after the date on which it is issued.

      (4)A letter of credit that states that it is perpetual expires five years afterits stated date of issuance, or if none is stated, five years after the date onwhich it is issued. [1961 c.726 §75.1060; 1997 c.150 §9]

 

      75.1070Confirmer, nominated person and adviser. (1) A confirmer is directly obligatedon a letter of credit and has the rights and obligations of an issuer to theextent of its confirmation. The confirmer also has rights against andobligations to the issuer as if the issuer were an applicant and the confirmerhad issued the letter of credit at the request and for the account of theissuer.

      (2)A nominated person who is not a confirmer is not obligated to honor orotherwise give value for a presentation.

      (3)A person requested to advise may decline to act as an adviser. An adviser thatis not a confirmer is not obligated to honor or give value for a presentation.An adviser undertakes to the issuer and to the beneficiary to advise themaccurately concerning the terms of the letter of credit, confirmation,amendment or advice received by that person and undertakes to the beneficiaryto check the apparent authenticity of the request to advise. Even if the adviceis inaccurate, the letter of credit, confirmation or amendment is enforceableas issued.

      (4)A person who notifies a transferee beneficiary of the terms of a letter ofcredit, confirmation, amendment or advice has the rights and obligations of anadviser under subsection (3) of this section. The terms in the notice to thetransferee beneficiary may differ from the terms in any notice to the transferorbeneficiary to the extent permitted by the letter of credit, confirmation,amendment or advice received by the person who so notifies. [1961 c.726 §75.1070;1997 c.150 §10]

 

      75.1080Issuer’s rights and obligations. (1) Except as provided in ORS 75.1090,an issuer shall honor a presentation that, as determined by the standardpractice referred to in subsection (5) of this section, appears on its facestrictly to comply with the terms and conditions of the letter of credit.Except as provided in ORS 75.1130 and unless otherwise agreed with theapplicant, an issuer shall dishonor a presentation that does not appear tocomply with the terms and conditions of the letter of credit.

      (2)An issuer has a reasonable time after presentation, but not later than the seventhbusiness day after the issuer receives the documents:

      (a)To honor;

      (b)If the letter of credit provides for honor to be completed more than sevenbusiness days after presentation, to accept a draft or incur a deferredobligation; or

      (c)To give notice to the presenter of discrepancies in the presentation.

      (3)Except as otherwise provided in subsection (4) of this section, an issuer isprecluded from asserting as a basis for dishonor:

      (a)Any discrepancy if timely notice is not given; or

      (b)Any discrepancy not stated in the notice if timely notice is given.

      (4)Failure to give the notice specified in subsection (2) of this section or tomention fraud, forgery or expiration in the notice does not preclude the issuerfrom asserting, as a basis for dishonor, fraud or forgery as described in ORS75.1090 (1) or expiration of the letter of credit before presentation.

      (5)An issuer shall observe standard practice of financial institutions thatregularly issue letters of credit. Determination of the issuer’s observance ofthe standard practice is a matter of interpretation for the court. The courtshall offer the parties a reasonable opportunity to present evidence of thestandard practice.

      (6)An issuer is not responsible for:

      (a)The performance or nonperformance of the underlying contract, arrangement, ortransaction;

      (b)An act or omission of another person; or

      (c)Observance or knowledge of the usage of a particular trade other than thestandard practice referred to in subsection (5) of this section.

      (7)If an undertaking constituting a letter of credit under ORS 75.1020 (1)(j)contains nondocumentary conditions, an issuer shall disregard thenondocumentary conditions and treat them as if they were not stated.

      (8)An issuer that has dishonored a presentation shall return the documents or holdthem at the disposal of, and send advice to that effect to, the presenter.

      (9)An issuer that has honored a presentation as permitted or required by thischapter:

      (a)Is entitled to be reimbursed by the applicant in immediately available fundsnot later than the date of its payment of funds;

      (b)Takes the documents free of claims of the beneficiary or presenter;

      (c)Is precluded from asserting a right of recourse on a draft under ORS 73.0414and 73.0415;

      (d)Except as provided in ORS 75.1100 and 75.1170, is precluded from restitution ofmoney paid or other value given by mistake to the extent the mistake concernsdiscrepancies in the documents or tender that are apparent on the face of thepresentation; and

      (e)Is discharged to the extent of its performance under the letter of creditunless the issuer honored a presentation in which a required signature of abeneficiary was forged. [1961 c.726 §75.1080; 1997 c.150 §11]

 

      75.1090Fraud and forgery.(1) If a presentation is made that appears on its face strictly to comply withthe terms and conditions of the letter of credit, but a required document isforged or materially fraudulent, or honor of the presentation would facilitatea material fraud by the beneficiary on the issuer or applicant:

      (a)The issuer shall honor the presentation, if honor is demanded by:

      (A)A nominated person who has given value in good faith and without notice offorgery or material fraud;

      (B)A confirmer who has honored its confirmation in good faith;

      (C)A holder in due course of a draft drawn under the letter of credit that wastaken after acceptance by the issuer or nominated person; or

      (D)An assignee of the issuer’s or nominated person’s deferred obligation that wastaken for value and without notice of forgery or material fraud after theobligation was incurred by the issuer or nominated person; and

      (b)The issuer, acting in good faith, may honor or dishonor the presentation in anyother case.

      (2)If an applicant claims that a required document is forged or materiallyfraudulent or that honor of the presentation would facilitate a material fraudby the beneficiary on the issuer or applicant, a court of competentjurisdiction may temporarily or permanently enjoin the issuer from honoring apresentation or grant similar relief against the issuer or other persons onlyif the court finds that:

      (a)The relief is not prohibited under the law applicable to an accepted draft ordeferred obligation incurred by the issuer;

      (b)A beneficiary, issuer or nominated person who may be adversely affected isadequately protected against loss that it may suffer because the relief isgranted;

      (c)All of the conditions to entitle a person to the relief under the law of thisstate have been met; and

      (d)On the basis of the information submitted to the court, the applicant is morelikely than not to succeed under its claim of forgery or material fraud and theperson demanding honor does not qualify for protection under subsection (1)(a)of this section. [1961 c.726 §75.1090; 1997 c.150 §12]

 

      75.1100Warranties.(1) If its presentation is honored, the beneficiary warrants:

      (a)To the issuer, any other person to whom presentation is made and to theapplicant that there is no fraud or forgery of the kind described in ORS75.1090 (1); and

      (b)To the applicant that the drawing does not violate any agreement between theapplicant and beneficiary or any other agreement intended by them to beaugmented by the letter of credit.

      (2)The warranties in subsection (1) of this section are in addition to warrantiesarising under ORS chapters 73, 74, 77 and 78 because of the presentation ortransfer of documents covered by ORS chapters 73, 74, 77 and 78. [1961 c.726 §75.1100;1997 c.150 §13]

 

      75.1110Remedies.(1) If an issuer wrongfully dishonors or repudiates its obligation to pay moneyunder a letter of credit before presentation, the beneficiary, successor ornominated person presenting on its own behalf may recover from the issuer theamount that is the subject of the dishonor or repudiation. If the issuer’sobligation under the letter of credit is not for the payment of money, theclaimant may obtain specific performance or, at the claimant’s election,recover an amount equal to the value of performance from the issuer. In eithercase, the claimant may also recover incidental but not consequential damages.The claimant is not obligated to take action to avoid damages that might be duefrom the issuer under this subsection. If, although not obligated to do so, theclaimant avoids damages, the claimant’s recovery from the issuer must bereduced by the amount of damages avoided. The issuer has the burden of provingthe amount of damages avoided. In the case of repudiation, the claimant neednot present any document.

      (2)If an issuer wrongfully dishonors a draft or demand presented under a letter ofcredit or honors a draft or demand in breach of its obligation to theapplicant, the applicant may recover damages resulting from the breach,including incidental but not consequential damages, less any amount saved as aresult of the breach.

      (3)If an adviser or nominated person other than a confirmer breaches an obligationunder this section or an issuer breaches an obligation not covered insubsection (1) or (2) of this section, a person to whom the obligation is owedmay recover damages resulting from the breach, including incidental but notconsequential damages, less any amount saved as a result of the breach. To theextent of the confirmation, a confirmer has the liability of an issuerspecified in this subsection and subsections (1) and (2) of this section.

      (4)An issuer, nominated person or adviser who is found liable under subsection(1), (2) or (3) of this section shall pay interest on the amount owed thereunderfrom the date of wrongful dishonor or other appropriate date.

      (5)Reasonable attorney fees and other expenses of litigation shall be awarded tothe prevailing party in an action in which a remedy is sought under thissection.

      (6)Damages that would otherwise be payable by a party for breach of an obligationunder this section may be liquidated by agreement or undertaking, but only inan amount or by a formula that is reasonable in light of the harm anticipated. [1961c.726 §75.1110; 1997 c.150 §14]

 

      75.1120Transfer of letter of credit. (1) Except as provided in ORS 75.1130,unless a letter of credit provides that it is transferable, the right of abeneficiary to draw or otherwise demand performance under a letter of creditmay not be transferred.

      (2)Even if a letter of credit provides that it is transferable, the issuer mayrefuse to recognize or carry out a transfer if:

      (a)The transfer would violate applicable law; or

      (b)The transferor or transferee has failed to comply with any requirement statedin the letter of credit or any other requirement relating to transfer imposedby the issuer that is within the standard practice referred to in ORS 75.1080(5) or is otherwise reasonable under the circumstances. [1961 c.726 §75.1120;1997 c.150 §15]

 

      75.1130Successor of beneficiary. (1) A successor of a beneficiary may consent toamendments, sign and present documents and receive payment or other items ofvalue in the name of the beneficiary without disclosing its status as asuccessor.

      (2)A successor of a beneficiary may consent to amendments, sign and presentdocuments and receive payment or other items of value in its own name as thedisclosed successor of the beneficiary. Except as provided in subsection (5) ofthis section, an issuer shall recognize a disclosed successor of a beneficiaryas beneficiary in full substitution for its predecessor upon compliance withthe requirements for recognition by the issuer of a transfer of drawing rightsby operation of law under the standard practice referred to in ORS 75.1080 (5)or, in the absence of such a practice, compliance with other reasonableprocedures sufficient to protect the issuer.

      (3)An issuer is not obliged to determine whether a purported successor is asuccessor of a beneficiary or whether the signature of a purported successor isgenuine or authorized.

      (4)Honor of a purported successor’s apparently complying presentation undersubsection (1) or (2) of this section has the consequences specified in ORS75.1080 (9) even if the purported successor is not the successor of abeneficiary. Documents signed in the name of the beneficiary or of a disclosedsuccessor by a person who is neither the beneficiary nor the successor of thebeneficiary are forged documents for the purposes of ORS 75.1090.

      (5)An issuer whose rights of reimbursement are not covered by subsection (4) ofthis section or substantially similar law and any confirmer or nominated personmay decline to recognize a presentation under subsection (2) of this section.

      (6)A beneficiary whose name is changed after the issuance of a letter of credithas the same rights and obligations as a successor of a beneficiary under thissection. [1961 c.726 §75.1130; 1997 c.150 §16]

 

      75.1140Assignment of proceeds. (1) As used in this section, “proceeds of a letterof credit” means the cash, check, accepted draft or other item of value paid ordelivered upon honor or giving of value by the issuer or any nominated personunder the letter of credit. “Proceeds of a letter of credit” does not include abeneficiary’s drawing rights or documents presented by the beneficiary.

      (2)A beneficiary may assign its right to part or all of the proceeds of a letterof credit. The beneficiary may do so before presentation as a presentassignment of its right to receive proceeds contingent upon its compliance withthe terms and conditions of the letter of credit.

      (3)An issuer or nominated person need not recognize an assignment of proceeds of aletter of credit until it consents to the assignment.

      (4)An issuer or nominated person has no obligation to give or withhold its consentto an assignment of proceeds of a letter of credit, but consent may not beunreasonably withheld if the assignee possesses and exhibits the letter ofcredit and presentation of the letter of credit is a condition to honor.

      (5)Rights of a transferee beneficiary or nominated person are independent of thebeneficiary’s assignment of the proceeds of a letter of credit and are superiorto the assignee’s right to the proceeds.

      (6)Neither the rights recognized by this section between an assignee and anissuer, transferee beneficiary or nominated person nor the issuer’s ornominated person’s payment of proceeds of a letter of credit to an assignee ora third person affect the rights between the assignee and any person other thanth