§490:9-409  Restrictions on assignment of
letter-of-credit rights ineffective.  (a)  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)  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 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. [L 2000, c 241, pt of §1]