(810 ILCS 5/5‑101)(from Ch. 26, par. 5‑101) Sec. 5‑101. Short title. This Article may be cited as Uniform Commercial Code‑‑Letters of Credit. (Source: P.A. 89‑534, eff. 1‑1‑97.)
(810 ILCS 5/5‑102)(from Ch. 26, par. 5‑102) Sec. 5‑102. Definitions. (a) In this Article: (1) "Adviser" means a person who, at the request of
the issuer, a confirmer, or another adviser, notifies or requests another adviser to notify the beneficiary that a letter of credit has been issued, confirmed, or amended.
(2) "Applicant" means a person at whose request or
for whose account a letter of credit is issued. The term includes a person who requests an issuer to issue a letter of credit on behalf of another if the person making the request undertakes an obligation to reimburse the issuer.
(3) "Beneficiary" means a person who under the terms
of a letter of credit is entitled to have its complying presentation honored. The term includes a person to whom drawing rights have been transferred under a transferable letter of credit.
(4) "Confirmer" means a nominated person who
undertakes, at the request or with the consent of the issuer, to honor a presentation under a letter of credit issued by another.
(5) "Dishonor" of a letter of credit means failure
timely to honor or to take an interim action, such as acceptance of a draft, that may be required by the letter of credit.
(6) "Document" means a draft or other demand,
document of title, investment security, certificate, invoice, or other record, statement, or representation of fact, law, right, or opinion (i) which is presented in a written or other medium permitted by the letter of credit or, unless prohibited by the letter of credit, by the standard practice referred to in Section 5‑108(e) and (ii) which is capable of being examined for compliance with the terms and conditions of the letter of credit. A document may not be oral.
(7) "Good faith" means honesty in fact in the
conduct or transaction concerned.
(8) "Honor" of a letter of credit means performance
of the issuer's undertaking in the letter of credit to pay or deliver an item of value. Unless the letter of credit otherwise provides, "honor" occurs
(i) upon payment, (ii) if the letter of credit provides for
acceptance, upon acceptance of a draft and, at maturity, its payment, or
(iii) if the letter of credit provides for
incurring a deferred obligation, upon incurring the obligation and, at maturity, its performance.
(9) "Issuer" means a bank or other person that
issues a letter of credit, but does not include an individual who makes an engagement for personal, family, or household purposes.
(10) "Letter of credit" means a definite undertaking
that satisfies the requirements of Section 5‑104 by an issuer to a beneficiary at the request or for the account of an applicant or, in the case of a financial institution, to itself or for its own account, to honor a documentary presentation by payment or delivery of an item of value.
(11) "Nominated person" means a person whom the
issuer (i) designates or authorizes to pay, accept, negotiate, or otherwise give value under a letter of credit and (ii) undertakes by agreement or custom and practice to reimburse.
(12) "Presentation" means delivery of a document to
an issuer or nominated person for honor or giving of value under a letter of credit.
(13) "Presenter" means a person making a
presentation as or on behalf of a beneficiary or nominated person.
(14) "Record" means information that is inscribed on
a tangible medium, or that is stored in an electronic or other medium and is retrievable in perceivable form.
(15) "Successor of a beneficiary" means a person who
succeeds to substantially all of the rights of a beneficiary by operation of law, including a corporation with or into which the beneficiary has been merged or consolidated, an administrator, executor, personal representative, trustee in bankruptcy, debtor in possession, liquidator, and receiver.
(b) Definitions in other Articles applying to this Article and the Sections in which they appear are: "Accept" or "Acceptance" Section 3‑409 "Value" Sections 3‑303, 4‑211 (c) Article 1 contains certain additional general definitions and principles of construction and interpretation applicable throughout this Article. (Source: P.A. 89‑534, eff. 1‑1‑97.)
(810 ILCS 5/5‑103)(from Ch. 26, par. 5‑103) Sec. 5‑103. Scope. (a) This Article applies to letters of credit and to certain rights and obligations arising out of transactions involving letters of credit. (b) The statement of a rule in this Article does not by itself require, imply, or negate application of the same or a different rule to a situation not provided for, or to a person not specified, in this Article. (c) With the exception of this subsection, subsections (a) and (d), Sections 5‑102(a)(9) and (10), 5‑106(d), and 5‑114(d), and except to the extent prohibited in Sections 1‑302 and 5‑117(d), the effect of this Article may be varied by agreement or by a provision stated or incorporated by reference in an undertaking. A term in an agreement or undertaking generally excusing liability or generally limiting remedies for failure to perform obligations is not sufficient to vary obligations prescribed by this Article. (d) Rights and obligations of an issuer to a beneficiary or a nominated person under a letter of credit are independent of the existence, performance, or nonperformance of a contract or arrangement out of which the letter of credit arises or which underlies it, including contracts or arrangements between the issuer and the applicant and between the applicant and the beneficiary. (Source: P.A. 95‑895, eff. 1‑1‑09.)
(810 ILCS 5/5‑104)(from Ch. 26, par. 5‑104) Sec. 5‑104. Formal requirements. A letter of credit, confirmation, advice, transfer, amendment, or cancellation may be issued in any form that is a record and is authenticated (i) by a signature or (ii) in accordance with the agreement of the parties or the standard practice referred to in Section 5‑108(e). (Source: P.A. 89‑534, eff. 1‑1‑97.)
(810 ILCS 5/5‑105)(from Ch. 26, par. 5‑105) Sec. 5‑105. Consideration. Consideration is not required to issue, amend, transfer, or cancel a letter of credit, advice, or confirmation. (Source: P.A. 89‑534, eff. 1‑1‑97.)
(810 ILCS 5/5‑106)(from Ch. 26, par. 5‑106) Sec. 5‑106. Issuance, amendment, cancellation, and duration. (a) A letter of credit is issued and becomes enforceable according to its terms against the issuer when the issuer sends or otherwise transmits it to the person requested to advise or to the beneficiary. A letter of credit is revocable only if it so provides. (b) After a letter of credit is issued, rights and obligations of a beneficiary, applicant, confirmer, and issuer are not affected by an amendment or cancellation to which that person has not consented except to the extent the letter of credit provides that it is revocable or that the issuer may amend or cancel the letter of credit without that consent. (c) If there is no stated expiration date or other provision that determines its duration, a letter of credit expires one year after its stated date of issuance or, if none is stated, after the date on which it is issued. (d) A letter of credit that states that it is perpetual expires 5 years after its stated date of issuance, or if none is stated, after the date on which it is issued. (Source: P.A. 89‑534, eff. 1‑1‑97.)
(810 ILCS 5/5‑107)(from Ch. 26, par. 5‑107) Sec. 5‑107. Confirmer, nominated person, and adviser. (a) A confirmer is directly obligated on a letter of credit and has the rights and obligations of an issuer to the extent of its confirmation. The confirmer also has rights against and obligations to the issuer as if the issuer were an applicant and the confirmer had issued the letter of credit at the request and for the account of the issuer. (b) A nominated person who is not a confirmer is not obligated to honor or otherwise give value for a presentation. (c) A person requested to advise may decline to act as an adviser. An adviser that is not a confirmer is not obligated to honor or give value for a presentation. An adviser undertakes to the issuer and to the beneficiary accurately to advise the terms of the letter of credit, confirmation, amendment, or advice received by that person and undertakes to the beneficiary to check the apparent authenticity of the request to advise. Even if the advice is inaccurate, the letter of credit, confirmation, or amendment is enforceable as issued. (d) A person who notifies a transferee beneficiary of the terms of a letter of credit, confirmation, amendment, or advice has the rights and obligations of an adviser under subsection (c). The terms in the notice to the transferee beneficiary may differ from the terms in any notice to the transferor beneficiary to the extent permitted by the letter of credit, confirmation, amendment, or advice received by the person who so notifies. (Source: P.A. 89‑534, eff. 1‑1‑97.)
(810 ILCS 5/5‑108)(from Ch. 26, par. 5‑108) Sec. 5‑108. Issuer's rights and obligations. (a) Except as otherwise provided in Section 5‑109, an issuer shall honor a presentation that, as determined by the standard practice referred to in subsection (e), appears on its face strictly to comply with the terms and conditions of the letter of credit. Except as otherwise provided in Section 5‑113 and unless otherwise agreed with the applicant, an issuer shall dishonor a presentation that does not appear so to comply. (b) An issuer has a reasonable time after presentation, but not beyond the end of the seventh business day of the issuer after the day of its receipt of documents: (1) to honor, (2) if the letter of credit provides for honor to be
completed more than seven business days after presentation, to accept a draft or incur a deferred obligation, or
(3) to give notice to the presenter of discrepancies
in the presentation.
(c) Except as otherwise provided in subsection (d), an issuer is precluded from asserting as a basis for dishonor any discrepancy if timely notice is not given, or any discrepancy not stated in the notice if timely notice is given. (d) Failure to give the notice specified in subsection (b) or to mention fraud, forgery, or expiration in the notice does not preclude the issuer from asserting as a basis for dishonor fraud or forgery as described in Section 5‑109(a) or expiration of the letter of credit before presentation. (e) An issuer shall observe standard practice of financial institutions that regularly issue letters of credit. Determination of the issuer's observance of the standard practice is a matter of interpretation for the court. The court shall offer the parties a reasonable opportunity to present evidence of the standard practice. (f) An issuer is not responsible for: (1) the performance or nonperformance of the
underlying contract, arrangement, or transaction,
(2) an act or omission of others, or (3) observance or knowledge of the usage of a
particular trade other than the standard practice referred to in subsection (e).
(g) If an undertaking constituting a letter of credit under Section 5‑102(a)(10) contains nondocumentary conditions, an issuer shall disregard the nondocumentary conditions and treat them as if they were not stated. (h) An issuer that has dishonored a presentation shall return the documents or hold them at the disposal of, and send advice to that effect to, the presenter. (i) An issuer that has honored a presentation as permitted or required by this Article: (1) is entitled to be reimbursed by the applicant in
immediately available funds not later than the date of its payment of funds;
(2) takes the documents free of claims of the
beneficiary or presenter;
(3) is precluded from asserting a right of recourse
on a draft under Sections 3‑414 and 3‑415;
(4) except as otherwise provided in Sections 5‑110
and 5‑117, is precluded from restitution of money paid or other value given by mistake to the extent the mistake concerns discrepancies in the documents or tender which are apparent on the face of the presentation; and
(5) is discharged to the extent of its performance
under the letter of credit unless the issuer honored a presentation in which a required signature of a beneficiary was forged.
(Source: P.A. 89‑534, eff. 1‑1‑97.)
(810 ILCS 5/5‑109)(from Ch. 26, par. 5‑109) Sec. 5‑109. Fraud and forgery. (a) If a presentation is made that appears on its face strictly to comply with the terms and conditions of the letter of credit, but a required document is forged or materially fraudulent, or honor of the presentation would facilitate a material fraud by the beneficiary on the issuer or applicant: (1) the issuer shall honor the presentation, if
honor is demanded by (i) a nominated person who has given value in good faith and without notice of forgery or material fraud, (ii) a confirmer who has honored its confirmation in good faith, (iii) a holder in due course of a draft drawn under the letter of credit which was taken after acceptance by the issuer or nominated person, or (iv) an assignee of the issuer's or nominated person's deferred obligation that was taken for value and without notice of forgery or material fraud after the obligation was incurred by the issuer or nominated person; and
(2) the issuer, acting in good faith, may honor or
dishonor the presentation in any other case.
(b) If an applicant claims that a required document is forged or materially fraudulent or that honor of the presentation would facilitate a material fraud by the beneficiary on the issuer or applicant, a court of competent jurisdiction may temporarily or permanently enjoin the issuer from honoring a presentation or grant similar relief against the issuer or other persons only if the court finds that: (1) the relief is not prohibited under the law
applicable to an accepted draft or deferred obligation incurred by the issuer;
(2) a beneficiary, issuer, or nominated person who
may be adversely affected is adequately protected against loss that it may suffer because the relief is granted;
(3) all of the conditions to entitle a person to the
relief under the law of this State have been met; and
(4) on the basis of the information submitted to the
court, the applicant is more likely than not to succeed under its claim of forgery or material fraud and the person demanding honor does not qualify for protection under subsection (a)(1).
(Source: P.A. 89‑534, eff. 1‑1‑97.)
(810 ILCS 5/5‑110)(from Ch. 26, par. 5‑110) Sec. 5‑110. Warranties. (a) If its presentation is honored, the beneficiary warrants: (1) to the issuer, any other person to whom
presentation is made, and the applicant that there is no fraud or forgery of the kind described in Section 5‑109(a); and
(2) to the applicant that the drawing does not
violate any agreement between the applicant and beneficiary or any other agreement intended by them to be augmented by the letter of credit.
(b) The warranties in subsection (a) are in addition to warranties arising under Articles 3, 4, 7, and 8 because of the presentation or transfer of documents covered by any of those Articles. (Source: P.A. 89‑534, eff. 1‑1‑97.)
(810 ILCS 5/5‑111)(from Ch. 26, par. 5‑111) Sec. 5‑111. Remedies. (a) If an issuer wrongfully dishonors or repudiates its obligation to pay money under a letter of credit before presentation, the beneficiary, successor, or nominated person presenting on its own behalf may recover from the issuer the amount that is the subject of the dishonor or repudiation. If the issuer's obligation under the letter of credit is not for the payment of money, the claimant may obtain specific performance or, at the claimant's election, recover an amount equal to the value of performance from the issuer. In either case, the claimant may also recover incidental but not consequential damages. The claimant is not obligated to take action to avoid damages that might be due from the issuer under this subsection. If, although not obligated to do so, the claimant avoids damages, the claimant's recovery from the issuer must be reduced by the amount of damages avoided. The issuer has the burden of proving the amount of damages avoided. In the case of repudiation the claimant need not present any document. (b) If an issuer wrongfully dishonors a draft or demand presented under a letter of credit or honors a draft or demand in breach of its obligation to the applicant, the applicant may recover damages resulting from the breach, including incidental but not consequential damages, less any amount saved as a result of the breach. (c) If an adviser or nominated person other than a confirmer breaches an obligation under this Article or an issuer breaches an obligation not covered in subsection (a) or (b), a person to whom the obligation is owed may recover damages resulting from the breach, including incidental but not consequential damages, less any amount saved as a result of the breach. To the extent of the confirmation, a confirmer has the liability of an issuer specified in this subsection and subsections (a) and (b). (d) An issuer, nominated person, or adviser who is found liable under subsection (a), (b), or (c) shall pay interest on the amount owed thereunder from the date of wrongful dishonor or other appropriate date. (e) Reasonable attorney's fees and other expenses of litigation must be awarded to the prevailing party in an action in which a remedy is sought under this Article. (f) Damages that would otherwise be payable by a party for breach of an obligation under this Article may be liquidated by agreement or undertaking, but only in an amount or by a formula that is reasonable in light of the harm anticipated. (Source: P.A. 89‑534, eff. 1‑1‑97.)
(810 ILCS 5/5‑112)(from Ch. 26, par. 5‑112) Sec. 5‑112. Transfer of letter of credit. (a) Except as otherwise provided in Section 5‑113, unless a letter of credit provides that it is transferable, the right of a beneficiary to draw or otherwise demand performance under a letter of credit may not be transferred. (b) Even if a letter of credit provides that it is transferable, the issuer may refuse to recognize or carry out a transfer if: (1) the transfer would violate applicable law; or (2) the transferor or transferee has failed to
comply with any requirement stated in the letter of credit or any other requirement relating to transfer imposed by the issuer which is within the standard practice referred to in Section 5‑108(e) or is otherwise reasonable under the circumstances.
(Source: P.A. 89‑534, eff. 1‑1‑97.)
(810 ILCS 5/5‑113)(from Ch. 26, par. 5‑113) Sec. 5‑113. Transfer by operation of law. (a) A successor of a beneficiary may consent to amendments, sign and present documents, and receive payment or other items of value in the name of the beneficiary without disclosing its status as a successor. (b) A successor of a beneficiary may consent to amendments, sign and present documents, and receive payment or other items of value in its own name as the disclosed successor of the beneficiary. Except as otherwise provided in subsection (e), an issuer shall recognize a disclosed successor of a beneficiary as beneficiary in full substitution for its predecessor upon compliance with the requirements for recognition by the issuer of a transfer of drawing rights by operation of law under the standard practice referred to in Section 5‑108(e) or, in the absence of such a practice, compliance with other reasonable procedures sufficient to protect the issuer. (c) An issuer is not obliged to determine whether a purported successor is a successor of a beneficiary or whether the signature of a purported successor is genuine or authorized. (d) Honor of a purported successor's apparently complying presentation under subsection (a) or (b) has the consequences specified in Section 5‑108(i) even if the purported successor is not the successor of a beneficiary. Documents signed in the name of the beneficiary or of a disclosed successor by a person who is neither the beneficiary nor the successor of the beneficiary are forged documents for the purposes of Section 5‑109. (e) An issuer whose rights of reimbursement are not covered by subsection (d) or substantially similar law and any confirmer or nominated person may decline to recognize a presentation under subsection (b). (f) A beneficiary whose name is changed after the issuance of a letter of credit has the same rights and obligations as a successor of a beneficiary under this Section. (Source: P.A. 89‑534, eff. 1‑1‑97.)
(810 ILCS 5/5‑114)(from Ch. 26, par. 5‑114) Sec. 5‑114. Assignment of proceeds. (a) In this Section, "proceeds of a letter of credit" means the cash, check, accepted draft, or other item of value paid or delivered upon honor or giving of value by the issuer or any nominated person under the letter of credit. The term does not include a beneficiary's drawing rights or documents presented by the beneficiary. (b) A beneficiary may assign its right to part or all
(810 ILCS 5/5‑101)(from Ch. 26, par. 5‑101) Sec. 5‑101. Short title. This Article may be cited as Uniform Commercial Code‑‑Letters of Credit. (Source: P.A. 89‑534, eff. 1‑1‑97.)
(810 ILCS 5/5‑102)(from Ch. 26, par. 5‑102) Sec. 5‑102. Definitions. (a) In this Article: (1) "Adviser" means a person who, at the request of
the issuer, a confirmer, or another adviser, notifies or requests another adviser to notify the beneficiary that a letter of credit has been issued, confirmed, or amended.
(2) "Applicant" means a person at whose request or
for whose account a letter of credit is issued. The term includes a person who requests an issuer to issue a letter of credit on behalf of another if the person making the request undertakes an obligation to reimburse the issuer.
(3) "Beneficiary" means a person who under the terms
of a letter of credit is entitled to have its complying presentation honored. The term includes a person to whom drawing rights have been transferred under a transferable letter of credit.
(4) "Confirmer" means a nominated person who
undertakes, at the request or with the consent of the issuer, to honor a presentation under a letter of credit issued by another.
(5) "Dishonor" of a letter of credit means failure
timely to honor or to take an interim action, such as acceptance of a draft, that may be required by the letter of credit.
(6) "Document" means a draft or other demand,
document of title, investment security, certificate, invoice, or other record, statement, or representation of fact, law, right, or opinion (i) which is presented in a written or other medium permitted by the letter of credit or, unless prohibited by the letter of credit, by the standard practice referred to in Section 5‑108(e) and (ii) which is capable of being examined for compliance with the terms and conditions of the letter of credit. A document may not be oral.
(7) "Good faith" means honesty in fact in the
conduct or transaction concerned.
(8) "Honor" of a letter of credit means performance
of the issuer's undertaking in the letter of credit to pay or deliver an item of value. Unless the letter of credit otherwise provides, "honor" occurs
(i) upon payment, (ii) if the letter of credit provides for
acceptance, upon acceptance of a draft and, at maturity, its payment, or
(iii) if the letter of credit provides for
incurring a deferred obligation, upon incurring the obligation and, at maturity, its performance.
(9) "Issuer" means a bank or other person that
issues a letter of credit, but does not include an individual who makes an engagement for personal, family, or household purposes.
(10) "Letter of credit" means a definite undertaking
that satisfies the requirements of Section 5‑104 by an issuer to a beneficiary at the request or for the account of an applicant or, in the case of a financial institution, to itself or for its own account, to honor a documentary presentation by payment or delivery of an item of value.
(11) "Nominated person" means a person whom the
issuer (i) designates or authorizes to pay, accept, negotiate, or otherwise give value under a letter of credit and (ii) undertakes by agreement or custom and practice to reimburse.
(12) "Presentation" means delivery of a document to
an issuer or nominated person for honor or giving of value under a letter of credit.
(13) "Presenter" means a person making a
presentation as or on behalf of a beneficiary or nominated person.
(14) "Record" means information that is inscribed on
a tangible medium, or that is stored in an electronic or other medium and is retrievable in perceivable form.
(15) "Successor of a beneficiary" means a person who
succeeds to substantially all of the rights of a beneficiary by operation of law, including a corporation with or into which the beneficiary has been merged or consolidated, an administrator, executor, personal representative, trustee in bankruptcy, debtor in possession, liquidator, and receiver.
(b) Definitions in other Articles applying to this Article and the Sections in which they appear are: "Accept" or "Acceptance" Section 3‑409 "Value" Sections 3‑303, 4‑211 (c) Article 1 contains certain additional general definitions and principles of construction and interpretation applicable throughout this Article. (Source: P.A. 89‑534, eff. 1‑1‑97.)
(810 ILCS 5/5‑103)(from Ch. 26, par. 5‑103) Sec. 5‑103. Scope. (a) This Article applies to letters of credit and to certain rights and obligations arising out of transactions involving letters of credit. (b) The statement of a rule in this Article does not by itself require, imply, or negate application of the same or a different rule to a situation not provided for, or to a person not specified, in this Article. (c) With the exception of this subsection, subsections (a) and (d), Sections 5‑102(a)(9) and (10), 5‑106(d), and 5‑114(d), and except to the extent prohibited in Sections 1‑302 and 5‑117(d), the effect of this Article may be varied by agreement or by a provision stated or incorporated by reference in an undertaking. A term in an agreement or undertaking generally excusing liability or generally limiting remedies for failure to perform obligations is not sufficient to vary obligations prescribed by this Article. (d) Rights and obligations of an issuer to a beneficiary or a nominated person under a letter of credit are independent of the existence, performance, or nonperformance of a contract or arrangement out of which the letter of credit arises or which underlies it, including contracts or arrangements between the issuer and the applicant and between the applicant and the beneficiary. (Source: P.A. 95‑895, eff. 1‑1‑09.)
(810 ILCS 5/5‑104)(from Ch. 26, par. 5‑104) Sec. 5‑104. Formal requirements. A letter of credit, confirmation, advice, transfer, amendment, or cancellation may be issued in any form that is a record and is authenticated (i) by a signature or (ii) in accordance with the agreement of the parties or the standard practice referred to in Section 5‑108(e). (Source: P.A. 89‑534, eff. 1‑1‑97.)
(810 ILCS 5/5‑105)(from Ch. 26, par. 5‑105) Sec. 5‑105. Consideration. Consideration is not required to issue, amend, transfer, or cancel a letter of credit, advice, or confirmation. (Source: P.A. 89‑534, eff. 1‑1‑97.)
(810 ILCS 5/5‑106)(from Ch. 26, par. 5‑106) Sec. 5‑106. Issuance, amendment, cancellation, and duration. (a) A letter of credit is issued and becomes enforceable according to its terms against the issuer when the issuer sends or otherwise transmits it to the person requested to advise or to the beneficiary. A letter of credit is revocable only if it so provides. (b) After a letter of credit is issued, rights and obligations of a beneficiary, applicant, confirmer, and issuer are not affected by an amendment or cancellation to which that person has not consented except to the extent the letter of credit provides that it is revocable or that the issuer may amend or cancel the letter of credit without that consent. (c) If there is no stated expiration date or other provision that determines its duration, a letter of credit expires one year after its stated date of issuance or, if none is stated, after the date on which it is issued. (d) A letter of credit that states that it is perpetual expires 5 years after its stated date of issuance, or if none is stated, after the date on which it is issued. (Source: P.A. 89‑534, eff. 1‑1‑97.)
(810 ILCS 5/5‑107)(from Ch. 26, par. 5‑107) Sec. 5‑107. Confirmer, nominated person, and adviser. (a) A confirmer is directly obligated on a letter of credit and has the rights and obligations of an issuer to the extent of its confirmation. The confirmer also has rights against and obligations to the issuer as if the issuer were an applicant and the confirmer had issued the letter of credit at the request and for the account of the issuer. (b) A nominated person who is not a confirmer is not obligated to honor or otherwise give value for a presentation. (c) A person requested to advise may decline to act as an adviser. An adviser that is not a confirmer is not obligated to honor or give value for a presentation. An adviser undertakes to the issuer and to the beneficiary accurately to advise the terms of the letter of credit, confirmation, amendment, or advice received by that person and undertakes to the beneficiary to check the apparent authenticity of the request to advise. Even if the advice is inaccurate, the letter of credit, confirmation, or amendment is enforceable as issued. (d) A person who notifies a transferee beneficiary of the terms of a letter of credit, confirmation, amendment, or advice has the rights and obligations of an adviser under subsection (c). The terms in the notice to the transferee beneficiary may differ from the terms in any notice to the transferor beneficiary to the extent permitted by the letter of credit, confirmation, amendment, or advice received by the person who so notifies. (Source: P.A. 89‑534, eff. 1‑1‑97.)
(810 ILCS 5/5‑108)(from Ch. 26, par. 5‑108) Sec. 5‑108. Issuer's rights and obligations. (a) Except as otherwise provided in Section 5‑109, an issuer shall honor a presentation that, as determined by the standard practice referred to in subsection (e), appears on its face strictly to comply with the terms and conditions of the letter of credit. Except as otherwise provided in Section 5‑113 and unless otherwise agreed with the applicant, an issuer shall dishonor a presentation that does not appear so to comply. (b) An issuer has a reasonable time after presentation, but not beyond the end of the seventh business day of the issuer after the day of its receipt of documents: (1) to honor, (2) if the letter of credit provides for honor to be
completed more than seven business days after presentation, to accept a draft or incur a deferred obligation, or
(3) to give notice to the presenter of discrepancies
in the presentation.
(c) Except as otherwise provided in subsection (d), an issuer is precluded from asserting as a basis for dishonor any discrepancy if timely notice is not given, or any discrepancy not stated in the notice if timely notice is given. (d) Failure to give the notice specified in subsection (b) or to mention fraud, forgery, or expiration in the notice does not preclude the issuer from asserting as a basis for dishonor fraud or forgery as described in Section 5‑109(a) or expiration of the letter of credit before presentation. (e) An issuer shall observe standard practice of financial institutions that regularly issue letters of credit. Determination of the issuer's observance of the standard practice is a matter of interpretation for the court. The court shall offer the parties a reasonable opportunity to present evidence of the standard practice. (f) An issuer is not responsible for: (1) the performance or nonperformance of the
underlying contract, arrangement, or transaction,
(2) an act or omission of others, or (3) observance or knowledge of the usage of a
particular trade other than the standard practice referred to in subsection (e).
(g) If an undertaking constituting a letter of credit under Section 5‑102(a)(10) contains nondocumentary conditions, an issuer shall disregard the nondocumentary conditions and treat them as if they were not stated. (h) An issuer that has dishonored a presentation shall return the documents or hold them at the disposal of, and send advice to that effect to, the presenter. (i) An issuer that has honored a presentation as permitted or required by this Article: (1) is entitled to be reimbursed by the applicant in
immediately available funds not later than the date of its payment of funds;
(2) takes the documents free of claims of the
beneficiary or presenter;
(3) is precluded from asserting a right of recourse
on a draft under Sections 3‑414 and 3‑415;
(4) except as otherwise provided in Sections 5‑110
and 5‑117, is precluded from restitution of money paid or other value given by mistake to the extent the mistake concerns discrepancies in the documents or tender which are apparent on the face of the presentation; and
(5) is discharged to the extent of its performance
under the letter of credit unless the issuer honored a presentation in which a required signature of a beneficiary was forged.
(Source: P.A. 89‑534, eff. 1‑1‑97.)
(810 ILCS 5/5‑109)(from Ch. 26, par. 5‑109) Sec. 5‑109. Fraud and forgery. (a) If a presentation is made that appears on its face strictly to comply with the terms and conditions of the letter of credit, but a required document is forged or materially fraudulent, or honor of the presentation would facilitate a material fraud by the beneficiary on the issuer or applicant: (1) the issuer shall honor the presentation, if
honor is demanded by (i) a nominated person who has given value in good faith and without notice of forgery or material fraud, (ii) a confirmer who has honored its confirmation in good faith, (iii) a holder in due course of a draft drawn under the letter of credit which was taken after acceptance by the issuer or nominated person, or (iv) an assignee of the issuer's or nominated person's deferred obligation that was taken for value and without notice of forgery or material fraud after the obligation was incurred by the issuer or nominated person; and
(2) the issuer, acting in good faith, may honor or
dishonor the presentation in any other case.
(b) If an applicant claims that a required document is forged or materially fraudulent or that honor of the presentation would facilitate a material fraud by the beneficiary on the issuer or applicant, a court of competent jurisdiction may temporarily or permanently enjoin the issuer from honoring a presentation or grant similar relief against the issuer or other persons only if the court finds that: (1) the relief is not prohibited under the law
applicable to an accepted draft or deferred obligation incurred by the issuer;
(2) a beneficiary, issuer, or nominated person who
may be adversely affected is adequately protected against loss that it may suffer because the relief is granted;
(3) all of the conditions to entitle a person to the
relief under the law of this State have been met; and
(4) on the basis of the information submitted to the
court, the applicant is more likely than not to succeed under its claim of forgery or material fraud and the person demanding honor does not qualify for protection under subsection (a)(1).
(Source: P.A. 89‑534, eff. 1‑1‑97.)
(810 ILCS 5/5‑110)(from Ch. 26, par. 5‑110) Sec. 5‑110. Warranties. (a) If its presentation is honored, the beneficiary warrants: (1) to the issuer, any other person to whom
presentation is made, and the applicant that there is no fraud or forgery of the kind described in Section 5‑109(a); and
(2) to the applicant that the drawing does not
violate any agreement between the applicant and beneficiary or any other agreement intended by them to be augmented by the letter of credit.
(b) The warranties in subsection (a) are in addition to warranties arising under Articles 3, 4, 7, and 8 because of the presentation or transfer of documents covered by any of those Articles. (Source: P.A. 89‑534, eff. 1‑1‑97.)
(810 ILCS 5/5‑111)(from Ch. 26, par. 5‑111) Sec. 5‑111. Remedies. (a) If an issuer wrongfully dishonors or repudiates its obligation to pay money under a letter of credit before presentation, the beneficiary, successor, or nominated person presenting on its own behalf may recover from the issuer the amount that is the subject of the dishonor or repudiation. If the issuer's obligation under the letter of credit is not for the payment of money, the claimant may obtain specific performance or, at the claimant's election, recover an amount equal to the value of performance from the issuer. In either case, the claimant may also recover incidental but not consequential damages. The claimant is not obligated to take action to avoid damages that might be due from the issuer under this subsection. If, although not obligated to do so, the claimant avoids damages, the claimant's recovery from the issuer must be reduced by the amount of damages avoided. The issuer has the burden of proving the amount of damages avoided. In the case of repudiation the claimant need not present any document. (b) If an issuer wrongfully dishonors a draft or demand presented under a letter of credit or honors a draft or demand in breach of its obligation to the applicant, the applicant may recover damages resulting from the breach, including incidental but not consequential damages, less any amount saved as a result of the breach. (c) If an adviser or nominated person other than a confirmer breaches an obligation under this Article or an issuer breaches an obligation not covered in subsection (a) or (b), a person to whom the obligation is owed may recover damages resulting from the breach, including incidental but not consequential damages, less any amount saved as a result of the breach. To the extent of the confirmation, a confirmer has the liability of an issuer specified in this subsection and subsections (a) and (b). (d) An issuer, nominated person, or adviser who is found liable under subsection (a), (b), or (c) shall pay interest on the amount owed thereunder from the date of wrongful dishonor or other appropriate date. (e) Reasonable attorney's fees and other expenses of litigation must be awarded to the prevailing party in an action in which a remedy is sought under this Article. (f) Damages that would otherwise be payable by a party for breach of an obligation under this Article may be liquidated by agreement or undertaking, but only in an amount or by a formula that is reasonable in light of the harm anticipated. (Source: P.A. 89‑534, eff. 1‑1‑97.)
(810 ILCS 5/5‑112)(from Ch. 26, par. 5‑112) Sec. 5‑112. Transfer of letter of credit. (a) Except as otherwise provided in Section 5‑113, unless a letter of credit provides that it is transferable, the right of a beneficiary to draw or otherwise demand performance under a letter of credit may not be transferred. (b) Even if a letter of credit provides that it is transferable, the issuer may refuse to recognize or carry out a transfer if: (1) the transfer would violate applicable law; or (2) the transferor or transferee has failed to
comply with any requirement stated in the letter of credit or any other requirement relating to transfer imposed by the issuer which is within the standard practice referred to in Section 5‑108(e) or is otherwise reasonable under the circumstances.
(Source: P.A. 89‑534, eff. 1‑1‑97.)
(810 ILCS 5/5‑113)(from Ch. 26, par. 5‑113) Sec. 5‑113. Transfer by operation of law. (a) A successor of a beneficiary may consent to amendments, sign and present documents, and receive payment or other items of value in the name of the beneficiary without disclosing its status as a successor. (b) A successor of a beneficiary may consent to amendments, sign and present documents, and receive payment or other items of value in its own name as the disclosed successor of the beneficiary. Except as otherwise provided in subsection (e), an issuer shall recognize a disclosed successor of a beneficiary as beneficiary in full substitution for its predecessor upon compliance with the requirements for recognition by the issuer of a transfer of drawing rights by operation of law under the standard practice referred to in Section 5‑108(e) or, in the absence of such a practice, compliance with other reasonable procedures sufficient to protect the issuer. (c) An issuer is not obliged to determine whether a purported successor is a successor of a beneficiary or whether the signature of a purported successor is genuine or authorized. (d) Honor of a purported successor's apparently complying presentation under subsection (a) or (b) has the consequences specified in Section 5‑108(i) even if the purported successor is not the successor of a beneficiary. Documents signed in the name of the beneficiary or of a disclosed successor by a person who is neither the beneficiary nor the successor of the beneficiary are forged documents for the purposes of Section 5‑109. (e) An issuer whose rights of reimbursement are not covered by subsection (d) or substantially similar law and any confirmer or nominated person may decline to recognize a presentation under subsection (b). (f) A beneficiary whose name is changed after the issuance of a letter of credit has the same rights and obligations as a successor of a beneficiary under this Section. (Source: P.A. 89‑534, eff. 1‑1‑97.)
(810 ILCS 5/5‑114)(from Ch. 26, par. 5‑114) Sec. 5‑114. Assignment of proceeds. (a) In this Section, "proceeds of a letter of credit" means the cash, check, accepted draft, or other item of value paid or delivered upon honor or giving of value by the issuer or any nominated person under the letter of credit. The term does not include a beneficiary's drawing rights or documents presented by the beneficiary. (b) A beneficiary may assign its right to part or all
(810 ILCS 5/5‑101)(from Ch. 26, par. 5‑101) Sec. 5‑101. Short title. This Article may be cited as Uniform Commercial Code‑‑Letters of Credit. (Source: P.A. 89‑534, eff. 1‑1‑97.)
(810 ILCS 5/5‑102)(from Ch. 26, par. 5‑102) Sec. 5‑102. Definitions. (a) In this Article: (1) "Adviser" means a person who, at the request of
the issuer, a confirmer, or another adviser, notifies or requests another adviser to notify the beneficiary that a letter of credit has been issued, confirmed, or amended.
(2) "Applicant" means a person at whose request or
for whose account a letter of credit is issued. The term includes a person who requests an issuer to issue a letter of credit on behalf of another if the person making the request undertakes an obligation to reimburse the issuer.
(3) "Beneficiary" means a person who under the terms
of a letter of credit is entitled to have its complying presentation honored. The term includes a person to whom drawing rights have been transferred under a transferable letter of credit.
(4) "Confirmer" means a nominated person who
undertakes, at the request or with the consent of the issuer, to honor a presentation under a letter of credit issued by another.
(5) "Dishonor" of a letter of credit means failure
timely to honor or to take an interim action, such as acceptance of a draft, that may be required by the letter of credit.
(6) "Document" means a draft or other demand,
document of title, investment security, certificate, invoice, or other record, statement, or representation of fact, law, right, or opinion (i) which is presented in a written or other medium permitted by the letter of credit or, unless prohibited by the letter of credit, by the standard practice referred to in Section 5‑108(e) and (ii) which is capable of being examined for compliance with the terms and conditions of the letter of credit. A document may not be oral.
(7) "Good faith" means honesty in fact in the
conduct or transaction concerned.
(8) "Honor" of a letter of credit means performance
of the issuer's undertaking in the letter of credit to pay or deliver an item of value. Unless the letter of credit otherwise provides, "honor" occurs
(i) upon payment, (ii) if the letter of credit provides for
acceptance, upon acceptance of a draft and, at maturity, its payment, or
(iii) if the letter of credit provides for
incurring a deferred obligation, upon incurring the obligation and, at maturity, its performance.
(9) "Issuer" means a bank or other person that
issues a letter of credit, but does not include an individual who makes an engagement for personal, family, or household purposes.
(10) "Letter of credit" means a definite undertaking
that satisfies the requirements of Section 5‑104 by an issuer to a beneficiary at the request or for the account of an applicant or, in the case of a financial institution, to itself or for its own account, to honor a documentary presentation by payment or delivery of an item of value.
(11) "Nominated person" means a person whom the
issuer (i) designates or authorizes to pay, accept, negotiate, or otherwise give value under a letter of credit and (ii) undertakes by agreement or custom and practice to reimburse.
(12) "Presentation" means delivery of a document to
an issuer or nominated person for honor or giving of value under a letter of credit.
(13) "Presenter" means a person making a
presentation as or on behalf of a beneficiary or nominated person.
(14) "Record" means information that is inscribed on
a tangible medium, or that is stored in an electronic or other medium and is retrievable in perceivable form.
(15) "Successor of a beneficiary" means a person who
succeeds to substantially all of the rights of a beneficiary by operation of law, including a corporation with or into which the beneficiary has been merged or consolidated, an administrator, executor, personal representative, trustee in bankruptcy, debtor in possession, liquidator, and receiver.
(b) Definitions in other Articles applying to this Article and the Sections in which they appear are: "Accept" or "Acceptance" Section 3‑409 "Value" Sections 3‑303, 4‑211 (c) Article 1 contains certain additional general definitions and principles of construction and interpretation applicable throughout this Article. (Source: P.A. 89‑534, eff. 1‑1‑97.)
(810 ILCS 5/5‑103)(from Ch. 26, par. 5‑103) Sec. 5‑103. Scope. (a) This Article applies to letters of credit and to certain rights and obligations arising out of transactions involving letters of credit. (b) The statement of a rule in this Article does not by itself require, imply, or negate application of the same or a different rule to a situation not provided for, or to a person not specified, in this Article. (c) With the exception of this subsection, subsections (a) and (d), Sections 5‑102(a)(9) and (10), 5‑106(d), and 5‑114(d), and except to the extent prohibited in Sections 1‑302 and 5‑117(d), the effect of this Article may be varied by agreement or by a provision stated or incorporated by reference in an undertaking. A term in an agreement or undertaking generally excusing liability or generally limiting remedies for failure to perform obligations is not sufficient to vary obligations prescribed by this Article. (d) Rights and obligations of an issuer to a beneficiary or a nominated person under a letter of credit are independent of the existence, performance, or nonperformance of a contract or arrangement out of which the letter of credit arises or which underlies it, including contracts or arrangements between the issuer and the applicant and between the applicant and the beneficiary. (Source: P.A. 95‑895, eff. 1‑1‑09.)
(810 ILCS 5/5‑104)(from Ch. 26, par. 5‑104) Sec. 5‑104. Formal requirements. A letter of credit, confirmation, advice, transfer, amendment, or cancellation may be issued in any form that is a record and is authenticated (i) by a signature or (ii) in accordance with the agreement of the parties or the standard practice referred to in Section 5‑108(e). (Source: P.A. 89‑534, eff. 1‑1‑97.)
(810 ILCS 5/5‑105)(from Ch. 26, par. 5‑105) Sec. 5‑105. Consideration. Consideration is not required to issue, amend, transfer, or cancel a letter of credit, advice, or confirmation. (Source: P.A. 89‑534, eff. 1‑1‑97.)
(810 ILCS 5/5‑106)(from Ch. 26, par. 5‑106) Sec. 5‑106. Issuance, amendment, cancellation, and duration. (a) A letter of credit is issued and becomes enforceable according to its terms against the issuer when the issuer sends or otherwise transmits it to the person requested to advise or to the beneficiary. A letter of credit is revocable only if it so provides. (b) After a letter of credit is issued, rights and obligations of a beneficiary, applicant, confirmer, and issuer are not affected by an amendment or cancellation to which that person has not consented except to the extent the letter of credit provides that it is revocable or that the issuer may amend or cancel the letter of credit without that consent. (c) If there is no stated expiration date or other provision that determines its duration, a letter of credit expires one year after its stated date of issuance or, if none is stated, after the date on which it is issued. (d) A letter of credit that states that it is perpetual expires 5 years after its stated date of issuance, or if none is stated, after the date on which it is issued. (Source: P.A. 89‑534, eff. 1‑1‑97.)
(810 ILCS 5/5‑107)(from Ch. 26, par. 5‑107) Sec. 5‑107. Confirmer, nominated person, and adviser. (a) A confirmer is directly obligated on a letter of credit and has the rights and obligations of an issuer to the extent of its confirmation. The confirmer also has rights against and obligations to the issuer as if the issuer were an applicant and the confirmer had issued the letter of credit at the request and for the account of the issuer. (b) A nominated person who is not a confirmer is not obligated to honor or otherwise give value for a presentation. (c) A person requested to advise may decline to act as an adviser. An adviser that is not a confirmer is not obligated to honor or give value for a presentation. An adviser undertakes to the issuer and to the beneficiary accurately to advise the terms of the letter of credit, confirmation, amendment, or advice received by that person and undertakes to the beneficiary to check the apparent authenticity of the request to advise. Even if the advice is inaccurate, the letter of credit, confirmation, or amendment is enforceable as issued. (d) A person who notifies a transferee beneficiary of the terms of a letter of credit, confirmation, amendment, or advice has the rights and obligations of an adviser under subsection (c). The terms in the notice to the transferee beneficiary may differ from the terms in any notice to the transferor beneficiary to the extent permitted by the letter of credit, confirmation, amendment, or advice received by the person who so notifies. (Source: P.A. 89‑534, eff. 1‑1‑97.)
(810 ILCS 5/5‑108)(from Ch. 26, par. 5‑108) Sec. 5‑108. Issuer's rights and obligations. (a) Except as otherwise provided in Section 5‑109, an issuer shall honor a presentation that, as determined by the standard practice referred to in subsection (e), appears on its face strictly to comply with the terms and conditions of the letter of credit. Except as otherwise provided in Section 5‑113 and unless otherwise agreed with the applicant, an issuer shall dishonor a presentation that does not appear so to comply. (b) An issuer has a reasonable time after presentation, but not beyond the end of the seventh business day of the issuer after the day of its receipt of documents: (1) to honor, (2) if the letter of credit provides for honor to be
completed more than seven business days after presentation, to accept a draft or incur a deferred obligation, or
(3) to give notice to the presenter of discrepancies
in the presentation.
(c) Except as otherwise provided in subsection (d), an issuer is precluded from asserting as a basis for dishonor any discrepancy if timely notice is not given, or any discrepancy not stated in the notice if timely notice is given. (d) Failure to give the notice specified in subsection (b) or to mention fraud, forgery, or expiration in the notice does not preclude the issuer from asserting as a basis for dishonor fraud or forgery as described in Section 5‑109(a) or expiration of the letter of credit before presentation. (e) An issuer shall observe standard practice of financial institutions that regularly issue letters of credit. Determination of the issuer's observance of the standard practice is a matter of interpretation for the court. The court shall offer the parties a reasonable opportunity to present evidence of the standard practice. (f) An issuer is not responsible for: (1) the performance or nonperformance of the
underlying contract, arrangement, or transaction,
(2) an act or omission of others, or (3) observance or knowledge of the usage of a
particular trade other than the standard practice referred to in subsection (e).
(g) If an undertaking constituting a letter of credit under Section 5‑102(a)(10) contains nondocumentary conditions, an issuer shall disregard the nondocumentary conditions and treat them as if they were not stated. (h) An issuer that has dishonored a presentation shall return the documents or hold them at the disposal of, and send advice to that effect to, the presenter. (i) An issuer that has honored a presentation as permitted or required by this Article: (1) is entitled to be reimbursed by the applicant in
immediately available funds not later than the date of its payment of funds;
(2) takes the documents free of claims of the
beneficiary or presenter;
(3) is precluded from asserting a right of recourse
on a draft under Sections 3‑414 and 3‑415;
(4) except as otherwise provided in Sections 5‑110
and 5‑117, is precluded from restitution of money paid or other value given by mistake to the extent the mistake concerns discrepancies in the documents or tender which are apparent on the face of the presentation; and
(5) is discharged to the extent of its performance
under the letter of credit unless the issuer honored a presentation in which a required signature of a beneficiary was forged.
(Source: P.A. 89‑534, eff. 1‑1‑97.)
(810 ILCS 5/5‑109)(from Ch. 26, par. 5‑109) Sec. 5‑109. Fraud and forgery. (a) If a presentation is made that appears on its face strictly to comply with the terms and conditions of the letter of credit, but a required document is forged or materially fraudulent, or honor of the presentation would facilitate a material fraud by the beneficiary on the issuer or applicant: (1) the issuer shall honor the presentation, if
honor is demanded by (i) a nominated person who has given value in good faith and without notice of forgery or material fraud, (ii) a confirmer who has honored its confirmation in good faith, (iii) a holder in due course of a draft drawn under the letter of credit which was taken after acceptance by the issuer or nominated person, or (iv) an assignee of the issuer's or nominated person's deferred obligation that was taken for value and without notice of forgery or material fraud after the obligation was incurred by the issuer or nominated person; and
(2) the issuer, acting in good faith, may honor or
dishonor the presentation in any other case.
(b) If an applicant claims that a required document is forged or materially fraudulent or that honor of the presentation would facilitate a material fraud by the beneficiary on the issuer or applicant, a court of competent jurisdiction may temporarily or permanently enjoin the issuer from honoring a presentation or grant similar relief against the issuer or other persons only if the court finds that: (1) the relief is not prohibited under the law
applicable to an accepted draft or deferred obligation incurred by the issuer;
(2) a beneficiary, issuer, or nominated person who
may be adversely affected is adequately protected against loss that it may suffer because the relief is granted;
(3) all of the conditions to entitle a person to the
relief under the law of this State have been met; and
(4) on the basis of the information submitted to the
court, the applicant is more likely than not to succeed under its claim of forgery or material fraud and the person demanding honor does not qualify for protection under subsection (a)(1).
(Source: P.A. 89‑534, eff. 1‑1‑97.)
(810 ILCS 5/5‑110)(from Ch. 26, par. 5‑110) Sec. 5‑110. Warranties. (a) If its presentation is honored, the beneficiary warrants: (1) to the issuer, any other person to whom
presentation is made, and the applicant that there is no fraud or forgery of the kind described in Section 5‑109(a); and
(2) to the applicant that the drawing does not
violate any agreement between the applicant and beneficiary or any other agreement intended by them to be augmented by the letter of credit.
(b) The warranties in subsection (a) are in addition to warranties arising under Articles 3, 4, 7, and 8 because of the presentation or transfer of documents covered by any of those Articles. (Source: P.A. 89‑534, eff. 1‑1‑97.)
(810 ILCS 5/5‑111)(from Ch. 26, par. 5‑111) Sec. 5‑111. Remedies. (a) If an issuer wrongfully dishonors or repudiates its obligation to pay money under a letter of credit before presentation, the beneficiary, successor, or nominated person presenting on its own behalf may recover from the issuer the amount that is the subject of the dishonor or repudiation. If the issuer's obligation under the letter of credit is not for the payment of money, the claimant may obtain specific performance or, at the claimant's election, recover an amount equal to the value of performance from the issuer. In either case, the claimant may also recover incidental but not consequential damages. The claimant is not obligated to take action to avoid damages that might be due from the issuer under this subsection. If, although not obligated to do so, the claimant avoids damages, the claimant's recovery from the issuer must be reduced by the amount of damages avoided. The issuer has the burden of proving the amount of damages avoided. In the case of repudiation the claimant need not present any document. (b) If an issuer wrongfully dishonors a draft or demand presented under a letter of credit or honors a draft or demand in breach of its obligation to the applicant, the applicant may recover damages resulting from the breach, including incidental but not consequential damages, less any amount saved as a result of the breach. (c) If an adviser or nominated person other than a confirmer breaches an obligation under this Article or an issuer breaches an obligation not covered in subsection (a) or (b), a person to whom the obligation is owed may recover damages resulting from the breach, including incidental but not consequential damages, less any amount saved as a result of the breach. To the extent of the confirmation, a confirmer has the liability of an issuer specified in this subsection and subsections (a) and (b). (d) An issuer, nominated person, or adviser who is found liable under subsection (a), (b), or (c) shall pay interest on the amount owed thereunder from the date of wrongful dishonor or other appropriate date. (e) Reasonable attorney's fees and other expenses of litigation must be awarded to the prevailing party in an action in which a remedy is sought under this Article. (f) Damages that would otherwise be payable by a party for breach of an obligation under this Article may be liquidated by agreement or undertaking, but only in an amount or by a formula that is reasonable in light of the harm anticipated. (Source: P.A. 89‑534, eff. 1‑1‑97.)
(810 ILCS 5/5‑112)(from Ch. 26, par. 5‑112) Sec. 5‑112. Transfer of letter of credit. (a) Except as otherwise provided in Section 5‑113, unless a letter of credit provides that it is transferable, the right of a beneficiary to draw or otherwise demand performance under a letter of credit may not be transferred. (b) Even if a letter of credit provides that it is transferable, the issuer may refuse to recognize or carry out a transfer if: (1) the transfer would violate applicable law; or (2) the transferor or transferee has failed to
comply with any requirement stated in the letter of credit or any other requirement relating to transfer imposed by the issuer which is within the standard practice referred to in Section 5‑108(e) or is otherwise reasonable under the circumstances.
(Source: P.A. 89‑534, eff. 1‑1‑97.)
(810 ILCS 5/5‑113)(from Ch. 26, par. 5‑113) Sec. 5‑113. Transfer by operation of law. (a) A successor of a beneficiary may consent to amendments, sign and present documents, and receive payment or other items of value in the name of the beneficiary without disclosing its status as a successor. (b) A successor of a beneficiary may consent to amendments, sign and present documents, and receive payment or other items of value in its own name as the disclosed successor of the beneficiary. Except as otherwise provided in subsection (e), an issuer shall recognize a disclosed successor of a beneficiary as beneficiary in full substitution for its predecessor upon compliance with the requirements for recognition by the issuer of a transfer of drawing rights by operation of law under the standard practice referred to in Section 5‑108(e) or, in the absence of such a practice, compliance with other reasonable procedures sufficient to protect the issuer. (c) An issuer is not obliged to determine whether a purported successor is a successor of a beneficiary or whether the signature of a purported successor is genuine or authorized. (d) Honor of a purported successor's apparently complying presentation under subsection (a) or (b) has the consequences specified in Section 5‑108(i) even if the purported successor is not the successor of a beneficiary. Documents signed in the name of the beneficiary or of a disclosed successor by a person who is neither the beneficiary nor the successor of the beneficiary are forged documents for the purposes of Section 5‑109. (e) An issuer whose rights of reimbursement are not covered by subsection (d) or substantially similar law and any confirmer or nominated person may decline to recognize a presentation under subsection (b). (f) A beneficiary whose name is changed after the issuance of a letter of credit has the same rights and obligations as a successor of a beneficiary under this Section. (Source: P.A. 89‑534, eff. 1‑1‑97.)
(810 ILCS 5/5‑114)(from Ch. 26, par. 5‑114) Sec. 5‑114. Assignment of proceeds. (a) In this Section, "proceeds of a letter of credit" means the cash, check, accepted draft, or other item of value paid or delivered upon honor or giving of value by the issuer or any nominated person under the letter of credit. The term does not include a beneficiary's drawing rights or documents presented by the beneficiary. (b) A beneficiary may assign its right to part or all
