§ 6A-9-409 Restrictions on assignment ofletter-of-credit rights ineffective. – (a) Term or law restricting assignment generally ineffective. A term ina letter of credit or a rule of law, statute, regulation, custom, or practiceapplicable to the letter of credit which prohibits, restricts, or requires theconsent of an applicant, issuer, or nominated person to a beneficiary'sassignment of or creation of a security interest in a letter-of-credit right isineffective to the extent that the term or rule of law, statute, regulation,custom, or practice:
(1) Would impair the creation, attachment, or perfection of asecurity 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, orremedy under the letter-of-credit right.
(b) Limitation on ineffectiveness under subsection(a). To the extent that a term in a letter of credit is ineffective undersubsection (a) but would be effective under law other than this chapter or acustom or practice applicable to the letter of credit, to the transfer of aright to draw or otherwise demand performance under the letter of credit, or tothe 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 renderperformance to the secured party, or accept payment or other performance fromthe secured party.
§ 6A-9-409 Restrictions on assignment ofletter-of-credit rights ineffective. – (a) Term or law restricting assignment generally ineffective. A term ina letter of credit or a rule of law, statute, regulation, custom, or practiceapplicable to the letter of credit which prohibits, restricts, or requires theconsent of an applicant, issuer, or nominated person to a beneficiary'sassignment of or creation of a security interest in a letter-of-credit right isineffective to the extent that the term or rule of law, statute, regulation,custom, or practice:
(1) Would impair the creation, attachment, or perfection of asecurity 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, orremedy under the letter-of-credit right.
(b) Limitation on ineffectiveness under subsection(a). To the extent that a term in a letter of credit is ineffective undersubsection (a) but would be effective under law other than this chapter or acustom or practice applicable to the letter of credit, to the transfer of aright to draw or otherwise demand performance under the letter of credit, or tothe 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 renderperformance to the secured party, or accept payment or other performance fromthe secured party.
§ 6A-9-409 Restrictions on assignment ofletter-of-credit rights ineffective. – (a) Term or law restricting assignment generally ineffective. A term ina letter of credit or a rule of law, statute, regulation, custom, or practiceapplicable to the letter of credit which prohibits, restricts, or requires theconsent of an applicant, issuer, or nominated person to a beneficiary'sassignment of or creation of a security interest in a letter-of-credit right isineffective to the extent that the term or rule of law, statute, regulation,custom, or practice:
(1) Would impair the creation, attachment, or perfection of asecurity 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, orremedy under the letter-of-credit right.
(b) Limitation on ineffectiveness under subsection(a). To the extent that a term in a letter of credit is ineffective undersubsection (a) but would be effective under law other than this chapter or acustom or practice applicable to the letter of credit, to the transfer of aright to draw or otherwise demand performance under the letter of credit, or tothe 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 renderperformance to the secured party, or accept payment or other performance fromthe secured party.
