(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 of the proceeds
of a letter of credit. The beneficiary may do so before presentation as a
present assignment of its right to receive proceeds contingent upon its
compliance with the terms and conditions of the letter of credit.
(c) An issuer or nominated person need not recognize an
assignment of proceeds of a letter of credit until it consents to the
assignment.
(d) An issuer or nominated person has no obligation to give or
withhold its consent to an assignment of proceeds of a letter of credit, but
consent may not be unreasonably withheld if the assignee possesses and
exhibits the letter of credit and presentation of the letter of credit is a
condition to honor.
(e) Rights of a transferee beneficiary or nominated person are
independent of the beneficiary's assignment of the proceeds of a letter of
credit and are superior to the assignee's right to the proceeds.
(f) Neither the rights recognized by this Section between an assignee
and an issuer, transferee beneficiary, or nominated person nor the issuer's or
nominated person's payment of proceeds to an assignee or a third person
affect the rights between the assignee and any person other than the issuer,
transferee beneficiary, or nominated person. The mode of creating and
perfecting a security interest in or granting an assignment of a beneficiary's
rights to proceeds is governed by Article 9 or other law. Against persons
other than the issuer, transferee beneficiary, or nominated person, the rights
and obligations arising upon the creation of a security interest or other
assignment of a beneficiary's right to proceeds and its perfection are
governed by Article 9 or other law.
(Source: P.A. 89-364, eff. 1-1-96; 89-534, eff. 1-1-97.)
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