§5-1117. Subrogation of issuer, applicant and nominated person
(1).
An issuer that honors a beneficiary's presentation is subrogated to the rights of the beneficiary to the same extent as
if the issuer were a secondary obligor of the underlying obligation owed to the beneficiary and of the applicant to the same
extent as if the issuer were the secondary obligor of the underlying obligation owed to the applicant.
[
1997, c. 429, Pt. A, §2 (NEW);
1997, c. 429, Pt. A, §4 (AFF)
.]
(2).
An applicant that reimburses an issuer is subrogated to the rights of the issuer against any beneficiary, presenter or nominated
person to the same extent as if the applicant were the secondary obligor of the obligations owed to the issuer and has the
rights of subrogation of the issuer to the rights of the beneficiary stated in subsection (1).
[
1997, c. 429, Pt. A, §2 (NEW);
1997, c. 429, Pt. A, §4 (AFF)
.]
(3).
A nominated person who pays or gives value against a draft or demand presented under a letter of credit is subrogated to
the rights of:
(a). The issuer against the applicant to the same extent as if the nominated person were a secondary obligor of the obligation
owed to the issuer by the applicant; [1997, c. 429, Pt. A, §2 (NEW); 1997, c. 429, Pt. A, §4 (AFF).]
(b). The beneficiary to the same extent as if the nominated person were a secondary obligor of the underlying obligation owed
to the beneficiary; and [1997, c. 429, Pt. A, §2 (NEW); 1997, c. 429, Pt. A, §4 (AFF).]
(c). The applicant to the same extent as if the nominated person were a secondary obligor of the underlying obligation owed to
the applicant. [1997, c. 429, Pt. A, §2 (NEW); 1997, c. 429, Pt. A, §4 (AFF).]
[
1997, c. 429, Pt. A, §2 (NEW);
1997, c. 429, Pt. A, §4 (AFF)
.]
(4).
Notwithstanding any agreement or term to the contrary, the rights of subrogation stated in subsections (1) and (2) do not
arise until the issuer honors the letter of credit or otherwise pays and the rights in subsection (3) do not arise until the
nominated person pays or otherwise gives value. Until then, the issuer, nominated person, and the applicant do not derive
under this section present or prospective rights forming the basis of a claim, defense or excuse.
[
1997, c. 429, Pt. A, §2 (NEW);
1997, c. 429, Pt. A, §4 (AFF)
.]
SECTION HISTORY
1997, c. 429, §A2 (NEW).
1997, c. 429, §A4 (AFF).
Data for this page extracted on 10/16/2012 08:20:53.