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| Home > Statutes > Usa Oregon |
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USA Statutes : oregon
Title : TITLE 08 COMMERCIAL TRANSACTIONS
Chapter : Chapter 75 Letters of Credit
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This chapter may be cited as Uniform
Commercial Code–Letters of Credit. [1961 c.726 §75.1010] (1) As used in this chapter:
(a) “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.
(b) “Applicant” means a person at whose request or for whose
account a letter of credit is issued. “Applicant” includes a person who
requests that an issuer issue a letter of credit on behalf of another if
the person making the request undertakes an obligation to reimburse the
issuer.
(c) “Beneficiary” means a person who under the terms of a letter of
credit is entitled to have its complying presentation honored.
“Beneficiary” includes a person to whom drawing rights have been
transferred under a transferable letter of credit.
(d) “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.
(e) “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.
(f) “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:
(A) That 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 ORS 75.1080 (5); and
(B) That is capable of being examined for compliance with the terms
and conditions of the letter of credit. A document may not be oral.
(g) “Good faith” means honesty in fact in the conduct of the
transaction concerned.
(h) “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:
(A) Upon payment;
(B) If the letter of credit provides for acceptance, upon
acceptance of a draft and, at maturity, its payment; or
(C) If the letter of credit provides for incurring a deferred
obligation, upon incurring the obligation and, at maturity, its
performance.
(i) “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.
(j) “Letter of credit” means a definite undertaking that satisfies
the requirements of ORS 75.1040 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.
(k) “Nominated person” means a person whom the issuer:
(A) Designates or authorizes to pay, accept, negotiate or otherwise
give value under a letter of credit; and
(B) Undertakes by agreement or custom and practice to reimburse.
(L) “Presentation” means delivery of a document to an issuer or
nominated person for honor or giving of value under a letter of credit.
(m) “Presenter” means a person making a presentation as or on
behalf of a beneficiary or nominated person.
(n) “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.
(o) “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.
(2) Other definitions applying to this chapter and the sections in
which they appear are:“Acceptance” ORS 73.0409
“Value” ORS 73.0303,
ORS 74.2110 (3) ORS chapter 71 contains certain additional general definitions
and principles of construction and interpretation applicable throughout
this chapter. [1961 c.726 §75.1020; 1997 c.150 §5] (1) This chapter applies to letters
of credit and to certain rights and obligations arising out of
transactions involving letters of credit.
(2) The statement of a rule in this chapter does not by itself
require, imply or negate application of the same or different rule to a
situation not provided for, or to a person not specified in this chapter.
(3) With the exception of this subsection, subsections (1) and (4)
of this section and ORS 75.1020 (1)(i) and (j), 75.1060 (4) and 75.1140
(4), and except to the extent prohibited in ORS 71.1020 (3) and 75.1170
(4), the effect of this chapter 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 chapter.
(4) 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. [1961 c.726 §75.1030; 1993
c.545 §119; 1997 c.150 §6] A letter of credit, confirmation,
advice, transfer, amendment or cancellation may be issued in any form
that is a record and is authenticated:
(1) By a signature; or
(2) In accordance with the agreement of the parties to the standard
practice referred to in ORS 75.1080 (5). [1961 c.726 §75.1040; 1997 c.150
§7] Consideration is not required to issue,
amend, transfer or cancel a letter of credit, advice or confirmation.
[1961 c.726 §75.1050; 1997 c.150 §8] (1) 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.
(2) 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.
(3) 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, one year after the date on
which it is issued.
(4) A letter of credit that states that it is perpetual expires
five years after its stated date of issuance, or if none is stated, five
years after the date on which it is issued. [1961 c.726 §75.1060; 1997
c.150 §9] (1) 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.
(2) A nominated person who is not a confirmer is not obligated to
honor or otherwise give value for a presentation.
(3) 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 to advise them accurately concerning 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.
(4) 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 (3) of this section. 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. [1961 c.726 §75.1070; 1997 c.150 §10] (1) Except as provided in
ORS 75.1090, an issuer shall honor a presentation that, as determined by
the standard practice referred to in subsection (5) of this section,
appears on its face strictly to comply with the terms and conditions of
the letter of credit. Except as provided in ORS 75.1130 and unless
otherwise agreed with the applicant, an issuer shall dishonor a
presentation that does not appear to comply with the terms and conditions
of the letter of credit.
(2) An issuer has a reasonable time after presentation, but not
later than the seventh business day after the issuer receives the
documents:
(a) To honor;
(b) 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
(c) To give notice to the presenter of discrepancies in the
presentation.
(3) Except as otherwise provided in subsection (4) of this section,
an issuer is precluded from asserting as a basis for dishonor:
(a) Any discrepancy if timely notice is not given; or
(b) Any discrepancy not stated in the notice if timely notice is
given.
(4) Failure to give the notice specified in subsection (2) of this
section 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 ORS 75.1090 (1) or expiration of the letter of
credit before presentation.
(5) 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.
(6) An issuer is not responsible for:
(a) The performance or nonperformance of the underlying contract,
arrangement, or transaction;
(b) An act or omission of another person; or
(c) Observance or knowledge of the usage of a particular trade
other than the standard practice referred to in subsection (5) of this
section.
(7) If an undertaking constituting a letter of credit under ORS
75.1020 (1)(j) contains nondocumentary conditions, an issuer shall
disregard the nondocumentary conditions and treat them as if they were
not stated.
(8) 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.
(9) An issuer that has honored a presentation as permitted or
required by this chapter:
(a) Is entitled to be reimbursed by the applicant in immediately
available funds not later than the date of its payment of funds;
(b) Takes the documents free of claims of the beneficiary or
presenter;
(c) Is precluded from asserting a right of recourse on a draft
under ORS 73.0414 and 73.0415;
(d) Except as provided in ORS 75.1100 and 75.1170, 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 that
are apparent on the face of the presentation; and
(e) 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. [1961 c.726 §75.1080; 1997 c.150
§11] (1) 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:
(a) The issuer shall honor the presentation, if honor is demanded
by:
(A) A nominated person who has given value in good faith and
without notice of forgery or material fraud;
(B) A confirmer who has honored its confirmation in good faith;
(C) A holder in due course of a draft drawn under the letter of
credit that was taken after acceptance by the issuer or nominated person;
or
(D) 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
(b) The issuer, acting in good faith, may honor or dishonor the
presentation in any other case.
(2) 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:
(a) The relief is not prohibited under the law applicable to an
accepted draft or deferred obligation incurred by the issuer;
(b) 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;
(c) All of the conditions to entitle a person to the relief under
the law of this state have been met; and
(d) 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 (1)(a) of this section. [1961 c.726 §75.1090;
1997 c.150 §12] (1) If its presentation is honored, the
beneficiary warrants:
(a) To the issuer, any other person to whom presentation is made
and to the applicant that there is no fraud or forgery of the kind
described in ORS 75.1090 (1); and
(b) 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.
(2) The warranties in subsection (1) of this section are in
addition to warranties arising under ORS chapters 73, 74, 77 and 78
because of the presentation or transfer of documents covered by ORS
chapters 73, 74, 77 and 78. [1961 c.726 §75.1100; 1997 c.150 §13] (1) 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.
(2) 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.
(3) If an adviser or nominated person other than a confirmer
breaches an obligation under this section or an issuer breaches an
obligation not covered in subsection (1) or (2) of this section, 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 (1) and (2) of this section.
(4) An issuer, nominated person or adviser who is found liable
under subsection (1), (2) or (3) of this section shall pay interest on
the amount owed thereunder from the date of wrongful dishonor or other
appropriate date.
(5) Reasonable attorney fees and other expenses of litigation shall
be awarded to the prevailing party in an action in which a remedy is
sought under this section.
(6) Damages that would otherwise be payable by a party for breach
of an obligation under this section 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. [1961 c.726 §75.1110; 1997 c.150 §14] (1) Except as provided in ORS
75.1130, 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.
(2) Even if a letter of credit provides that it is transferable,
the issuer may refuse to recognize or carry out a transfer if:
(a) The transfer would violate applicable law; or
(b) 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 that is within the standard
practice referred to in ORS 75.1080 (5) or is otherwise reasonable under
the circumstances. [1961 c.726 §75.1120; 1997 c.150 §15] (1) 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.
(2) 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
provided in subsection (5) of this section, 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 ORS 75.1080 (5) or, in the absence
of such a practice, compliance with other reasonable procedures
sufficient to protect the issuer.
(3) 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.
(4) Honor of a purported successor’s apparently complying
presentation under subsection (1) or (2) of this section has the
consequences specified in ORS 75.1080 (9) 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 ORS 75.1090.
(5) An issuer whose rights of reimbursement are not covered by
subsection (4) of this section or substantially similar law and any
confirmer or nominated person may decline to recognize a presentation
under subsection (2) of this section.
(6) 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. [1961 c.726 §75.1130; 1997 c.150 §16] (1) As used 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. “Proceeds
of a letter of credit” does not include a beneficiary’s drawing rights or
documents presented by the beneficiary.
(2) 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.
(3) An issuer or nominated person need not recognize an assignment
of proceeds of a letter of credit until it consents to the assignment.
(4) 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.
(5) 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.
(6) 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 of a letter of
credit 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 ORS chapter 79 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 ORS chapter 79 or other law. [1961 c.726 §75.1140; 1985 c.676
§75.1140; 1993 c.545 §120; 1995 c.328 §68; 1997 c.150 §17] An action to enforce a right or
obligation arising under this chapter must be commenced within one year
after the expiration date of the relevant letter of credit or one year
after the cause of action accrues, whichever occurs later. A cause of
action accrues when the breach occurs, regardless of the aggrieved
party’s lack of knowledge of the breach. [1961 c.726 §75.1150; 1997 c.150
§18] (1) The liability of an issuer,
nominated person or adviser for action or omission is governed by the law
of the jurisdiction chosen by an agreement in the form of a record signed
or otherwise authenticated by the affected parties in the manner provided
in ORS 75.1040 or by a provision in the person’s letter of credit,
confirmation or other undertaking. The jurisdiction whose law is chosen
need not bear any relation to the transaction.
(2) Unless subsection (1) of this section applies, the liability of
an issuer, nominated person or adviser for action or omission is governed
by the law of the jurisdiction in which the person is located. The person
is considered to be located at the address indicated in the person’s
undertaking. If more than one address is indicated, the person is
considered to be located at the address from which the person’s
undertaking was issued. For the purpose of jurisdiction, choice of law
and recognition of interbranch letters of credit, but not enforcement of
a judgment, all branches of a bank are considered separate juridical
entities and a bank is considered to be located at the place where its
relevant branch is considered to be located under this subsection.
(3)(a) Except as provided in this subsection, the liability of an
issuer, nominated person or adviser is governed by any rules of custom or
practice, such as the Uniform Customs and Practice for Documentary
Credits, to which the letter of credit, confirmation or other undertaking
is expressly made subject.
(b) Except to the extent of any conflict with the nonvariable
provisions specified in ORS 75.1030 (3), rules of custom or practice
govern if:
(A) This chapter would govern the liability of an issuer, nominated
person or adviser under subsection (1) or (2) of this section;
(B) The relevant undertaking incorporates rules of custom or
practice; and
(C) There is conflict between this chapter and those rules as
applied to that undertaking.
(4) If there is conflict between this chapter and ORS chapters 73,
74, 74A or 79, this chapter governs.
(5) The forum for settling disputes arising out of an undertaking
under this chapter may be chosen in the manner and with the binding
effect that governing law may be chosen in accordance with subsection (1)
of this section. [1961 c.726 §75.1160; 1973 c.504 §4; 1997 c.150 §19] (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.
(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)
of this section.
(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 secondary obligor of the obligation owed to the
issuer by the applicant;
(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
(c) The applicant to same extent as if the nominated person were a
secondary obligor of the underlying obligation owed to the applicant.
(4) Notwithstanding any agreement or term to the contrary, the
rights of subrogation stated in subsections (1) and (2) of this section
do not arise until the issuer honors the letter of credit or otherwise
pays. The rights in subsection (3) of this section do not arise until the
nominated person pays or otherwise gives value. Until the rights in
subsections (1), (2) or (3) of this section arise, 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. [1961
c.726 §75.1170; 1997 c.150 §20] (1) An
issuer or nominated person has a security interest in a document
presented under a letter of credit to the extent that the issuer or
nominated person honors or gives value for the presentation.
(2) As long as and to the extent that an issuer or nominated person
has not been reimbursed or has not otherwise recovered the value given
with respect to a security interest in a document under subsection (1) of
this section, the security interest continues and is subject to ORS
chapter 79, but:
(a) A security agreement is not necessary to make the security
interest enforceable under ORS 79.0203 (2)(c);
(b) If the document is presented in a medium other than a written
or other tangible medium, the security interest is perfected; and
(c) If the document is presented in a written or other tangible
medium and is not a certificated security, chattel paper, a document of
title, an instrument, or a letter of credit, the security interest is
perfected and has priority over a conflicting security interest in the
document as long as the debtor does not have possession of the document.
[2001 c.445 §148]Note: For transition provisions regarding secured transactions, see
notes under 79.0628.
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