Idaho State Statutes - Idaho Attorney Directory

RESTRICTIONS ON ASSIGNMENT OF LETTER OF CREDIT RIGHTS
INEFFECTIVE. (a) A term in a letter of credit or a rule of law, statute, rule,
regulation, custom or practice applicable to the letter of credit which
prohibits, restricts or requires the consent of an applicant, issuer or
nominated person to a beneficiary's assignment of or creation of a security
interest in a letter of credit right is ineffective to the extent that the
term or rule of law, statute, rule, regulation, custom or practice:
(1) Would impair the creation, attachment or perfection of a security
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, or
remedy under the letter of credit right.
(b) To the extent that a term in a letter of credit is ineffective under
subsection (a) of this section but would be effective under law other than
this chapter or a custom or practice applicable to the letter of credit, to
the transfer of a right to draw or otherwise demand performance under the
letter of credit, or to the 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 render
performance to the secured party, or accept payment or other performance
from the secured party.

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