§ 554.9409

554.9409 Restrictions on assignment of letter-of-credit rights ineffective. 1. Term or law restricting assignment generally ineffective. A term in a letter of credit or a rule of law, statute, regulation, custom, or practice applicable to the letter of credit whichprohibits, restricts, or requires the consent of an applicant, issuer, or nominated person toa beneficiary’s assignment 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: a. would impair the creation, attachment, or perfection of a security interest in the letter-of-credit right; or b. 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. 2. Limitation on ineffectiveness under subsection 1. To the extent that a term in a letter of credit is ineffective under subsection 1 but would be effective under law other than thisArticle or a custom or practice applicable to the letter of credit, to the transfer of a right todraw

etter of credit is ineffective under subsection 1 but would be effective under law other than thisArticle or a custom or practice applicable to the letter of credit, to the transfer of a right todraw or otherwise demand performance under the letter of credit, or to the assignment of aright to proceeds of the letter of credit, the creation, attachment, or perfection of a securityinterest in the letter-of-credit right: a. is not enforceable against the applicant, issuer, nominated person, or transferee beneficiary; b. imposes no duties or obligations on the applicant, issuer, nominated person, or transferee beneficiary; and c. 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 acceptpayment or other performance from the secured party. 2000 Acts, ch 1149, §71, 187Referred to in §554.9401 Sat Dec 23 11:02:07 2023 Iowa Code 2024, Section 554.9409 (24, 0)