N.Y. Uniform Commercial Code Law § 5-114: Assignment of proceeds

Section 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.