N.Y. Uniform Commercial Code Law § 9-409: Restrictions on Assignment of Letter-of-credit Rights Ineffective

Section 9--409. Restrictions on Assignment of Letter-of-credit Rights

Ineffective.

(a) 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 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, 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) Limitation on ineffectiveness under subsection (a). To the extent

that a term in a letter-of-credit is ineffective under subsection (a)

but would be effective under law other than this article 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.