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355.5-117 Subrogation of issuer, applicant, and nominated person.
(1)
(2)
(3)
(4)
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.
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.
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 a 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.
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 and the rights in subsection (3) of this section
do not arise until the nominated person pays or otherwise gives value. Until then,
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.
Effective: July 1, 2001
History: Repealed and reenacted 2000 Ky. Acts ch. 408, sec. 17, effective July 1, 2001.
-- Created 1958 Ky. Acts ch. 77, sec. 5-117, effective July 1, 1960.
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