2006 New York Code - 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.