The online versions of legislation provided on this website are not official. Enrolled bills are the final version passed by the Ohio General Assembly and presented to the Governor for signature. The official version of acts signed by the Governor are available from the Secretary of State's Office in the Continental Plaza, 180 East Broad St., Columbus.
|
***
An attempt was made to recreate these historic documents. The original text was retained, however, during the process some errors in formatting may have been introduced. The official version of the act may be obtained from the Secretary of State's Office listed above.
***
|
(122nd General Assembly)(House Bill Number 338)
AN ACT
To amend sections 1301.05, 1302.56, 1309.01, 1309.03, 1309.04, 1309.23,
and 1309.24, to enact new sections 1305.01 to 1305.16, and to
repeal sections 1305.01, 1305.02, 1305.03,
1305.04, 1305.05,
1305.06, 1305.07, 1305.08, 1305.09, 1305.10, 1305.11, 1305.12,
1305.13, 1305.14, 1305.15, and 1305.16 of the Revised Code to
adopt Revised Article V--Letters of Credit
of the Uniform
Commercial Code.
Be it enacted by the General Assembly of the State of Ohio:
SECTION 1 . That sections 1301.05, 1302.56, 1309.01, 1309.03, 1309.04, 1309.23,
and
1309.24 be amended and new sections 1305.01, 1305.02, 1305.03, 1305.04,
1305.05, 1305.06, 1305.07, 1305.08, 1305.09, 1305.10, 1305.11, 1305.12,
1305.13, 1305.14, 1305.15, and 1305.16 of the Revised Code be enacted to read
as follows:
Sec. 1301.05. (A) Except as otherwise provided in this
section, when a transaction bears a reasonable relation to this
state and also to another state or nation, the parties may agree
that the law either of this state or of the other state or nation
shall govern their rights and duties. Failing such an agreement
Chapters 1301., 1302., 1303., 1304., 1305., 1307., 1308.,
1309., and 1310. of the Revised Code apply to transactions
bearing an appropriate relation to this state. (B) Where one of the following provisions of Chapters
1301., 1302., 1303., 1304., 1305., 1307., 1308., 1309.,
and 1310. of the Revised Code specifies the applicable law, that
provision governs and a contrary agreement is effective only to
the extent permitted by the law, including the conflict of laws
rules, so specified: (1) Rights of creditors against sold goods, as provided in
section 1302.43 of the Revised Code; (2) Applicability of sections 1304.01 to 1304.40 of the
Revised Code, as provided in section 1304.02 of the Revised Code; (3) Fund transfers under sections 1304.51 to 1304.85 of
the Revised Code, as provided in section 1304.85 of the Revised
Code; (4) Choice of law as to letters of credit under section 1305.15 Of the Revised Code; (5) Applicability of sections 1308.01 to 1308.36 of the
Revised Code, as provided in section 1308.05 of the Revised Code; (5)(6) Perfection provisions of section 1309.03 of the
Revised Code;
(6)(7) Applicability of sections 1310.01 to 1310.78 of the
Revised Code, as provided in sections 1310.03 and 1310.04 of the
Revised Code.
Sec. 1302.56. (A) Where the contract requires payment before inspection,
non-conformity nonconformity of the goods does not excuse the
buyer from so making payment unless: (1) the non-conformity The nonconformity appears without
inspection; or (2) despite Despite tender of the required documents the
circumstances would justify injunction against honor under the
provisions division (B) of section 1305.13
1305.08
of the Revised Code. (B) Payment pursuant to division (A) of this section does not constitute an
acceptance of goods or impair the buyer's right to inspect or any of
his the buyer's remedies. Sec. 1305.01. (A) AS USED IN THIS CHAPTER: (1) "ADVISER" MEANS A PERSON WHO, AT THE REQUEST OF
THE ISSUER, A CONFIRMER, OR ANOTHER ADVISER, NOTIFIES OR
REQUESTS ANOTHER ADVISER TO NOTIFY THE BENEFICIARY THAT A LETTER
OF CREDIT HAS BEEN ISSUED, CONFIRMED, OR AMENDED. (2) "APPLICANT" MEANS A PERSON AT WHOSE REQUEST OR FOR
WHOSE ACCOUNT A LETTER OF CREDIT IS ISSUED. THE TERM INCLUDES A
PERSON WHO REQUESTS AN ISSUER TO ISSUE A LETTER OF CREDIT ON
BEHALF OF ANOTHER IF THE PERSON MAKING THE REQUEST UNDERTAKES AN
OBLIGATION TO REIMBURSE THE ISSUER. (3) "BENEFICIARY" MEANS A PERSON WHO, UNDER THE TERMS
OF A LETTER OF CREDIT, IS ENTITLED TO HAVE ITS COMPLYING
PRESENTATION HONORED. THE TERM INCLUDES A PERSON TO WHOM
DRAWING RIGHTS HAVE BEEN TRANSFERRED UNDER A TRANSFERABLE LETTER
OF CREDIT. (4) "CONFIRMER" MEANS A NOMINATED PERSON WHO
UNDERTAKES, AT THE REQUEST OR WITH THE CONSENT OF THE ISSUER, TO
HONOR A PRESENTATION UNDER A LETTER OF CREDIT ISSUED BY ANOTHER. (5) "DISHONOR" OF A LETTER OF CREDIT MEANS FAILURE
TIMELY TO HONOR OR TO TAKE AN INTERIM ACTION, SUCH AS ACCEPTANCE
OF A DRAFT, THAT MAY BE REQUIRED BY THE LETTER OF CREDIT. (6) "DOCUMENT" MEANS A DRAFT OR OTHER DEMAND, DOCUMENT
OF TITLE, INVESTMENT SECURITY, CERTIFICATE, INVOICE, OR OTHER
RECORD, STATEMENT, OR REPRESENTATION OF FACT, LAW, RIGHT, OR
OPINION THAT IS (a) PRESENTED IN A WRITTEN OR OTHER MEDIUM
PERMITTED BY THE LETTER OF CREDIT OR, UNLESS PROHIBITED BY THE
LETTER OF CREDIT, BY THE STANDARD PRACTICE REFERRED TO IN
DIVISION (E) OF SECTION 1305.07 Of the Revised Code and (b) CAPABLE
OF BEING EXAMINED FOR COMPLIANCE WITH THE TERMS
AND CONDITIONS OF THE LETTER OF CREDIT. A DOCUMENT MAY NOT BE
ORAL. (7) "GOOD FAITH" MEANS HONESTY IN FACT IN THE CONDUCT
OR TRANSACTION CONCERNED. (8) "HONOR" OF A LETTER OF CREDIT MEANS PERFORMANCE OF
THE ISSUER'S UNDERTAKING IN THE LETTER OF CREDIT TO PAY OR
DELIVER AN ITEM OF VALUE. UNLESS THE LETTER OF CREDIT OTHERWISE
PROVIDES, "HONOR" OCCURS: (a) UPON PAYMENT; (b) IF THE LETTER OF CREDIT PROVIDES FOR
ACCEPTANCE, UPON ACCEPTANCE OF A DRAFT AND, AT MATURITY, ITS
PAYMENT; OR (c) IF THE LETTER OF CREDIT PROVIDES FOR INCURRING
A DEFERRED OBLIGATION, UPON INCURRING THE OBLIGATION AND, AT
MATURITY, ITS PERFORMANCE. (9) "ISSUER" MEANS A BANK OR OTHER PERSON THAT ISSUES
A LETTER OF CREDIT, BUT DOES NOT INCLUDE AN INDIVIDUAL WHO MAKES
AN ENGAGEMENT FOR PERSONAL, FAMILY, OR HOUSEHOLD PURPOSES. (10) "LETTER OF CREDIT" MEANS A DEFINITE UNDERTAKING
THAT SATISFIES THE REQUIREMENTS OF SECTION 1305.03 Of the Revised Code BY AN ISSUER TO
A BENEFICIARY AT THE REQUEST OR FOR THE ACCOUNT
OF AN APPLICANT OR, IN THE CASE OF A FINANCIAL INSTITUTION, TO
ITSELF OR FOR ITS OWN ACCOUNT, TO HONOR A DOCUMENTARY
PRESENTATION BY PAYMENT OR DELIVERY OF AN ITEM OF VALUE. (11) "NOMINATED PERSON" MEANS A PERSON WHOM THE ISSUER
(a) DESIGNATES OR AUTHORIZES TO PAY, ACCEPT, NEGOTIATE, OR
OTHERWISE GIVE VALUE UNDER A LETTER OF CREDIT AND (b)
UNDERTAKES BY AGREEMENT OR CUSTOM AND PRACTICE TO REIMBURSE. (12) "PRESENTATION" MEANS DELIVERY OF A DOCUMENT TO AN
ISSUER OR NOMINATED PERSON FOR HONOR OR GIVING OF VALUE UNDER A
LETTER OF CREDIT. (13) "PRESENTER" MEANS A PERSON MAKING A PRESENTATION
AS, OR ON BEHALF OF, A BENEFICIARY OR NOMINATED PERSON. (14) "RECORD" MEANS INFORMATION THAT IS INSCRIBED ON A
TANGIBLE MEDIUM, OR THAT IS STORED IN AN ELECTRONIC OR OTHER
MEDIUM AND IS RETRIEVABLE IN PERCEIVABLE FORM. (15) "SUCCESSOR OF A BENEFICIARY" MEANS A PERSON WHO
SUCCEEDS TO SUBSTANTIALLY ALL OF THE RIGHTS OF A BENEFICIARY BY
OPERATION OF LAW, INCLUDING A CORPORATION WITH OR INTO WHICH THE
BENEFICIARY HAS BEEN MERGED OR CONSOLIDATED, AN ADMINISTRATOR,
EXECUTOR, PERSONAL REPRESENTATIVE, TRUSTEE IN BANKRUPTCY, DEBTOR
IN POSSESSION, LIQUIDATOR, AND RECEIVER. (B) DEFINITIONS IN OTHER CHAPTERS APPLYING TO THIS CHAPTER AND THE
SECTIONS IN WHICH THEY APPEAR ARE: "ACCEPT" OR "ACCEPTANCE" IN
SECTION 1303.46 AND "VALUE" IN SECTIONS 1303.33 AND 1304.21 Of the Revised Code. (C) CHAPTER 1301. Of the Revised Code CONTAINS CERTAIN ADDITIONAL GENERAL
DEFINITIONS AND PRINCIPLES OF CONSTRUCTION AND INTERPRETATION APPLICABLE
THROUGHOUT THIS CHAPTER. Sec. 1305.02. (A) THIS CHAPTER APPLIES TO LETTERS OF CREDIT AND TO
CERTAIN RIGHTS AND OBLIGATIONS ARISING OUT OF TRANSACTIONS INVOLVING LETTERS
OF CREDIT. (B) THE STATEMENT OF A RULE IN THIS CHAPTER DOES NOT BY ITSELF
REQUIRE, IMPLY, OR NEGATE APPLICATION OF THE SAME OR A DIFFERENT
RULE TO A SITUATION NOT PROVIDED FOR, OR TO A PERSON NOT
SPECIFIED, IN THIS CHAPTER. (C) WITH THE EXCEPTION OF THIS DIVISION, DIVISIONS
(A) AND (D) OF THIS SECTION, DIVISIONS
(A)(9) AND (10) OF SECTION 1305.01, DIVISION (D)
OF SECTION 1305.05, AND DIVISION (D)
OF SECTION 1305.13, AND EXCEPT TO THE EXTENT PROHIBITED IN
DIVISION (C) OF SECTION 1301.02 AND DIVISION
(D) OF SECTION 1305.16 Of the Revised Code,
THE EFFECT OF THIS CHAPTER MAY BE VARIED BY AGREEMENT OR BY A
PROVISION STATED OR INCORPORATED BY REFERENCE IN AN UNDERTAKING.
A TERM IN AN AGREEMENT OR UNDERTAKING GENERALLY EXCUSING
LIABILITY OR GENERALLY LIMITING REMEDIES FOR FAILURE TO PERFORM
OBLIGATIONS IS NOT SUFFICIENT TO VARY OBLIGATIONS PRESCRIBED BY
THIS CHAPTER. (D) RIGHTS AND OBLIGATIONS OF AN ISSUER TO A BENEFICIARY
OR A NOMINATED PERSON UNDER A LETTER OF CREDIT ARE INDEPENDENT
OF THE EXISTENCE, PERFORMANCE, OR NONPERFORMANCE OF A CONTRACT
OR ARRANGEMENT OUT OF WHICH THE LETTER OF CREDIT ARISES OR WHICH
UNDERLIES IT, INCLUDING CONTRACTS OR ARRANGEMENTS BETWEEN THE
ISSUER AND THE APPLICANT AND BETWEEN THE APPLICANT AND THE
BENEFICIARY. Sec. 1305.03. A LETTER OF CREDIT, CONFIRMATION, ADVICE,
TRANSFER, AMENDMENT, OR CANCELLATION MAY BE ISSUED IN ANY FORM
THAT IS A RECORD AND IS AUTHENTICATED BY A SIGNATURE OR IN
ACCORDANCE WITH THE AGREEMENT OF THE PARTIES OR THE STANDARD
PRACTICE REFERRED TO IN DIVISION (E) OF SECTION 1305.07 Of the Revised Code. Sec. 1305.04. CONSIDERATION IS NOT REQUIRED TO ISSUE, AMEND,
TRANSFER, OR CANCEL A LETTER OF CREDIT, ADVICE, OR CONFIRMATION. Sec. 1305.05. (A) A LETTER OF CREDIT IS ISSUED AND BECOMES
ENFORCEABLE ACCORDING
TO ITS TERMS AGAINST THE ISSUER WHEN THE ISSUER SENDS OR
OTHERWISE TRANSMITS IT TO THE PERSON REQUESTED TO ADVISE OR TO
THE BENEFICIARY. A LETTER OF CREDIT IS REVOCABLE ONLY IF IT SO
PROVIDES. (B) AFTER A LETTER OF CREDIT IS ISSUED, RIGHTS AND OBLIGATIONS OF A
BENEFICIARY, APPLICANT, CONFIRMER, AND ISSUER ARE NOT AFFECTED
BY AN AMENDMENT OR CANCELLATION TO WHICH THAT PERSON HAS NOT
CONSENTED EXCEPT TO THE EXTENT THE LETTER OF CREDIT PROVIDES
THAT IT IS REVOCABLE OR THAT THE ISSUER MAY AMEND OR CANCEL THE
LETTER OF CREDIT WITHOUT THAT CONSENT. (C) IF THERE IS NO STATED EXPIRATION DATE OR OTHER PROVISION THAT
DETERMINES ITS DURATION, A LETTER OF CREDIT EXPIRES ONE YEAR
AFTER ITS STATED DATE OF ISSUANCE OR, IF NONE IS STATED, AFTER
THE DATE ON WHICH IT IS ISSUED. (D) A LETTER OF CREDIT THAT STATES THAT IT IS PERPETUAL EXPIRES
FIVE YEARS AFTER ITS STATED DATE OF ISSUANCE OR, IF NONE IS
STATED, AFTER THE DATE ON WHICH IT IS ISSUED. Sec. 1305.06. (A) A CONFIRMER IS DIRECTLY OBLIGATED ON A LETTER OF
CREDIT AND HAS
THE RIGHTS AND OBLIGATIONS OF AN ISSUER TO THE EXTENT OF ITS
CONFIRMATION. THE CONFIRMER ALSO HAS RIGHTS AGAINST AND
OBLIGATIONS TO THE ISSUER AS IF THE ISSUER WERE AN APPLICANT AND
THE CONFIRMER HAD ISSUED THE LETTER OF CREDIT AT THE REQUEST AND
FOR THE ACCOUNT OF THE ISSUER. (B) A NOMINATED PERSON WHO IS NOT A CONFIRMER IS NOT OBLIGATED TO
HONOR OR OTHERWISE GIVE VALUE FOR A PRESENTATION. (C) A PERSON REQUESTED TO ADVISE MAY DECLINE TO ACT AS AN ADVISER.
AN ADVISER THAT IS NOT A CONFIRMER IS NOT OBLIGATED TO HONOR OR
GIVE VALUE FOR A PRESENTATION. AN ADVISER UNDERTAKES TO THE
ISSUER AND TO THE BENEFICIARY ACCURATELY TO ADVISE THE TERMS OF
THE LETTER OF CREDIT, CONFIRMATION, AMENDMENT, OR ADVICE
RECEIVED BY THAT PERSON AND UNDERTAKES TO THE BENEFICIARY TO
CHECK THE APPARENT AUTHENTICITY OF THE REQUEST TO ADVISE. EVEN
IF THE ADVICE IS INACCURATE, THE LETTER OF CREDIT, CONFIRMATION,
OR AMENDMENT IS ENFORCEABLE AS ISSUED. (D) A PERSON WHO NOTIFIES A TRANSFEREE BENEFICIARY OF THE TERMS OF
A LETTER OF CREDIT, CONFIRMATION, AMENDMENT, OR ADVICE HAS THE
RIGHTS AND OBLIGATIONS OF AN ADVISER UNDER DIVISION (C)
OF THIS SECTION. THE TERMS IN THE NOTICE TO THE TRANSFEREE
BENEFICIARY MAY DIFFER FROM THE TERMS IN ANY NOTICE TO THE
TRANSFEROR BENEFICIARY TO THE EXTENT PERMITTED BY THE LETTER OF
CREDIT, CONFIRMATION, AMENDMENT, OR ADVICE RECEIVED BY THE
PERSON WHO SO NOTIFIES. Sec. 1305.07. (A) EXCEPT AS OTHERWISE PROVIDED IN SECTION 1305.08
Of the Revised Code,
AN ISSUER SHALL HONOR A PRESENTATION THAT, AS DETERMINED BY THE
STANDARD PRACTICE REFERRED TO IN DIVISION
(E) OF THIS SECTION, APPEARS ON ITS FACE STRICTLY TO COMPLY WITH THE
TERMS AND CONDITIONS OF THE LETTER OF CREDIT. EXCEPT AS
OTHERWISE PROVIDED IN SECTION 1305.12 Of the Revised Code AND, UNLESS OTHERWISE AGREED
WITH THE APPLICANT, AN ISSUER SHALL
DISHONOR A PRESENTATION THAT DOES NOT APPEAR SO TO COMPLY. (B) AN ISSUER HAS A REASONABLE TIME AFTER PRESENTATION, BUT NOT
BEYOND THE END OF THE SEVENTH BUSINESS DAY OF THE ISSUER AFTER
THE DAY OF ITS RECEIPT OF DOCUMENTS: (1) TO HONOR; (2) IF THE LETTER OF CREDIT PROVIDES FOR HONOR TO BE
COMPLETED MORE THAN SEVEN BUSINESS DAYS AFTER PRESENTATION, TO
ACCEPT A DRAFT OR INCUR A DEFERRED OBLIGATION; OR (3) TO GIVE NOTICE TO THE PRESENTER OF DISCREPANCIES IN
THE PRESENTATION. (C) EXCEPT AS OTHERWISE PROVIDED IN DIVISION
(D) OF THIS SECTION, AN ISSUER IS PRECLUDED FROM ASSERTING AS A
BASIS FOR DISHONOR ANY DISCREPANCY IF TIMELY NOTICE IS NOT GIVEN
OR ANY DISCREPANCY NOT STATED IN THE NOTICE IF TIMELY NOTICE IS
GIVEN. (D) FAILURE TO GIVE THE NOTICE SPECIFIED IN DIVISION
(B) OF THIS SECTION OR TO MENTION FRAUD, FORGERY, OR EXPIRATION IN
THE NOTICE DOES NOT PRECLUDE THE ISSUER FROM ASSERTING AS A
BASIS FOR DISHONOR FRAUD OR FORGERY AS DESCRIBED IN DIVISION (A)
OF SECTION 1305.08 Of the Revised Code OR EXPIRATION OF THE LETTER OF CREDIT BEFORE
PRESENTATION. (E) AN ISSUER SHALL OBSERVE STANDARD PRACTICE OF FINANCIAL
INSTITUTIONS THAT REGULARLY ISSUE LETTERS OF CREDIT.
DETERMINATION OF THE ISSUER'S OBSERVANCE OF THE STANDARD
PRACTICE IS A MATTER OF INTERPRETATION FOR THE COURT. THE COURT
SHALL OFFER THE PARTIES A REASONABLE OPPORTUNITY TO PRESENT
EVIDENCE OF THE STANDARD PRACTICE. (F) AN ISSUER IS NOT RESPONSIBLE FOR: (1) THE PERFORMANCE OR NONPERFORMANCE OF THE UNDERLYING
CONTRACT, ARRANGEMENT, OR TRANSACTION; (2) AN ACT OR OMISSION OF OTHERS; OR (3) OBSERVANCE OR KNOWLEDGE OF THE USAGE OF A
PARTICULAR TRADE OTHER THAN THE STANDARD PRACTICE REFERRED TO IN
DIVISION (E) OF THIS SECTION. (G) IF AN UNDERTAKING CONSTITUTING A LETTER OF CREDIT UNDER
DIVISION (A)(10) OF SECTION 1305.01 Of the Revised Code CONTAINS
NONDOCUMENTARY CONDITIONS, AN ISSUER SHALL DISREGARD
THE NONDOCUMENTARY CONDITIONS AND TREAT THEM AS IF THEY WERE NOT
STATED. (H) AN ISSUER THAT HAS DISHONORED A PRESENTATION SHALL RETURN THE
DOCUMENTS OR HOLD THEM AT THE DISPOSAL OF, AND SEND ADVICE TO
THAT EFFECT TO, THE PRESENTER. (I) AN ISSUER THAT HAS HONORED A PRESENTATION AS PERMITTED OR
REQUIRED BY THIS CHAPTER: (1) IS ENTITLED TO BE REIMBURSED BY THE APPLICANT IN
IMMEDIATELY AVAILABLE FUNDS NOT LATER THAN THE DATE OF ITS
PAYMENT OF FUNDS; (2) TAKES THE DOCUMENTS FREE OF CLAIMS OF THE
BENEFICIARY OR PRESENTER; (3) IS PRECLUDED FROM ASSERTING A RIGHT OF RECOURSE ON
A DRAFT UNDER SECTIONS 1303.54 AND 1303.55 Of the Revised Code; (4) EXCEPT AS OTHERWISE PROVIDED IN SECTIONS 1305.09
AND 1305.16 Of the Revised Code, IS PRECLUDED FROM RESTITUTION OF MONEY PAID OR OTHER
VALUE GIVEN BY MISTAKE TO THE EXTENT THE MISTAKE CONCERNS DISCREPANCIES IN
THE DOCUMENTS OR TENDER THAT ARE APPARENT ON THE FACE OF THE
PRESENTATION; AND (5) IS DISCHARGED TO THE EXTENT OF ITS PERFORMANCE
UNDER THE LETTER OF CREDIT UNLESS THE ISSUER HONORED A
PRESENTATION IN WHICH A REQUIRED SIGNATURE OF A BENEFICIARY WAS
FORGED. Sec. 1305.08. (A) IF A PRESENTATION IS MADE THAT APPEARS ON ITS
FACE STRICTLY TO
COMPLY WITH THE TERMS AND CONDITIONS OF THE LETTER OF CREDIT,
BUT A REQUIRED DOCUMENT IS FORGED OR MATERIALLY FRAUDULENT, OR
HONOR OF THE PRESENTATION WOULD FACILITATE A MATERIAL FRAUD BY
THE BENEFICIARY ON THE ISSUER OR APPLICANT: (1) THE ISSUER SHALL HONOR THE PRESENTATION, IF HONOR IS
DEMANDED BY (a) A NOMINATED PERSON WHO HAS GIVEN VALUE IN GOOD
FAITH AND WITHOUT NOTICE OF FORGERY OR MATERIAL FRAUD, (b) A
CONFIRMER WHO HAS HONORED ITS CONFIRMATION IN GOOD FAITH, (c)
A HOLDER IN DUE COURSE OF A DRAFT DRAWN UNDER THE LETTER OF
CREDIT WHICH WAS TAKEN AFTER ACCEPTANCE BY THE ISSUER OR
NOMINATED PERSON, OR (d) AN ASSIGNEE OF THE ISSUER'S OR
NOMINATED PERSON'S DEFERRED OBLIGATION THAT WAS TAKEN FOR VALUE
AND WITHOUT NOTICE OF FORGERY OR MATERIAL FRAUD AFTER THE
OBLIGATION WAS INCURRED BY THE ISSUER OR NOMINATED PERSON; AND (2) THE ISSUER, ACTING IN GOOD FAITH, MAY HONOR OR DISHONOR
THE PRESENTATION IN ANY OTHER CASE. (B) IF AN APPLICANT CLAIMS THAT A REQUIRED DOCUMENT IS FORGED OR
MATERIALLY FRAUDULENT OR THAT HONOR OF THE PRESENTATION WOULD
FACILITATE A MATERIAL FRAUD BY THE BENEFICIARY ON THE ISSUER OR
APPLICANT, A COURT OF COMPETENT JURISDICTION MAY TEMPORARILY OR
PERMANENTLY ENJOIN THE ISSUER FROM HONORING A PRESENTATION OR
GRANT SIMILAR RELIEF AGAINST THE ISSUER OR OTHER PERSONS ONLY IF
THE COURT FINDS THAT: (1) THE RELIEF IS NOT PROHIBITED UNDER THE LAW
APPLICABLE TO AN ACCEPTED DRAFT OR DEFERRED OBLIGATION INCURRED
BY THE ISSUER; (2) A BENEFICIARY, ISSUER, OR NOMINATED PERSON WHO MAY
BE ADVERSELY AFFECTED IS ADEQUATELY PROTECTED AGAINST LOSS THAT
IT MAY SUFFER BECAUSE THE RELIEF IS GRANTED; (3) ALL OF THE CONDITIONS TO ENTITLE A PERSON TO THE
RELIEF UNDER THE LAW OF THIS STATE HAVE BEEN MET; AND (4) ON THE BASIS OF THE INFORMATION SUBMITTED TO THE
COURT, THE APPLICANT IS MORE LIKELY THAN NOT TO SUCCEED UNDER
ITS CLAIM OF FORGERY OR MATERIAL FRAUD AND THE PERSON DEMANDING
HONOR DOES NOT QUALIFY FOR PROTECTION UNDER DIVISION (A)(1) OF
THIS SECTION. Sec. 1305.09. (A) IF ITS PRESENTATION IS HONORED, THE
BENEFICIARY WARRANTS: (1) TO THE ISSUER, ANY OTHER PERSON TO WHOM
PRESENTATION IS MADE, AND THE APPLICANT THAT THERE IS NO FRAUD
OR FORGERY OF THE KIND DESCRIBED IN DIVISION (A) OF SECTION
1305.08 OF THE REVISED CODE; AND (2) TO THE APPLICANT THAT THE DRAWING DOES NOT VIOLATE
ANY AGREEMENT BETWEEN THE APPLICANT AND BENEFICIARY OR ANY OTHER
AGREEMENT INTENDED BY THEM TO BE AUGMENTED BY THE LETTER OF
CREDIT. (B) THE WARRANTIES IN DIVISION (A)
OF THIS SECTION ARE IN ADDITION TO WARRANTIES ARISING UNDER
CHAPTERS 1303., 1304., 1307., AND 1308. OF THE
REVISED
CODE BECAUSE OF THE PRESENTATION OR TRANSFER OF DOCUMENTS
COVERED BY ANY OF THOSE CHAPTERS. Sec. 1305.10. (A) IF AN ISSUER WRONGFULLY DISHONORS OR REPUDIATES
ITS OBLIGATION
TO PAY MONEY UNDER A LETTER OF CREDIT BEFORE PRESENTATION, THE
BENEFICIARY, SUCCESSOR, OR NOMINATED PERSON PRESENTING ON ITS
OWN BEHALF MAY RECOVER FROM THE ISSUER THE AMOUNT THAT IS THE
SUBJECT OF THE DISHONOR OR REPUDIATION. IF THE ISSUER'S
OBLIGATION UNDER THE LETTER OF CREDIT IS NOT FOR THE PAYMENT OF
MONEY, THE CLAIMANT MAY OBTAIN SPECIFIC PERFORMANCE OR, AT THE
CLAIMANT'S ELECTION, RECOVER AN AMOUNT EQUAL TO THE VALUE OF
PERFORMANCE FROM THE ISSUER. IN EITHER CASE, THE CLAIMANT MAY
ALSO RECOVER INCIDENTAL BUT NOT CONSEQUENTIAL DAMAGES. THE
CLAIMANT IS NOT OBLIGATED TO TAKE ACTION TO AVOID DAMAGES THAT
MIGHT BE DUE FROM THE ISSUER UNDER THIS DIVISION. IF, ALTHOUGH
NOT OBLIGATED TO DO SO, THE CLAIMANT AVOIDS DAMAGES, THE
CLAIMANT'S RECOVERY FROM THE ISSUER MUST BE REDUCED BY THE
AMOUNT OF DAMAGES AVOIDED. THE ISSUER HAS THE BURDEN OF PROVING
THE AMOUNT OF DAMAGES AVOIDED. IN THE CASE OF REPUDIATION THE
CLAIMANT NEED NOT PRESENT ANY DOCUMENT. (B) IF AN ISSUER WRONGFULLY DISHONORS A DRAFT OR DEMAND PRESENTED
UNDER A LETTER OF CREDIT OR HONORS A DRAFT OR DEMAND IN BREACH
OF ITS OBLIGATION TO THE APPLICANT, THE APPLICANT MAY RECOVER
DAMAGES RESULTING FROM THE BREACH, INCLUDING INCIDENTAL BUT NOT
CONSEQUENTIAL DAMAGES, LESS ANY AMOUNT SAVED AS A RESULT OF THE
BREACH. (C) IF AN ADVISER OR NOMINATED PERSON OTHER THAN A CONFIRMER
BREACHES AN OBLIGATION UNDER THIS CHAPTER OR AN ISSUER BREACHES
AN OBLIGATION NOT COVERED IN DIVISION (A) OR (B)
OF THIS SECTION, A PERSON TO WHOM THE OBLIGATION IS OWED MAY
RECOVER DAMAGES RESULTING FROM THE BREACH, INCLUDING INCIDENTAL
BUT NOT CONSEQUENTIAL DAMAGES, LESS ANY AMOUNT SAVED AS A RESULT
OF THE BREACH. TO THE EXTENT OF THE CONFIRMATION, A CONFIRMER
HAS THE LIABILITY OF AN ISSUER SPECIFIED IN THIS DIVISION AND
DIVISION (A) OR (B)
OF THIS SECTION. (D) AN ISSUER, NOMINATED PERSON, OR ADVISER WHO IS FOUND
LIABLE UNDER DIVISION (A), (B), OR (C)
OF THIS SECTION SHALL PAY INTEREST ON THE AMOUNT OWED THEREUNDER
FROM THE DATE OF WRONGFUL DISHONOR OR OTHER APPROPRIATE DATE. (E) REASONABLE ATTORNEY'S FEES AND OTHER EXPENSES OF LITIGATION
MUST BE AWARDED TO THE PREVAILING PARTY IN AN ACTION IN WHICH A
REMEDY IS SOUGHT UNDER THIS CHAPTER. (F) DAMAGES THAT WOULD OTHERWISE BE PAYABLE BY A PARTY FOR BREACH
OF AN OBLIGATION UNDER THIS CHAPTER MAY BE LIQUIDATED BY
AGREEMENT OR UNDERTAKING, BUT ONLY IN AN AMOUNT OR BY A FORMULA
THAT IS REASONABLE IN LIGHT OF THE HARM ANTICIPATED. Sec. 1305.11. (A) EXCEPT AS OTHERWISE PROVIDED IN SECTION
1305.12 OF THE REVISED CODE, UNLESS A LETTER OF CREDIT
PROVIDES THAT IT IS TRANSFERABLE, THE
RIGHT OF A BENEFICIARY TO DRAW OR OTHERWISE DEMAND PERFORMANCE
UNDER A LETTER OF CREDIT MAY NOT BE TRANSFERRED. (B) EVEN IF A LETTER OF CREDIT PROVIDES THAT IT IS TRANSFERABLE,
THE ISSUER MAY REFUSE TO RECOGNIZE OR CARRY OUT A TRANSFER IF: (1) THE TRANSFER WOULD VIOLATE APPLICABLE LAW; OR (2) THE TRANSFEROR OR TRANSFEREE HAS FAILED TO COMPLY
WITH ANY REQUIREMENT STATED IN THE LETTER OF CREDIT OR ANY OTHER
REQUIREMENT RELATING TO TRANSFER IMPOSED BY THE ISSUER THAT IS
WITHIN THE STANDARD PRACTICE REFERRED TO IN DIVISION
(E) OF SECTION 1305.07 OF THE REVISED CODE
OR IS OTHERWISE REASONABLE UNDER THE CIRCUMSTANCES. Sec. 1305.12. (A) A SUCCESSOR OF A BENEFICIARY MAY CONSENT TO
AMENDMENTS, SIGN
AND PRESENT DOCUMENTS, AND RECEIVE PAYMENT OR OTHER ITEMS OF
VALUE IN THE NAME OF THE BENEFICIARY WITHOUT DISCLOSING ITS
STATUS AS A SUCCESSOR. (B) A SUCCESSOR OF A BENEFICIARY MAY CONSENT TO AMENDMENTS, SIGN
AND PRESENT DOCUMENTS, AND RECEIVE PAYMENT OR OTHER ITEMS OF
VALUE IN ITS OWN NAME AS THE DISCLOSED SUCCESSOR OF THE
BENEFICIARY. EXCEPT AS OTHERWISE PROVIDED IN DIVISION (E)
OF THIS SECTION, AN ISSUER SHALL RECOGNIZE A DISCLOSED SUCCESSOR
OF A BENEFICIARY AS BENEFICIARY IN FULL SUBSTITUTION FOR ITS
PREDECESSOR UPON COMPLIANCE WITH THE REQUIREMENTS FOR
RECOGNITION BY THE ISSUER OF A TRANSFER OF DRAWING RIGHTS BY
OPERATION OF LAW UNDER THE STANDARD PRACTICE REFERRED TO IN
DIVISION (E) OF SECTION 1305.07 OF THE REVISED CODE
OR, IN THE ABSENCE OF SUCH A PRACTICE, COMPLIANCE WITH OTHER
REASONABLE PROCEDURES SUFFICIENT TO PROTECT THE ISSUER. (C) AN ISSUER IS NOT OBLIGED TO DETERMINE WHETHER A PURPORTED
SUCCESSOR IS A SUCCESSOR OF A BENEFICIARY OR WHETHER THE
SIGNATURE OF A PURPORTED SUCCESSOR IS GENUINE OR AUTHORIZED. (D) HONOR OF A PURPORTED SUCCESSOR'S APPARENTLY COMPLYING
PRESENTATION UNDER DIVISION (A) OR (B)
OF THIS SECTION HAS THE CONSEQUENCES SPECIFIED IN DIVISION (I)
OF SECTION 1305.07 OF THE REVISED CODE
EVEN IF THE PURPORTED SUCCESSOR IS NOT THE SUCCESSOR OF A
BENEFICIARY. DOCUMENTS SIGNED IN THE NAME OF THE BENEFICIARY OR
OF A DISCLOSED SUCCESSOR BY A PERSON WHO IS NEITHER THE
BENEFICIARY NOR THE SUCCESSOR OF THE BENEFICIARY ARE FORGED
DOCUMENTS FOR THE PURPOSES OF SECTION 1305.08 OF THE
REVISED CODE. (E) AN ISSUER WHOSE RIGHTS OF REIMBURSEMENT ARE NOT
COVERED BY DIVISION (D)
OF THIS SECTION OR SUBSTANTIALLY SIMILAR LAW AND ANY CONFIRMER
OR NOMINATED PERSON MAY DECLINE TO RECOGNIZE A PRESENTATION
UNDER DIVISION (B) OF THIS SECTION. (F) A BENEFICIARY WHOSE NAME IS CHANGED AFTER THE
ISSUANCE OF A LETTER OF CREDIT HAS THE SAME RIGHTS AND
OBLIGATIONS AS A SUCCESSOR OF A BENEFICIARY UNDER THIS SECTION. Sec. 1305.13. (A) AS USED 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
CHAPTER 1309. OF THE REVISED CODE 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 CHAPTER 1309. OF THE
REVISED CODE OR OTHER LAW. Sec. 1305.14. AN ACTION TO ENFORCE A RIGHT OR OBLIGATION
ARISING UNDER THIS CHAPTER MUST BE COMMENCED WITHIN ONE YEAR
AFTER THE EXPIRATION DATE OF THE RELEVANT LETTER OF CREDIT OR
ONE YEAR AFTER THE CAUSE OF ACTION ACCRUES, WHICHEVER OCCURS
LATER. A CAUSE OF ACTION ACCRUES WHEN THE BREACH OCCURS,
REGARDLESS OF THE AGGRIEVED PARTY'S LACK OF KNOWLEDGE OF THE
BREACH. Sec. 1305.15. (A) THE LIABILITY OF AN ISSUER, NOMINATED PERSON, OR
ADVISER FOR ACTION OR OMISSION IS GOVERNED BY THE LAW OF THE JURISDICTION
CHOSEN BY AN AGREEMENT IN THE FORM OF A RECORD SIGNED OR
OTHERWISE AUTHENTICATED BY THE AFFECTED PARTIES IN THE MANNER
PROVIDED IN SECTION 1305.03 OF THE REVISED CODE
OR BY A PROVISION IN THE PERSON'S LETTER OF CREDIT,
CONFIRMATION, OR OTHER UNDERTAKING. THE JURISDICTION WHOSE LAW
IS CHOSEN NEED NOT BEAR ANY RELATION TO THE TRANSACTION. (B) UNLESS DIVISION (A)
OF THIS SECTION APPLIES, THE LIABILITY OF AN ISSUER, NOMINATED
PERSON, OR ADVISER FOR ACTION OR OMISSION IS GOVERNED BY THE LAW
OF THE JURISDICTION IN WHICH THE PERSON IS LOCATED. THE PERSON
IS CONSIDERED TO BE LOCATED AT THE ADDRESS INDICATED IN THE
PERSON'S UNDERTAKING. IF MORE THAN ONE ADDRESS IS INDICATED,
THE PERSON IS CONSIDERED TO BE LOCATED AT THE ADDRESS FROM WHICH
THE PERSON'S UNDERTAKING WAS ISSUED. FOR THE PURPOSE OF
JURISDICTION, CHOICE OF LAW, AND RECOGNITION OF INTERBRANCH
LETTERS OF CREDIT, BUT NOT ENFORCEMENT OF A JUDGMENT, ALL
BRANCHES OF A BANK ARE CONSIDERED SEPARATE JURIDICAL ENTITIES
AND A BANK IS CONSIDERED TO BE LOCATED AT THE PLACE WHERE ITS
RELEVANT BRANCH IS CONSIDERED TO BE LOCATED UNDER THIS DIVISION. (C) EXCEPT AS OTHERWISE PROVIDED IN THIS DIVISION, THE LIABILITY OF
AN ISSUER, NOMINATED PERSON, OR ADVISER IS GOVERNED BY ANY RULES
OF CUSTOM OR PRACTICE, SUCH AS THE UNIFORM CUSTOMS AND PRACTICE
FOR DOCUMENTARY CREDITS, TO WHICH THE LETTER OF CREDIT,
CONFIRMATION, OR OTHER UNDERTAKING IS EXPRESSLY MADE SUBJECT.
IF (1) THIS CHAPTER WOULD GOVERN THE LIABILITY OF AN ISSUER,
NOMINATED PERSON, OR ADVISER UNDER DIVISION
(A)
OR (B)
OF THIS SECTION, (2) THE RELEVANT UNDERTAKING INCORPORATES
RULES OF CUSTOM OR PRACTICE, AND (3) THERE IS CONFLICT BETWEEN
THIS CHAPTER AND THOSE RULES AS APPLIED TO THAT UNDERTAKING,
THOSE RULES GOVERN EXCEPT TO THE EXTENT OF ANY CONFLICT WITH THE
NONVARIABLE PROVISIONS SPECIFIED IN DIVISION (C) OF SECTION
1305.02 OF THE REVISED CODE. (D) IF THERE IS CONFLICT BETWEEN THIS CHAPTER AND CHAPTER
1303., 1304., OR 1309. OF THE
REVISED CODE, THIS CHAPTER GOVERNS. (E) THE FORUM FOR SETTLING DISPUTES ARISING OUT OF AN UNDERTAKING
WITHIN THIS CHAPTER MAY BE CHOSEN IN THE MANNER AND WITH THE
BINDING EFFECT THAT GOVERNING LAW MAY BE CHOSEN IN ACCORDANCE
WITH DIVISION (A) OF THIS SECTION. Sec. 1305.16. (A) 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. (B) 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 DIVISION (A) OF THIS SECTION. (C) 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: (1) 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; (2) THE BENEFICIARY TO THE SAME EXTENT AS IF THE ISSUER
WERE A SECONDARY OBLIGOR OF THE UNDERLYING OBLIGATION OWED TO
THE BENEFICIARY; AND (3) THE APPLICANT TO THE SAME EXTENT AS IF THE
NOMINATED PERSON WERE THE SECONDARY OBLIGOR OF THE UNDERLYING
OBLIGATION OWED TO THE APPLICANT. (D) NOTWITHSTANDING ANY AGREEMENT OR TERM TO THE CONTRARY, THE
RIGHTS OF SUBROGATION STATED IN DIVISIONS (A) AND (B)
OF THIS SECTION DO NOT ARISE UNTIL THE ISSUER HONORS THE LETTER
OF CREDIT OR OTHERWISE PAYS AND THE RIGHTS IN DIVISION (C)
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. Sec. 1309.01. (A) As used in sections 1309.01 to 1309.50
of the Revised Code, unless the context otherwise requires: (1) "Account debtor" means the person who is obligated on
an account, chattel paper, or general intangible. (2) "Chattel paper" means a writing or writings which
evidence both a monetary obligation and a security interest in or
a lease of specific goods, but a charter or other contract
involving the use or hire of a vessel is not chattel paper. When
a transaction is evidenced both by such a security agreement or a
lease and by an instrument or a series of instruments, the group
of writings taken together constitutes chattel paper. (3) "Collateral" means the property subject to a security
interest, and includes accounts and chattel paper which have been
sold. (4) "Debtor" means the person who owes payment or other
performance of the obligations secured, whether or not he the
person owns or has rights in the collateral, and includes the seller of
accounts or chattel paper. Where the debtor and the owner of the
collateral are not the same person, the term "debtor" means the
owner of the collateral in any provision of sections 1309.01 to
1309.50 of the Revised Code dealing with the collateral, the
obligor in any provision dealing with the obligation and may
include both where the context so requires. (5) "Deposit account" means a demand, time, savings,
passbook or like account maintained with a bank, savings and loan
association, credit union, or like organization, other than an
account evidenced by a certificate of deposit. (6) "Document" means document of title as defined in
division (O) of section 1301.01 of the Revised Code, and a
receipt of the kind described in division (B) of section 1307.06
of the Revised Code. (7) "Encumbrance" includes real estate mortgages and other
liens on real estate and all other rights in real estate that are
not ownership interests. (8) "Goods" includes all things which are movable at the
time the security interest attaches or which are fixtures under
section 1309.32 of the Revised Code, but does not include money,
documents, instruments, accounts, chattel paper, general
intangibles, or minerals or the like, including oil and gas,
before extraction. "Goods" also include standing timber which is
to be cut and removed under a conveyance or contract for sale,
the unborn young of animals, and growing crops. (9) "Instrument" means a negotiable instrument as defined
in section 1303.03 of the Revised Code, or a certificated
security as defined in section 1308.01 of the Revised Code, or
any other writing which evidences a right to the payment of money
and is not itself a security agreement or lease and is of a type
which is in ordinary course of business transferred by delivery
with any necessary indorsement or assignment. (10) "Mortgage" means a consensual interest created by a
real estate mortgage, a trust deed on real estate, or the like. (11) An advance is made "pursuant to commitment" if the
secured party has bound himself itself to make it, whether or
not a subsequent event of default or other event not within his the
secured party's control has relieved or may relieve him the
secured party from his the secured party's obligation. (12) "Security agreement" means an agreement which creates
or provides for a security interest. (13) "Secured party" means a lender, seller, or other
person in whose favor there is a security interest, including a
person to whom accounts or chattel paper have been sold. When
the holders of obligations issued under an indenture of trust,
equipment trust agreement, or the like are represented by a
trustee or other person, the representative is the secured party. (14) "Transmitting utility" means any person primarily
engaged in the railroad, street railway, or trolley bus business,
the electric or electronic communications business, the
transmission of goods by pipeline, or the transmission or the
production and transmission of electricity, steam, gas, or water,
or the provision of sewer service. (15) "Account" means any right to payment for goods sold
or leased or for services rendered which is not evidenced by an
instrument or chattel paper, whether or not it has been earned by
performance. (16) "General intangible" means any personal property,
including things in action, other than goods, accounts, chattel
paper, documents, instruments, rights to proceeds of letters of
credit, and money. All rights to payment
earned or unearned under a charter or other contract involving
the use or hire of a vessel and all rights incident to the
charter or contract are accounts. (B) Other definitions applying to sections 1309.01 to
1309.50 of the Revised Code are: (1) "Attach," as defined in section 1309.14 of the Revised
Code; (2) "Construction mortgage," as defined in section 1309.32
of the Revised Code; (3) "Consumer goods," as defined in section 1309.07 of the
Revised Code; (4) "Equipment," as defined in section 1309.07 of the
Revised Code; (5) "Farm products," as defined in section 1309.07 of the
Revised Code; (6) "Fixture," as defined in section 1309.32 of the
Revised Code; (7) "Fixture filing," as defined in section 1309.32 of the
Revised Code; (8) "Inventory," as defined in section 1309.07 of the
Revised Code; (9) "Lien creditor," as defined in section 1309.20 of the
Revised Code; (10) "Proceeds," as defined in section 1309.25 of the
Revised Code; (11) "Purchase money security interest," as defined in
section 1309.05 of the Revised Code; (12) "United States," as defined in section 1309.03 of the
Revised Code; (13) "Letter of credit," as defined in section 1305.01 Of the Revised Code; (14) "Proceeds of a letter of credit," as defined in section 1305.13 Of the Revised Code. (C) As used in sections 1309.01 to 1309.50 of the Revised
Code, "check" and "note" have the meaning set forth in section
1303.03 of the Revised Code; "contract for sale" and "sale" have
the meaning set forth in section 1302.01 of the Revised Code; and
"holder in due course" has the meaning set forth in section
1303.31 of the Revised Code. (D) The terms and principles of construction and
interpretation set forth in sections 1301.01 to 1301.14 of the
Revised Code are applicable to sections 1309.01 to 1309.50 of the
Revised Code. Sec. 1309.03. (A) Documents, instruments, letters of credit,
and ordinary goods: (1) This division applies to documents and, instruments,
rights to proceeds of letters of credit, and to goods other than
those covered by a certificate of title
described in division (B) of this section, mobile goods described
in division (C) of this section, and minerals described in
division (E) of this section. (2) Except as otherwise provided in this division,
perfection and the effect of perfection or nonperfection of a
security interest in collateral are governed by the law of the
jurisdiction where the collateral is when the last event occurs
on which is based the assertion that the security interest is
perfected or unperfected. (3) If the parties to a transaction creating a purchase
money security interest in goods in one jurisdiction understand
at the time that the security interest attaches that the goods
will be kept in another jurisdiction, then the law of the other
jurisdiction governs the perfection and the effect of perfection
or nonperfection of the security interest from the time it
attaches until thirty days after the debtor receives possession
of the goods and thereafter if the goods are taken to the other
jurisdiction before the end of the thirty-day period. (4) When collateral is brought into and kept in this state
while subject to a security interest perfected under the law of
the jurisdiction from which the collateral was removed, the
security interest remains perfected, but if action is required by
sections 1309.20 to 1309.37 of the Revised Code to perfect the
security interest: (a) If the action is not taken before the expiration of
the period of perfection in the other jurisdiction or the end of
four months after the collateral is brought into this state,
whichever period first expires, the security interest becomes
unperfected at the end of that period and is thereafter deemed to
have been unperfected as against a person who became a purchaser
after removal; (b) If the action is taken before the expiration of the
period specified in division (A)(4)(a) of this section, the
security interest continues perfected thereafter; (c) For the purpose of priority over a buyer of consumer
goods, division (B) of section 1309.26 of the Revised Code, the
period of the effectiveness of a filing in the jurisdiction from
which the collateral is removed is governed by the rules with
respect to perfection in divisions (A)(4)(a) and (b) of this
section. (B) Certificate of title. (1) This division applies to goods covered by a
certificate of title issued under a statute of this state or of
another jurisdiction under the law of which indication of a
security interest on the certificate is required as a condition
of perfection. (2) Except as otherwise provided in this division,
perfection and the effect of perfection or nonperfection of the
security interest are governed by the law, including the conflict
of laws rules, of the jurisdiction issuing the certificate until
four months after the goods are removed from that jurisdiction
and thereafter until the goods are registered in another
jurisdiction, but in any event not beyond surrender of the
certificate. After the expiration of that period, the goods are
not covered by the certificate of title within the meaning of
this section. (3) Except with respect to the rights of a buyer described
in division (B)(4) of this section a security interest, perfected
in another jurisdiction otherwise than by notation on a
certificate of title, in goods brought into this state and
thereafter covered by a certificate of title issued by this state
is subject to the rules stated in division (A)(4) of this
section. (4) If goods are brought into this state while a security
interest therein is perfected in any manner under the law of the
jurisdiction from which the goods are removed and a certificate
of title is issued by this state and the certificate does not
show that the goods are subject to the security interest or that
they may be subject to security interests not shown on the
certificate, the security interest is subordinate to the rights
of a buyer of the goods who is not in the business of selling
goods of that kind to the extent that he the buyer gives value
and receives delivery of the goods after issuance of the certificate and
without knowledge of the security interest. (C) Accounts, general intangibles, and mobile goods. (1) This division applies to accounts, other than an
account described in division (E) of this section on minerals,
and general intangibles, other than uncertificated securities,
and to goods which are mobile and which are of a type normally
used in more than one jurisdiction, such as motor vehicles,
trailers, rolling stock, airplanes, shipping containers, road
building and construction machinery, and commercial harvesting
machinery and the like, if the goods are equipment or are
inventory leased or held for lease by the debtor to others, and
are not covered by a certificate of title described in division
(B) of this section. (2) The law, including the conflict of laws rules, of the
jurisdiction in which the debtor is located governs the
perfection and the effect of perfection or nonperfection of the
security interest. (3) If, however, the debtor is located in a jurisdiction
which is not a part of the United States, and which does not
provide for perfection of the security interest by filing or
recording in that jurisdiction, the law of the jurisdiction in
the United States in which the debtor has its major executive
office in the United States governs the perfection and the effect
of perfection or nonperfection of the security interest through
filing. In the alternative, if the debtor is located in a
jurisdiction which is not a part of the United States or Canada
and the collateral is accounts or general intangibles for money
due or to become due, the security interest may be perfected by
notification to the account debtor. As used in this division,
"United States" includes its territories and possessions and the
Commonwealth of Puerto Rico. (4) A debtor shall be deemed located at his the debtor's place
of business if he the debtor has one, at his the
debtor's chief executive office if he the debtor has more
than
one place of business; otherwise at his the debtor's residence.
If, however, the debtor is a foreign air carrier under the "Federal Aviation
Act of 1958," as amended, it shall be deemed located at
the designated office of the agent upon whom service of process
may be made on behalf of the foreign air carrier. (5) A security interest perfected under the law of the
jurisdiction of the location of the debtor is perfected until the
expiration of four months after a change of the debtor's location
to another jurisdiction, or until perfection would have ceased by
the law of the first jurisdiction, whichever period first
expires. Unless perfected in the new jurisdiction before the end
of that period, it becomes unperfected thereafter and is deemed
to have been unperfected as against a person who became a
purchaser after the change. (D) Chattel Paper. The rules stated for goods in division (A) of this section apply
to a possessory security interest in chattel paper. The rule
stated for accounts in division (C) of this section applies to a
nonpossessory security in chattel paper, but the security
interest may not be perfected by notification to the account
debtor. (E) Minerals. Perfection and the effect of perfection or nonperfection of
a security interest which is created by a debtor who has an
interest in minerals or the like, including oil and gas, before
extraction and which attaches thereto as extracted, or which
attaches to an account resulting from the sale thereof at the
wellhead or minehead are governed by the law, including the
conflict of laws rules, of the jurisdiction wherein the wellhead
or minehead is located. (F) Uncertificated securities. The law, including the conflict of laws rules, of the
jurisdiction of organization of the issuer governs the perfection
and the effect of perfection or non-perfection NONPERFECTION of a
security interest in uncertificated securities. Sec. 1309.04. Sections 1309.01 to 1309.50 of the Revised
Code do not apply: (A) to To a security interest subject to any statute of the
United States such as the "Ship Mortgage Act, 1920," 41 Stat.
1000, 46 U.S.C. 911, to the extent that such statute governs the
rights of parties to and third parties affected by transactions
in particular types of property; or (B) to To a lien given by statute or other rule of law for
services or materials except as provided in section 1309.29 of
the Revised Code on priority of such liens; or (C) to To a transfer of a claim for wages, salary, or other
compensation of an employee; or (D) to To a transfer by a governmental subdivision or agency;
or (E) to To a sale of accounts or chattel paper as part of a
sale of the business out of which they arose, or an assignment of
accounts or chattel paper which is for the purpose of collection
only, or a transfer of a right to payment under a contract to an
assignee who is also to do the performance under the contract, or
a transfer of a single account to an assignee in whole or partial
satisfaction of a pre-existing indebtedness; or (F) to To a transfer of an interest or claim in or under any
policy of insurance, except as provided with respect to proceeds
under section 1309.25 of the Revised Code and priorities in
proceeds under section 1309.31 of the Revised Code; or (G) to To a right represented by a judgment, other than a
judgment taken on a right to payment which was collateral; or (H) to To any right of set-off; or (I) except Except to the extent that provision is made for
fixtures in section 1309.32 of the Revised Code, to the creation
or transfer of an interest in or lien on real estate, including a
lease or rents thereunder; or (J) to To a transfer in whole or in part of any claim arising
out of a tort; or (K) to To a transfer of an interest in any deposit account,
division (A)(5) of section 1309.01 of the Revised Code, except as
provided with respect to proceeds under section 1309.25 of the
Revised Code, and priorities in proceeds under section 1309.31 of
the Revised Code; or (L) To a transfer of an interest in a letter of credit other than
the rights to proceeds of a letter of credit. Sec. 1309.23. (A) A security interest in chattel paper or
negotiable documents may be perfected by filing. A security interest in
the right to proceeds of a letter of credit can be perfected only by the
secured party's taking possession of the letter of credit. A
security interest in money or instruments, other than certificated
securities or instruments which constitute part of chattel paper,
can be perfected only by the secured party's taking possession,
except as provided in divisions (D) and (E) of this section and
divisions (B) and (C) of section 1309.25 of the Revised Code on
proceeds. (B) During the period that goods are in the possession of
the issuer of a negotiable document therefor, a security interest
in the goods is perfected by perfecting a security interest in
the document, and any security interest in the goods otherwise
perfected during such period is subject thereto. (C) A security interest in goods in the possession of a
bailee other than one who has issued a negotiable document
therefor is perfected by issuance of a document in the name of
the secured party or by the bailee's receipt of notification of
the secured party's interest or by filing as to the goods. (D) A security interest in instruments, other than
certificated securities, or negotiable documents is perfected
without filing or the taking of possession for a period of
twenty-one days from the time it attaches to the extent that it
arises for new value given under a written security agreement. (E) A security interest remains perfected for a period of
twenty-one days without filing where a secured party having a
perfected security interest in an instrument, other than a
certificated security, a negotiable document, or goods in
possession of a bailee other than one who has issued a negotiable
document therefor: (1) Makes available to the debtor the goods or documents
representing the goods for the purpose of ultimate sale or
exchange or for the purpose of loading, unloading, storing,
shipping, trans-shipping, manufacturing, processing, or otherwise
dealing with them in a manner preliminary to their sale or
exchange, but priority between conflicting security interests in
the goods is subject to division (C) of section 1309.31 of the
Revised Code; or (2) Delivers the instrument to the debtor for the purpose
of ultimate sale or exchange or of presentation, collection,
renewal, or registration of transfer. (F) After the twenty-one day period set forth in divisions
(D) and (E) of this section, perfection depends upon compliance
with applicable provisions of sections 1309.01 to 1309.50 of the
Revised Code. Sec. 1309.24. A security interest in letters of credit and
advices of credit, as provided in division (B)(1)(F) of
section 1305.15 1305.13 of the Revised Code, goods,
instruments, other than
certificated securities, negotiable documents, money, or chattel
paper may be perfected by the secured party's taking possession
of the collateral. A security interest in the right to proceeds of a
letter of credit may be perfected by the secured party's taking possession of
the letter of credit. If such collateral other than goods covered
by a negotiable document is held by a bailee, the secured party
is deemed to have possession from the time the bailee receives
notification of the secured party's interest. A security
interest is perfected by possession from the time possession is
taken without relation back and continues only so long as
possession is retained, unless otherwise specified in sections
1309.01 to 1309.50 of the Revised Code. The security interest
may be otherwise perfected as provided in sections 1309.01 to
1309.50 of the Revised Code, before or after the period of
possession by the secured party. SECTION 2 . That existing sections 1301.05, 1302.56, 1309.01, 1309.03, 1309.04,
1309.23, and 1309.24 and sections 1305.01, 1305.02, 1305.03, 1305.04, 1305.05,
1305.06, 1305.07, 1305.08, 1305.09, 1305.10, 1305.11, 1305.12, 1305.13,
1305.14,
1305.15, and 1305.16 of the Revised Code are hereby repealed.
SECTION 3 . Sections 1 and 2 of this act shall become effective July 1,
1998.
SECTION 4 . This act applies to a letter of credit that is issued on or after
July 1, 1998. This act does not apply to a transaction, event, obligation,
or duty arising out of or associated with a letter of credit that was issued
before July 1, 1998.
SECTION 5 . A transaction arising out of or associated with a letter of credit
that was issued before July 1, 1998, and the rights, obligations, and
interests flowing from that transaction are governed by any statute or other
law amended or repealed by this act as if the amendment or repeal had not
occurred and may be terminated, completed, consummated, or enforced under that
statute or other law.
|