SB203: Bill Text

SB203,17,15 (4) An issuer, nominated person, or adviser who is found liable under sub. (1), (2), or (3) shall pay interest on the amount owed thereunder from the date of wrongful dishonor or other appropriate date.

SB203,17,18 (5) 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.

SB203,17,21 (6) 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.

SB203,17,25 405.112 Transfer of letter of credit. (1) Except as otherwise provided in s. 405.113, 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.

SB203,18,2 (2) Even if a letter of credit provides that it is transferable, the issuer may refuse to recognize or carry out a transfer if any of the following conditions are met:

SB203,18,3 (a) The transfer would violate applicable law.

SB203,18,7 (b) 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 which is within the standard practice referred to in s. 405.108 (5) or is otherwise reasonable under the circumstances.

SB203,18,11 405.113 Transfer by operation of law. (1) 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.

SB203,18,19 (2) 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 sub. (5), 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 s. 405.108 (5) or, in the absence of such a practice, compliance with other reasonable procedures sufficient to protect the issuer.

SB203,18,22 (3) 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.

SB203,19,2 (4) Honor of a purported successor's apparently complying presentation under sub. (1) or (2) has the consequences specified in s. 405.108 (9) 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 s. 405.109.

SB203,19,5 (5) An issuer whose rights of reimbursement are not covered by sub. (4) or substantially similar law and any confirmer or nominated person may decline to recognize a presentation under sub. (2).

SB203,19,7 (6) 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.

SB203,19,12 405.114 Assignment of proceeds. (1) 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.

SB203,19,16 (2) 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.

SB203,19,18 (3) An issuer or nominated person need not recognize an assignment of proceeds of a letter of credit until it consents to the assignment.

SB203,19,22 (4) 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.

SB203,19,25 (5) 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.

SB203,20,10 (6) 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 affects 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 ch. 409 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 ch. 409 or other law.

SB203,20,15 405.115 Statute of limitations. 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 date 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.

SB203,20,21 405.116 Choice of law and forum. (1) 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 s. 405.104 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.

SB203,21,5 (2) Unless sub. (1) 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 subsection.

SB203,21,14 (3) Except as otherwise provided in this subsection, 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 this chapter would govern the liability of an issuer, nominated person, or adviser under sub. (1) or (2), if the relevant undertaking incorporates rules of custom or practice, and if 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 s. 405.103 (3).

SB203,21,16 (4) If there is conflict between this chapter and ch. 403, 404, 409, or 410, this chapter governs.

SB203,21,19 (5) 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 sub. (1).

SB203,21,25 405.117 Subrogation of issuer, applicant, and nominated person. (1) 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.

SB203,22,5 (2) 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 sub. (1).

SB203,22,7 (3) 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 all of the following:

SB203,22,9 (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.

SB203,22,11 (b) The beneficiary to the same extent as if the nominated person were a secondary obligor of the underlying obligation owed to the beneficiary.

SB203,22,13 (c) The applicant to same extent as if the nominated person were a secondary obligor of the underlying obligation owed to the applicant.

SB203,22,19 (4) Notwithstanding any agreement or term to the contrary, the rights of subrogation stated in subs. (1) and (2) do not arise until the issuer honors the letter of credit or otherwise pays and the rights in sub. (3) 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.

SB203, s. 5 Section 5. 409.103 (1) (title) of the statutes is amended to read:

SB203,22,22 409.103 (1) (title) Documents, instruments , letters of credit, and ordinary goods.

SB203, s. 6 Section 6. 409.103 (1) (a) of the statutes is amended to read:

SB203,23,2 409.103 (1) (a) This subsection applies to documents and, instruments, rights to proceeds of written letters of credit, and to goods other than those covered by a certificate of title described in sub. (2), mobile goods described in sub. (3), and minerals described in sub. (5).

SB203, s. 7 Section 7. 409.104 (13) of the statutes is amended to read:

SB203,23,6 409.104 (13) To a transfer of an interest in any deposit account as defined in s. 409.105 (1), except as provided with respect to proceeds under s. 409.306 and priorities in proceeds under s. 409.312.; or

SB203, s. 8 Section 8. 409.104 (14) of the statutes is created to read:

SB203,23,9 409.104 (14) To a transfer of an interest in a letter of credit other than the rights to proceeds of a written letter of credit.

SB203, s. 9 Section 9. 409.105 (3) (cm) of the statutes is created to read:

SB203,23,11 409.105 (3) (cm) "Letter of credit" — s. 405.102 (1) (j).

SB203, s. 10 Section 10. 409.105 (3) (dm) of the statutes is created to read:

SB203,23,13 409.105 (3) (dm) "Proceeds of a letter of credit" — s. 405.114 (1).

SB203, s. 11 Section 11. 409.106 of the statutes is amended to read:

SB203,23,22 409.106 Definitions: "account"; "general intangibles". "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. "General intangibles" means any personal property (including things in action) other than goods, accounts, chattel paper, documents, instruments, investment property, rights to proceeds of written 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.

SB203, s. 12 Section 12. 409.304 (title) of the statutes is amended to read:

SB203,24,2 409.304 (title) Perfection of security interest in instruments, documents, proceeds of a written letter of credit, and goods covered by documents; perfection by permissive filing; temporary perfection without filing or transfer of possession.

SB203, s. 13 Section 13. 409.304 (1) of the statutes is amended to read:

SB203,24,10 409.304 (1) A security interest in chattel paper or negotiable documents may be perfected by filing. A security interest in the rights to proceeds of a written letter of credit may be perfected only by the secured party's taking possession of the letter of credit. A security interest in money or instruments, other than instruments which constitute part of chattel paper, can be perfected only by the secured party's taking possession, except as provided in subs. (4) and (5) and s. 409.306 (2) and (3) on proceeds.

SB203, s. 14 Section 14. 409.305 of the statutes is amended to read:

SB203,24,24 409.305 When possession by secured party perfects security interest without filing. A security interest in letters of credit and advices of credit (s. 405.116 (2) (a)), goods, instruments, money, negotiable documents 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 written 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 this chapter. The security interest may be otherwise perfected as provided in this chapter before or after the period of possession by the secured party.

SB203, s. 15 Section 15. 440.92 (3) (c) 3. of the statutes is amended to read:

SB203,25,5 440.92 (3) (c) 3. The preneed seller files with the department a bond furnished by a surety company authorized to do business in this state or files with the department and maintains an irrevocable letter of credit from a financial institution and the amount of the bond or letter of credit is sufficient to secure the cost to the cemetery authority of constructing the mausoleum.

SB203, s. 16 Section 16. 565.25 (5) (b) 3. of the statutes is amended to read:

SB203,25,9 565.25 (5) (b) 3. The filing with the department and maintenance of an irrevocable letter of credit payable to and for the benefit of the department, in an amount required by the department.

SB203, s. 17 Section 17. 707.49 (4) of the statutes is amended to read:

SB203,25,19 707.49 (4) Surety bond and other options. Instead of placing deposits in an escrow account, a developer may obtain a surety bond issued by a company authorized to do business in this state, or obtain and maintain an irrevocable letter of credit or a similar arrangement, in an amount which at all times is not less than the amount of the deposits otherwise subject to the escrow requirements of this section. The bond, letter of credit or similar arrangement shall be filed with the department of agriculture, trade and consumer protection and made payable to the department of agriculture, trade and consumer protection for the benefit of aggrieved parties.

SB203, s. 18 Section 18. Initial applicability.

SB203,25,22 (1) This act first applies to a letter of credit that is issued on the effective date of this subsection.

SB203,25,25 (2) This act first applies to a transaction arising out of or associated with a letter of credit that was issued on the effective date of this subsection and to the rights, obligations, and interests flowing from such a transaction.

SB203, s. 19 Section 19. Effective date.

SB203,26,2 (1) This act takes effect on the first day of the 3rd month following publication.

SB203,26,3 (End)