(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.
(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.
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.
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.
(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.
(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).
(4) If there is conflict between this chapter and ch. 403, 404, 409, or 410, this chapter governs.
(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).
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.
(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).
(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:
(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.
(c) The applicant to same extent as if the nominated person were a secondary obligor of the underlying obligation owed to the applicant.
(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.
405.118 Security interest of issuer or nominated person. (1) An issuer or nominated person has a security interest in a document presented under a letter of credit to the extent that the issuer or nominated person honors or gives value for the presentation.
(2) So long as and to the extent that an issuer or nominated person has not been reimbursed or has not otherwise recovered the value given with respect to a security interest in a document under sub. (1), the security interest continues and is subject to ch. 409, but:
(a) A security agreement is not necessary to make the security interest enforceable under s. 409.203 (2) (c);
(b) If the document is presented in a medium other than a written or other tangible medium, the security interest is perfected; and
(c) If the document is presented in a written or other tangible medium and is not a certificated security, a chattel paper, a document of title, an instrument, or a letter of credit, the security interest is perfected and has priority over a conflicting security interest in the document so long as the debtor does not have possession of the document.
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4. 440.92 (3) (c) 3. of the statutes is amended to read:
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.
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5. 565.25 (5) (b) 3. of the statutes is amended to read:
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.
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6. 707.49 (4) of the statutes is amended to read:
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.
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7.
Initial applicability.
(1) This act first applies to a letter of credit that is issued on the effective date of this subsection.
(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.
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8.
Effective date.
(1) This act takes effect on the first day of the 3rd month following publication.
