Tex. Bus. & Com. Code § 5.114 · Chapter 5. LETTERS OF CREDIT
ASSIGNMENT OF PROCEEDS.
Text — Current through the 89th 2nd Called Legislative Session, 2025
(a) 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 9 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 9 or other law.
Notes and commentary — not statutory text
History
Amended by Acts 1999, 76th Leg., ch. 4, Sec. 1, eff. Sept. 1, 1999.
Source of truth
- Edition
- Current through the 89th 2nd Called Legislative Session, 2025
- Official file
- https://statutes.capitol.texas.gov/Docs/BC/htm/BC.5.htm
- Text hash
- sha256 d62ad999fb8ec8c2ea912ff0d6e11688b64daa14c341d376904feaeed7e31e58
- Composed by
- compose_tx.py 2026-10-05: the Legislative Council's chapter files read in document order; verify_tx.py's independent reading (lxml DOM walk) agrees character for character
This section cites
Provisions in this library that the text above cites, as it prints each citation. A range cited as “ss. 61.13-61.16” links its first and last provisions.
Business & Commerce Code
Cited by 4 provisions
Provisions in this library whose text cites Tex. Bus. & Com. Code § 5.114. Each shows the citation as that text prints it.
Business & Commerce Code
- Tex. Bus. & Com. Code § 5.103SCOPE.Printed as Section 5.114(d)
- Tex. Bus. & Com. Code § 9.102DEFINITIONS AND INDEX OF DEFINITIONS.Printed as Section 5.114
- Tex. Bus. & Com. Code § 9.107CONTROL OF LETTER-OF-CREDIT RIGHT.Printed as Section 5.114(c)
- Tex. Bus. & Com. Code § 9.109SCOPE.Printed as Section 5.114
Procedural information only. Not legal advice and not a substitute for the advice of an attorney. Confirm the current text with the official publisher before relying on it.