| 4. Secured Party-Transferee Beneficiaries. As described in |
Comment 3, drawing rights under letters of credit are transferred |
in many commercial contexts in which the transferee is not a |
secured party claiming a security interest in an underlying |
receivable supported by the letter of credit. Consequently, a |
transfer of a letter of credit is not a method of "perfection" of |
a security interest. The transferee's independent right to draw |
under the letter of credit and to receive and retain the value |
thereunder (in effect, priority) is not based on Article 9 [Maine |
cite Article 9-A] but on letter-of-credit law and the terms of |
the letter of credit. Assume, however, that a secured party does |
hold a security interest in a receivable that is owned by a |
beneficiary-debtor and supported by a transferable letter of |
credit. Assume further that the beneficiary-debtor causes the |
letter of credit to be transferred to the secured party, the |
secured party draws under the letter of credit, and, upon the |
issuer's payment to the secured party-transferee, the underlying |
account debtor's obligation to the original beneficiary-debtor is |
satisfied. In this situation, the payment to the secured party- |
transferee is proceeds of the receivable collected by the secured |
party-transferee. Consequently, the secured party-transferee |
would have certain duties to the debtor and third parties under |
Article 9 [Maine cite Article 9-A]. For example, it would be |
obliged to collect under the letter of credit in a commercially |
reasonable manner and to remit any surplus pursuant to Sections |
9-607 and 9-608 [Maine cite sections 9-1607 and 9-1608]. |