Printable Format84-5-107. Confirmer, nominated person and adviser. (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 subsection (c). 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.
History: L. 1996, ch. 202, § 7; July 1.
KANSAS COMMENT, 1996
This section is derived from the former 84-5-107. The former 84-5-107(4) has been deleted as an inadvisable default rule. The section is identical to the 1995 Official Text.
The confirmer steps into the shoes of the actual issuer as far as the beneficiary is concerned, and the actual issuer steps into the shoes of an applicant in its relationship with the confirmer, with the confirmer having the duties of the issuer. The confirmer has the rights and obligations of the issuer as to the beneficiary, and also has the rights of, and the obligations of, an issuer as to the actual issuer as if the issuer were the applicant. The rights and obligations of the issuer are defined in 84-5-108.
Subsection (b) states that a nominated person (84-5-102(a)(11)) who is not a confirmer, that is, who has not undertaken to honor a letter of credit, is not obligated. Nor, under subsection (c), is an advisor (84-5-102(a)(1)) obligated to honor or give value for a letter of credit. The advisor is obligated to accurately advise as to the action regarding the letter of credit and to the authenticity of the request to be an advisor. If the advisor is mistaken regarding the letter or its status, the letter is still valid as issued. Under subsection (d), one who notifies a transferee beneficiary has the rights and obligations of an advisor. Such a person is acting like an advisor, and the subsection imposes those obligations.
Because the confirmer is liable to the beneficiary as an issuer, if the confirmer gives incorrect information, the confirmer will be obligated to the beneficiary to honor it. The advisor and the nominated person, if not confirmers, have no such direct liability, as discussed in Official Comment 3.
Revisor's Note:
Former section 84-5-107 was repealed by L. 1996, ch. 202, § 91 and the number reassigned to the current text.