Printable Format84-5-113. Transfer by operation of law. (a) 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.
(b) 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 subsection (e), 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 K.S.A. 84-5-108(e) or, in the absence of such a practice, compliance with other reasonable procedures sufficient to protect the issuer.
(c) An issuer is not obligated to determine whether a purported successor is a successor of a beneficiary or whether the signature of a purported successor is genuine or authorized.
(d) Honor of a purported successor's apparently complying presentation under subsection (a) or (b) has the consequences specified in K.S.A. 84-5-108(i) 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 K.S.A. 84-5-109.
(e) An issuer whose rights of reimbursement are not covered by subsection (d) or substantially similar law and any confirmer or nominated person may decline to recognize a presentation under subsection (b).
(f) 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.
History: L. 1996, ch. 202, § 13; July 1.
KANSAS COMMENT, 1996
This section is new and is identical to the 1995 Official Text. It deals with the rights of a "successor of a beneficiary," which is defined in 84-5-102(a)(15) as a person who has succeeded by operation of law to substantially all the rights of a beneficiary, most commonly by merger, insolvency or death. Subsection (f) gives the same rights to a beneficiary whose name is changed after the issuance of a letter of credit as to a successor of a beneficiary.
Subsection (a) gives the successor of a beneficiary broad rights to act without disclosing its status as successor, while subsection (b) permits a disclosed successor to perform the same acts as a named successor. Where the successor acts in its own name as successor, however, the issuer, to protect the issuer, may impose reasonable requirements for recognition of the successor by the issuer as is permitted by standard practice of financial institutions that regularly issue letters of credit, as defined in 85-5-108(e).
Subsection (c) provides that the issuer may rely on such items as court papers and is not required to further investigate the authority of the successor. If the issuer honors an apparently complying presentation, the issuer is entitled to reimbursement from the applicant, takes the documents free from claims, is discharged on the obligation and has the other rights provided in 84-5-108(i). Where the acts of the apparent successor are not authorized, however, they are considered a forgery for the purposes of 84-5-109, permitting a dishonor or injunction in those cases described in that section.
Subsection (e) allows an issuer, confirmer or nominated person to reject performance by a successor in the name of the successor if that issuer, confirmer or nominated person does not have the right of reimbursement, discharge and the other rights provided by subsection (d).
Revisor's Note:
Former section 84-5-113 was repealed by L. 1996, ch. 202, § 91 and the number reassigned to the current text.