N.J. Admin. Code § 3:11-9.1

Current through Register Vol. 56, No. 11, June 3, 2024

Section 3:11-9.1 - Standby letters of credit defined

(a) A standby letter of credit is any letter of credit, or similar arrangement however named or described, which represents an obligation to the beneficiary on the part of the issuer:

1. To repay money borrowed by or advanced to or for the account of the account party; or

2. To make payment on account of any indebtedness undertaken by the account party; or

3. To make payment on account of any default by the account party in the performance of an obligation.

(b) As defined in (a) above, the term "standby letter of credit" does not include commercial or traveler's letter of credit issued pursuant to section 25(3) of the Banking Act of 1948, such as:

1. Letter of credit used to facilitate the purchase and sale of goods;

2. Where the issuing bank has obtained, or will obtain, documents of title covering the goods; or

3. Where the credit is reasonably related to the actual value of the goods at the time of purchase and sale.

N.J. Admin. Code § 3:11-9.1