N.Y. Comp. Codes R. & Regs. tit. 11 § 79.2

Current through Register Vol. 46, No. 36, September 4, 2024

Section 79.2 - Required conditions for acceptable letters of credit

For a letter of credit to be acceptable, it must:

(a) be irrevocable;

(b) be clean and unconditional;

(c) be issued, presentable and payable at an office of the qualified bank in the United States;

(d) contain a statement that identifies the beneficiary and includes the definition set forth in section 79.1(b) of this Part;

(e) contain a statement that it is not subject to any agreement, condition or qualification outside of the letter of credit;

(f) contain a statement to the effect that the obligation of the issuing bank under the letter of credit is an individual obligation of such bank and is in no way contingent upon reimbursement with respect thereto;

(g) contain an issue date and a date of expiration;

(h) have a term of at least one year and contain an evergreen clause which provides at least 30 days' written notice to the beneficiary prior to expiry date for nonrenewal;

(i) state that it is subject to and governed by the Laws of the State of New York and the 1993 revision of the Uniform Customs and Practice for Documentary Credits of the International Chamber of Commerce (Publication 500)[FN*] and that, in the event of any conflict, the Laws of the State of New York will control. If the beneficiary is a foreign insurer, then such insurer's state of domicile may be substituted for New York. The letter of credit must contain a provision for an extension of time, of not less than 30 days after resumption of business, to draw against the letter of credit in the event that one or more of the occurrences described in article 17 of Publication 500 occurs;

(j) if obtained in conjunction with a reinsurance agreement, have the reinsurance agreement in compliance with the provisions of section 79.5 of this Part;

(k) be issued by a qualified bank. The aggregate of all letters of credit issued or confirmed to one beneficiary by any one qualified bank on behalf of any one applicant must not exceed five percent of such bank's consolidated capital and surplus as shown in its annual report as of the end of its preceding fiscal year, as filed with the Federal or state regulatory authority having jurisdiction over such bank; and

(l) conform in substance to section 79.9(a) of this Part.

[FN*] ICC No. 500, UNIFORM CUSTOMS AND PRACTICE FOR DOCUMENTARY CREDITS/1993 Revision. Copyright 1993 by the International Chamber of Commerce. All rights reserved. Reprinted with the permission of the International Chamber of Commerce through ICC Publishing, Inc., in New York.

N.Y. Comp. Codes R. & Regs. Tit. 11 § 79.2