Okla. Stat. tit. 12A § 5-102

Current through Laws 2024, c. 453.

Section 5-102 - Definitions

(a) In this article:

(1) "Adviser" means a person who, at the request of the issuer, a confirmer, or another adviser, notifies or requests another adviser to notify the beneficiary that a letter of credit has been issued, confirmed, or amended;

(2) "Applicant" means a person at whose request or for whose account a letter of credit is issued. The term includes a person who requests an issuer to issue a letter of credit on behalf of another if the person making the request undertakes an obligation to reimburse the issuer;

(3) "Beneficiary" means a person who under the terms of a letter of credit is entitled to have its complying presentation honored. The term includes a person to whom drawing rights have been transferred under a transferable letter of credit;

(4) "Confirmer" means a nominated person who undertakes, at the request or with the consent of the issuer, to honor a presentation under a letter of credit issued by another;

(5) "Dishonor" of a letter of credit means failure timely to honor or to take an interim action, such as acceptance of a draft, that may be required by the letter of credit;

(6) "Document" means a draft or other demand, document of title, investment security, certificate, invoice, or other record, statement, or representation of fact, law, right, or opinion:

(i) which is presented in a written or other medium permitted by the letter of credit or, unless prohibited by the letter of credit, by the standard practice referred to in subsection (e) of Section 5-108 of this title; and

(ii) which is capable of being examined for compliance with the terms and conditions of the letter of credit.

A document may not be oral;

(7) "Good faith" means honesty in fact in the conduct or transaction concerned;

(8) "Honor" of a letter of credit means performance of the issuer's undertaking in the letter of credit to pay or deliver an item of value. Unless the letter of credit otherwise provides, "honor" occurs:

(i) upon payment;

(ii) if the letter of credit provides for acceptance, upon acceptance of a draft and, at maturity, its payment; or

(iii) if the letter of credit provides for incurring a deferred obligation, upon incurring the obligation and, at maturity, its performance;

(9) "Issuer" means a bank or other person that issues a letter of credit, but does not include an individual who makes an engagement for personal, family, or household purposes;

(10) "Letter of credit" means a definite undertaking that satisfies the requirements of Section 5-104 of this title by an issuer to a beneficiary at the request or for the account of an applicant or, in the case of a financial institution, to itself or for its own account, to honor a documentary presentation by payment or delivery of an item of value;

(11) "Nominated person" means a person whom the issuer:

(i) designates or authorizes to pay, accept, negotiate, or otherwise give value under a letter of credit; and

(ii) undertakes by agreement or custom and practice to reimburse;

(12) "Presentation" means delivery of a document to an issuer or nominated person for honor or giving of value under a letter of credit;

(13) "Presenter" means a person making a presentation as or on behalf of a beneficiary or nominated person;

(14) "Record" means information that is inscribed on a tangible medium, or that is stored in an electronic or other medium and is retrievable in perceivable form; and

(15) "Successor of a beneficiary" means a person who succeeds to substantially all of the rights of a beneficiary by operation of law, including a corporation with or into which the beneficiary has been merged or consolidated, an administrator, executor, personal representative, trustee in bankruptcy, debtor in possession, liquidator, and receiver.

(b) Definitions in other articles of this title applying to this article and the sections in which they appear are:

"Accept or "Acceptance" Section 3-409.

"Value" Sections 3-303 and 4-211.

(c) Article 1 of this title contains certain additional general definitions and principles of construction and interpretation applicable throughout this article.

Okla. Stat. tit. 12A, § 5-102

Added by Laws 1961, p. 132, § 5-102. Amended by Laws 1996, SB 1034, c. 56, §1, eff. 1/1/1997.

Oklahoma Code Comment

The revision expands the number of statutory definitions contained in former Section 5-103 . Newly included terms are: "adviser," "applicant," "confirmer," "dishonor," "good faith," "honor," "nominated person," "presentation," "record," "successor of a beneficiary" and "value." The following definitions were deleted by the revision: "documentary draft" (see "document"); "advising bank" and "confirming bank" (see "adviser" and "confirmer"); "customer" (see "applicant") and "notation credit."

The definition of "document" contemplates the inclusion of certain electronic and other non-paper media as documents. The former version limited a "document" to a paper item.

The definition of "honor" is broader than that in sub section 1-201(21) , which provides that to "honor" is "to pay or to accept and pay, or where a credit so engages to purchase or discount a draft complying with the terms of the credit." What constitutes honor is defined by the issuer's undertaking and may include delivery of an item of value under revised Article 5. As noted in Official Comment 4, the definition of "honor" now also includes incurring a deferred obligation. This provision presumes that a letter of credit providing for honor by acceptance obligates the issuer to accept and, at maturity, to pay.

Consumers are specifically excluded from the definition of "issuer." The former definition contained no exclusion.

Official Comment 6 states the labeling of a document is not conclusive as to its legal effect. In explaining the approach of revised Article 5, the Comment should qualify the decision in Dubuque Packing Co. v. Fitzgibbon, 599 P.2d 440 (Okla. Ct.App.1979), which held, in part, that a document which referred to itself four times as a guarantee was a "guarantee," rather than a letter of credit.

The former Article 5 Definitions section referenced Section 3-104 , which defines a "draft" as a negotiable order. The Official Comments point out that the language in revised Article 5 does not require the document to be negotiable.

Prior Statutory Provisions:

15 Okla. Stat. § 401 (1910), which defined "letter of credit."

15 Okla. Stat. § 404 (1910), which defined "classes" of letters of credit.

15 Okla. Stat. § 405 (1910), which defined a "general" letter of credit.

15 Okla. Stat. § 409 (1910).