Iowa Code

Iowa Code § 554.5114 (2026)

Assignment of proceeds

✓ current as of July 2026

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1. In this section, “proceeds of a letter of credit” means the cash, check, accepted draft, or other item of value paid or delivered upon honor or giving of value by the issuer or any \n Tue Dec 09 22:02:41 2025 Iowa Code 2026, Chapter 554 (108, 4) 105 UNIFORM COMMERCIAL CODE, §554.5116\n\nnominated person under the letter of credit. The term does not include a beneficiary’s drawing rights or documents presented by the beneficiary.

2. A beneficiary may assign its right to part or all of the proceeds of a letter of credit. The beneficiary may do so before presentation as a present assignment of its right to receive proceeds contingent upon its compliance with the terms and conditions of the letter of credit.

3. An issuer or nominated person need not recognize an assignment of proceeds of a letter of credit until it consents to the assignment.

4. An issuer or nominated person has no obligation to give or withhold its consent to an assignment of proceeds of a letter of credit, but consent may not be unreasonably withheld if the assignee possesses and exhibits the letter of credit and presentation of the letter of credit is a condition to honor.

5. Rights of a transferee beneficiary or nominated person are independent of the beneficiary’s assignment of the proceeds of a letter of credit and are superior to the assignee’s right to the proceeds.

6. Neither the rights recognized by this section between an assignee and an issuer, transferee beneficiary, or nominated person nor the issuer’s or nominated person’s payment of proceeds to an assignee or a third person affect the rights between the assignee and any person other than the issuer, transferee beneficiary, or nominated person. The mode of creating and perfecting a security interest in or granting an assignment of a beneficiary’s rights to proceeds is governed by Article 9 or other law. Against persons other than the issuer, transferee beneficiary, or nominated person, the rights and obligations arising upon the creation of a security interest or other assignment of a beneficiary’s right to proceeds and its perfection are governed by Article 9 or other law. [C66, 71, 73, 75, 77, 79, 81, §554.5114] 89 Acts, ch 113, §55; 96 Acts, ch 1026, §13, 28 Referred to in §539.1, 539.2, 554.5103, 554.9102, 554.9107, 554.9109 \n

Notes of Decisions

Cited in 3 cases, 1972–1993 · leading case: First Nat'l Bank of Council Bluffs v. Rosebud Hous. Auth., 291 N.W.2d 41 (Iowa 1980).

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First Nat'l Bank of Council Bluffs v. Rosebud Hous. Auth., 291 N.W.2d 41 (Iowa 1980). · cites it 7× “This principle is codified in section 554.5114(1): An issuer must honor a draft or demand for payment which complies with the terms of the relevant credit regardless of whether the goods or documents conform to the underlying contract for sale or other contract between the…”

Comdata Network, Inc. v. First Interstate Bank of Fort Dodge, 497 N.W.2d 807 (Iowa 1993). · cites it 4× “This principle is codified in section 554.5114(1)_ [T]he principle that the letter of credit is an independent promise as stated in section 554.”

Johnston v. State Bank, 195 N.W.2d 126 (Iowa 1972). “But Johnston is mistaken in asserting that the Bank’s letter here constituted a letter of credit.”

— Iowa Code § 554.5114(1) — 3 cases

First Nat'l Bank of Council Bluffs v. Rosebud Hous. Auth., 291 N.W.2d 41 (Iowa 1980). “This principle is codified in section 554.5114(1): An issuer must honor a draft or demand for payment which complies with the terms of the relevant credit regardless of whether the goods or documents conform to the underlying contract for sale or other contract between the…”

Comdata Network, Inc. v. First Interstate Bank of Fort Dodge, 497 N.W.2d 807 (Iowa 1993). “This principle is codified in section 554.5114(1)_ [T]he principle that the letter of credit is an independent promise as stated in section 554.”

Johnston v. State Bank, 195 N.W.2d 126 (Iowa 1972). “But Johnston is mistaken in asserting that the Bank’s letter here constituted a letter of credit.”

— Iowa Code § 554.5114(2) — 1 case

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