Ky. Rev. Stat. » Chapter 355
Kentucky Revised Statutes

Ky. Rev. Stat. § 355.5-114 (2026)

Assignment of proceeds

✓ current as of May 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 nominated 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 of this chapter 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 of this chapter or other law. Effective: July 1, 2001 History: Repealed and reenacted 2000 Ky. Acts ch. 408, sec. 14, effective July 1, 2001. -- Amended 1996 Ky. Acts ch. 130, sec. 181, effective January 1, 1997. -- Amended 1986 Ky. Acts ch. 118, sec. 7, effective July 1, 1987 -- Created 1958 Ky. Acts ch. 77, sec. 5-114, effective July 1, 1960.

Notes of Decisions
Cited in 1 case, 1988–1988 · leading case: Audio Sys., Inc. v. First Nat'l Bank of Louisville, 753 S.W.2d 553 (Ky. Ct. App. 1988).
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Audio Sys., Inc. v. First Nat'l Bank of Louisville, 753 S.W.2d 553 (Ky. Ct. App. 1988). · cites it 4× “KRS 355.5-114(1). This duty is relieved if the documents are “forged or fraudulent or there is fraud in the transaction.”
— Ky. Rev. Stat. § 355.5-114(1) — 1 case
Audio Sys., Inc. v. First Nat'l Bank of Louisville, 753 S.W.2d 553 (Ky. Ct. App. 1988). “KRS 355.5-114(1). This duty is relieved if the documents are “forged or fraudulent or there is fraud in the transaction.”
— Ky. Rev. Stat. § 355.5-114(2) — 1 case
Audio Sys., Inc. v. First Nat'l Bank of Louisville, 753 S.W.2d 553 (Ky. Ct. App. 1988). “KRS 355.5-114(1). This duty is relieved if the documents are “forged or fraudulent or there is fraud in the transaction.”
— Ky. Rev. Stat. § 355.5-114(2)(b) — 1 case
Audio Sys., Inc. v. First Nat'l Bank of Louisville, 753 S.W.2d 553 (Ky. Ct. App. 1988). “KRS 355.5-114(1). This duty is relieved if the documents are “forged or fraudulent or there is fraud in the transaction.”
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