Tennessee Code Annotated
Tenn. Code Ann. § 47-5-112 (2026)
Transfer of letter of credit
✓ current as of May 2026
- (a) Except as otherwise provided in § 47-5-113, unless a letter of credit provides that it is transferable, the right of a beneficiary to draw or otherwise demand performance under a letter of credit may not be transferred.
- (b) Even if a letter of credit provides that it is transferable, the issuer may refuse to recognize or carry out a transfer if:
- (1) the transfer would violate applicable law; or
- (2) the transferor or transferee has failed to comply with any requirement stated in the letter of credit or any other requirement relating to transfer imposed by the issuer which is within the standard practice referred to in § 47-5-108(e) or is otherwise reasonable under the circumstances.
Acts 1998, ch. 675, § 1.
Notes of Decisions
Cited in 3
cases, 1972–1990 · leading case: Union Exp. Co. v. N.I.B. Intermarket, A.B., 786 S.W.2d 628 (Tenn. 1990).
Union Exp. Co. v. N.I.B. Intermarket, A.B., 786 S.W.2d 628 (Tenn. 1990). “Under this limited exception of § 47-5-114(2), however, when a required document does not conform to the necessary warranties, is forged, is fraudulent, or there is fraud in the transaction, an issuer acting in good faith is not required to, but may honor a draft drawn under a…”
Exch. Mut. Ins. Co. v. Com. Union Bank of Sumner Cnty., 686 S.W.2d 913 (Tenn. Ct. App. 1984). “Plaintiff argues that the Bank’s failure to state any reason for dishonoring the drafts violated the Bank’s duty owed to the beneficiary under Tenn. Code Ann. § 47-5-112 and the terms of the letter itself.”
Talbot v. Bank of Hendersonville, 495 S.W.2d 548 (Tenn. Ct. App. 1972). “The long delay in payment is not an admission of the bank that the papers were defective; rather it was an effort by the bank to be sure of its position in the face of the protests of plaintiff, and to give plaintiff an opportunity to extricate himself from his difficulty.”
Tenn. Code Ann. § 47-5-112(2)(b): 1 case
Union Exp. Co. v. N.I.B. Intermarket, A.B., 786 S.W.2d 628 (Tenn. 1990). “Under this limited exception of § 47-5-114(2), however, when a required document does not conform to the necessary warranties, is forged, is fraudulent, or there is fraud in the transaction, an issuer acting in good faith is not required to, but may honor a draft drawn under a…”
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