Wisconsin Statutes
Wis. Stat. § 409.409 (2026)
Restrictions on assignment of letter-of-credit rights ineffective
✓ current as of July 2026
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409.409(1)(1) Term or law restricting assignment generally ineffective. A term in a letter of credit or a rule of law, statute, rule, custom, or practice applicable to the letter of credit which prohibits, restricts, or requires the consent of an applicant, issuer, or nominated person to a beneficiary’s assignment of or creation of a security interest in a letter-of-credit right is ineffective to the extent that the term or rule of law, statute, rule, custom, or practice:
409.409(1)(a)(a) Would impair the creation, attachment, or perfection of a security interest in the letter-of-credit right; or
409.409(1)(b)(b) Provides that the assignment or the creation, attachment, or perfection of the security interest may give rise to a default, breach, right of recoupment, claim, defense, termination, right of termination, or remedy under the letter-of-credit right.
409.409(2)(2) Limitation on ineffectiveness under sub. (1). To the extent that a term in a letter of credit is ineffective under sub. (1) but would be effective under law other than this chapter or a custom or practice applicable to the letter of credit, to the transfer of a right to draw or otherwise demand performance under the letter of credit, or to the assignment of a right to proceeds of the letter of credit, the creation, attachment, or perfection of a security interest in the letter-of-credit right:
409.409(2)(a)(a) Is not enforceable against the applicant, issuer, nominated person, or transferee beneficiary;
409.409(2)(b)(b) Imposes no duties or obligations on the applicant, issuer, nominated person, or transferee beneficiary; and
409.409(2)(c)(c) Does not require the applicant, issuer, nominated person, or transferee beneficiary to recognize the security interest, pay or render performance to the secured party, or accept payment or other performance from the secured party.
Notes of Decisions
Cited in 1
case, 1979–1979 · leading case: United Gen. Leasing, Inc. v. Gehrke Enter., Inc. (In Re Gehrke Enter., Inc.), 1 B.R. 647 (Bankr. W.D. Wis. 1979).
United Gen. Leasing, Inc. v. Gehrke Enter., Inc. (In Re Gehrke Enter., Inc.), 1 B.R. 647 (Bankr. W.D. Wis. 1979). “401 to § 409.409 to perfect its lien by filing. The certificates of title are not in evidence and, therefore, the compliance of Leasing with the provisions of the Vehicle Title and Anti-theft Law, Wis.”
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