New Jersey § 12a:5-117

§ 12a:5-117.

a. An issuer that honors a beneficiary's presentation is subrogated to the rights

of the beneficiary to the same extent as if the issuer were a secondary obligor of

the underlying obligation owed to the beneficiary; and of the applicant, to the same

extent as if the issuer were the secondary obligor of the underlying obligation owed

to the applicant. b. An applicant that reimburses an issuer is subrogated to the rights of the issuer

against any beneficiary, presenter, or nominated person to the same extent as if the

applicant were the secondary obligor of the obligations owed to the issuer and has

the rights of subrogation of the issuer to the rights of the beneficiary stated in

subsection a. of this section. c. A nominated person who pays or gives value against a draft or demand presented

under a letter of credit is subrogated to the rights of: (1) the issuer against the applicant to the same extent as if the nominated person

were a secondary obligor of the obligation owed to the issuer by the applicant; (2) the beneficiary to the same extent as if the nominated person were a secondary

obligor of the underlying obligation owed to the beneficiary; and (3) the applicant to the same extent as if the nominated person were a secondary obligor

of the underlying obligation owed to the applicant. d. Notwithstanding any agreement or term to the contrary, the rights of subrogation

stated in subsections a. and b. of this section do not arise until the issuer honors

the letter of credit or otherwise pays and the rights in subsection c. of this section

do not arise until the nominated person pays or otherwise gives value. Until then, the issuer, nominated person, and the applicant do not derive under

this section present or prospective rights forming the basis of a claim, defense,

or excuse.