Obligatory disbursement agreement. For purposes of this section, the term ‘‘obligatory disbursement agreement’’ means a written agreement, entered into by a person in the course of the person’s trade or business, to make dis- bursements. An agreement is treated as an obligatory disbursement agree- ment only with respect to disburse- ments which are required to be made by reason of the intervention of the rights of a person other than the tax- payer. The obligation to pay must be conditioned upon an event beyond the control of the obligor. For example, the provisions of this section are applica- ble where an issuing bank obligates itself to honor drafts or other demands 27 CFR Ch. I (4–1–17 Edition) for payment on a letter of credit and a bank, in good faith, relies upon that letter of credit in making advances. The provisions of this section are also applicable, for example, where a bond- ing company obligates itself to make payments to indemnify against loss or liability and, under the terms of the bond, makes a payment with respect to a loss. The priority described in this section is not applicable, for example, in the case of an accommodation en- dorsement by an endorser who assumes the obligation other than in the course of the endorser’s trade or business.
Obligatory disbursement agreement. For purposes of this section the term ‘‘obligatory disbursement agreement’’ means a written agreement, entered into by a person in the course of his trade or business, to make disburse- ments. An agreement is treated as an obligatory disbursement agreement only with respect to disbursements which are required to be made by rea- son of the intervention of the rights of a person other than the taxpayer. The obligation to pay must be conditioned upon an event beyond the control of the obligor. For example, the provi- sions of this section are applicable where an issuing bank obligates itself to honor drafts or other demands for payment on a letter of credit and a bank, in good faith, relies upon that letter of credit in making advances. The provisions of this section are also applicable, for example, where a bond- ing company obligates itself to make payments to indemnify against loss or liability and, under the terms of the bond, makes a payment with respect to a loss. The priority described in this section is not applicable, for example, in the case of an accommodation en- dorsement by an endorser who assumes his obligation other than in the course of his trade or business.
Obligatory disbursement agreement. For purposes of this section, the term ‘‘obligatory disbursement agreement’’ means a written agreement, entered into by a person in the course of the person’s trade or business, to make dis- bursements. An agreement is treated as an obligatory disbursement agree- ment only with respect to disburse- ments which are required to be made by reason of the intervention of the rights of a person other than the tax- payer. The obligation to pay must be conditioned upon an event beyond the control of the obligor. For example, the provisions of this section are applica- ble where an issuing bank obligates itself to honor drafts or other demands
