§12A-5-108. Issuer's Rights and Obligations.
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Issuer's Rights and Obligations.
(a)Except as otherwise provided in Section 5-109 of this title, an issuer shall honor a presentation that, as determined by the standard practice referred to in subsection
(e)of this section, appears on its face strictly to comply with the terms and conditions of the letter of credit. Except as otherwise provided in Section 5- 113 of this title and unless otherwise agreed with the applicant, an issuer shall dishonor a presentation that does not appear so to comply.
(b)An issuer has a reasonable time after presentation, but not beyond the end of the seventh business day of the issuer after the day of its receipt of documents:
(1)To honor;
(2)If the letter of credit provides for honor to be
completed more than seven
(7)business days after
presentation, to accept a draft or incur a deferred
obligation; or
(3)To give notice to the presenter of discrepancies in
the presentation.
(c)Except as otherwise provided in subsection
(d)of this section, an issuer is precluded from asserting as a basis for dishonor any discrepancy if timely notice is not given, or any discrepancy not stated in the notice if timely notice is given.
(d)Failure to give the notice specified in subsection
(b)of this section or to mention fraud, forgery, or expiration in the notice does not preclude the issuer from asserting as a basis for dishonor fraud or forgery as described in subsection
(a)of Section 5-109 of this title or expiration of the letter of credit before presentation.
(e)An issuer shall observe standard practice of financial institutions that regularly issue letters of credit. Determination of the issuer's observance of the standard practice is a matter of interpretation for the court. The court shall offer the parties a reasonable opportunity to present evidence of the standard practice.
(f)An issuer is not responsible for:
(1)The performance or nonperformance of the underlying
contract, arrangement, or transaction;
(2)An act or omission of others; or
(3)Observance or knowledge of the usage of a particular
trade other than the standard practice referred to in
subsection
(e)of this section.
(g)If an undertaking constituting a letter of credit under paragraph
(10)of subsection
(a)of Section 5-102 of this title contains nondocumentary conditions, an issuer shall disregard the nondocumentary conditions and treat them as if they were not stated.
(h)An issuer that has dishonored a presentation shall return the documents or hold them at the disposal of, and send advice to that effect to, the presenter.
(i)An issuer that has honored a presentation as permitted or required by this article:
(1)Is entitled to be reimbursed by the applicant in
immediately available funds not later than the date of
its payment of funds;
(2)Takes the documents free of claims of the beneficiary
or presenter;
(3)Is precluded from asserting a right of recourse on a
draft under Sections 3-414 and 3-415 of this title;
(4)Except as otherwise provided in Sections 5-110 and 5-
117 of this title, is precluded from restitution of
money paid or other value given by mistake to the
extent the mistake concerns discrepancies in the
documents or tender which are apparent on the face of
the presentation; and
(5)Is discharged to the extent of its performance under
the letter of credit unless the issuer honored a
presentation in which a required signature of a
beneficiary was forged. Added by Laws 1961, p. 133, § 5-108. Amended by Laws 1996, c. 56, § 7, eff. Jan. 1, 1997.