8.5A-108 - A-108. Issuer's rights and obligations.
§ 8.5A-108. Issuer's rights and obligations.
(a) Except as otherwise provided in § 8.5A-109, an issuer shall honor apresentation that, as determined by the standard practice referred to insubsection (e), appears on its face strictly to comply with the terms andconditions of the letter of credit. Except as otherwise provided in §8.5A-113 and unless otherwise agreed with the applicant, an issuer shalldishonor a presentation that does not appear so to comply.
(b) An issuer has a reasonable time after presentation, but not beyond theend of the seventh business day of the issuer after the day of its receipt ofdocuments:
(1) to honor;
(2) if the letter of credit provides for honor to be completed more thanseven business days after presentation, to accept a draft or incur a deferredobligation; or
(3) to give notice to the presenter of discrepancies in the presentation.
(c) Except as otherwise provided in subsection (d), an issuer is precludedfrom asserting as a basis for dishonor any discrepancy if timely notice isnot given, or any discrepancy not stated in the notice if timely notice isgiven.
(d) Failure to give the notice specified in subsection (b) or to mentionfraud, forgery, or expiration in the notice does not preclude the issuer fromasserting as a basis for dishonor fraud or forgery as described in §8.5A-109(a) or expiration of the letter of credit before presentation.
(e) An issuer shall observe standard practice of financial institutions thatregularly issue letters of credit. Determination of the issuer's observanceof the standard practice is a matter of interpretation for the court. Thecourt shall offer the parties a reasonable opportunity to present evidence ofthe 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 thestandard practice referred to in subsection (e).
(g) If an undertaking constituting a letter of credit under § 8.5A-102(a)(10) contains nondocumentary conditions, an issuer shall disregard thenondocumentary conditions and treat them as if they were not stated.
(h) An issuer that has dishonored a presentation shall return the documentsor hold them at the disposal of, and send advice to that effect to, thepresenter.
(i) An issuer that has honored a presentation as permitted or required bythis title:
(1) is entitled to be reimbursed by the applicant in immediately availablefunds 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 §§8.3A-414 and 8.3A-415;
(4) except as otherwise provided in §§ 8.5A-110 and 8.5A-117, is precludedfrom restitution of money paid or other value given by mistake to the extentthe mistake concerns discrepancies in the documents or tender which areapparent on the face of the presentation; and
(5) is discharged to the extent of its performance under the letter of creditunless the issuer honored a presentation in which a required signature of abeneficiary was forged.
(1997, c. 343.)