MS 1996 [Repealed, 1997 c 11 art 1 s 20
336.5-108 ISSUER'S RIGHTS AND OBLIGATIONS.
(a) Except as otherwise provided in section
, an issuer shall honor a presentation
that, as determined by the standard practice referred to in subsection (e), appears on its face
strictly to comply with the terms and conditions of the letter of credit. Except as otherwise
provided in section
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 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), 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) 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 section
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
(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).
(g) If an undertaking constituting a letter of credit under section
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
(4) except as otherwise provided in sections
, 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.
History: 1997 c 11 art 1 s 8