2006 New York Code - Issuer\'s Rights And Obligations.

 
  Section 5--108. Issuer's rights and obligations.
    (a) Except  as  otherwise  provided in section 5--109, 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 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 issue 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) 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  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.
    (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  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;
         (4) except  as  otherwise provided in sections 5--110 and 5--117,
             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.