400.5-108. Issuer's rights and obligations. - Missouri Statutes

Issuer's rights and obligations.

400.5-108. (a) Except as otherwise provided in section 400.5-109,an issuer shall honor a presentation that, as determined by the standardpractice referred to in subsection (e), appears on its face strictly tocomply with the terms and conditions of the letter of credit. Except asotherwise provided in section 400.5-113 and unless otherwise agreed withthe applicant, an issuer shall dishonor a presentation that does not appearso to comply.

(b) An issuer has a reasonable time after presentation, but notbeyond the end of the seventh business day of the issuer after the day ofits receipt of documents:

(1) To honor;

(2) If the letter of credit provides for honor to be completed morethan seven business days after presentation, to accept a draft or incur adeferred obligation; or

(3) To give notice to the presenter of discrepancies in thepresentation.

(c) Except as otherwise provided in subsection (d), an issuer isprecluded from asserting as a basis for dishonor any discrepancy if timelynotice is not given, or any discrepancy not stated in the notice if timelynotice is given.

(d) Failure to give the notice specified in subsection (b) or tomention fraud, forgery or expiration in the notice does not preclude theissuer from asserting as a basis for dishonor, fraud or forgery asdescribed in section 400.5-109(a) or expiration of the letter of creditbefore presentation.

(e) An issuer shall observe standard practice of financialinstitutions that regularly issue letters of credit. Determination of theissuer's observance of the standard practice is a matter of interpretationfor the court. The court shall offer the parties a reasonable opportunityto 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 otherthan the standard practice referred to in subsection (e).

(g) If an undertaking constituting a letter of credit under section400.5-102(a)(10) contains nondocumentary conditions, an issuer shalldisregard the nondocumentary conditions and treat them as if they were notstated.

(h) An issuer that has dishonored a presentation shall return thedocuments or hold them at the disposal of, and send advice to that effectto, the presenter.

(i) An issuer that has honored a presentation as permitted orrequired by this article:

(1) Is entitled to be reimbursed by the applicant in immediatelyavailable funds not later than the date of its payment of funds;

(2) Takes the documents free of claims of the beneficiary orpresenter;

(3) Is precluded from asserting a right of recourse on a draft undersections 400.3-414 and 400.3-415;

(4) Except as otherwise provided in sections 400.5-110 and 400.5-117,is precluded from restitution of money paid or other value given by mistaketo the extent the mistake concerns discrepancies in the documents or tenderwhich are apparent on the face of the presentation; and

(5) Is discharged to the extent of its performance under the letterof credit unless the issuer honored a presentation in which a requiredsignature of a beneficiary was forged.

(L. 1963 p. 503 § 5-108, A.L. 1997 S.B. 6)

*No continuity with § 400.5-108 as repealed by L. 1997 S.B. 6 § A.