§490:5-108  Issuer's rights and obligations. 
(a)  Except as otherwise provided in section 490:5-109, 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
490:5-113 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 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 490:5-109(a) or expiration of the letter of
credit before presentation.



(e)  An issuer shall observe the 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).



(g)  If an undertaking constituting a letter of
credit 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 490:3-414 and 490:3-415;



(4)  Except as otherwise provided in sections
490:5-110 and 490:5-117, 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 that 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. [L 1996, c 39, pt of §1]