State Codes and Statutes
Statutes > Utah > Title-70a > Chapter-05 > 70a-5-10870A-5-108. Issuer's rights and obligations.
(1) Except as otherwise provided in Section 70A-5-109, an issuer shall honor apresentation that, as determined by the standard practice referred to in Subsection (5), appears onits face strictly to comply with the terms and conditions of the letter of credit. Except asotherwise provided in Section 70A-5-113 and unless otherwise agreed with the applicant, anissuer shall dishonor a presentation that does not appear so to comply.
(2) An issuer has a reasonable time after presentation, but not beyond the end of theseventh business day of the issuer after the day of its receipt of documents:
(a) to honor;
(b) if the letter of credit provides for honor to be completed more than seven businessdays after presentation, to accept a draft or incur a deferred obligation; or
(c) to give notice to the presenter of discrepancies in the presentation.
(3) Except as otherwise provided in Subsection (4), an issuer is precluded from assertingas a basis for dishonor any discrepancy if timely notice is not given, or any discrepancy not statedin the notice if timely notice is given.
(4) Failure to give the notice specified in Subsection (2) or to mention fraud, forgery, orexpiration in the notice does not preclude the issuer from asserting as a basis for dishonor fraud orforgery as described in Subsection 70A-5-109(1) or expiration of the letter of credit beforepresentation.
(5) An issuer shall observe standard practice of financial institutions that regularly issueletters of credit. Determination of the issuer's observance of the standard practice is a matter ofinterpretation for the court. The court shall offer the parties a reasonable opportunity to presentevidence of the standard practice.
(6) An issuer is not responsible for:
(a) the performance or nonperformance of the underlying contract, arrangement, ortransaction;
(b) an act or omission of others; or
(c) observance or knowledge of the usage of a particular trade other than the standardpractice referred to in Subsection (5).
(7) If an undertaking constituting a letter of credit under Subsection 70A-5-102(10)contains nondocumentary conditions, an issuer shall disregard the nondocumentary conditions andtreat them as if they were not stated.
(8) An issuer that has dishonored a presentation shall return the documents or hold themat the disposal of, and send advice to that effect to, the presenter.
(9) An issuer that has honored a presentation as permitted or required by this chapter:
(a) is entitled to be reimbursed by the applicant in immediately available funds not laterthan the date of its payment of funds;
(b) takes the documents free of claims of the beneficiary or presenter;
(c) is precluded from asserting a right of recourse on a draft under Sections 70A-3-414and 70A-3-415;
(d) except as otherwise provided in Sections 70A-5-110 and 70A-5-117, is precludedfrom restitution of money paid or other value given by mistake to the extent the mistake concernsdiscrepancies in the documents or tender which are apparent on the face of the presentation; and
(e) is discharged to the extent of its performance under the letter of credit unless theissuer honored a presentation in which a required signature of a beneficiary was forged.
Repealed and Re-enacted by Chapter 241, 1997 General Session
