Section 45.05.108. Issuer's rights and obligations.

   (a) Except as otherwise provided in AS 45.05.109, an issuer shall honor a presentation that, as determined by the standard practice referred to in (e) of this section, appears on its face to comply strictly with the terms and conditions of the letter of credit. Except as otherwise provided in AS 45.05.113 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 issuer after the day of the issuer's receipt of documents,
        (1) to honor the presentation;
        (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 (d) of this section, an issuer is precluded from asserting a discrepancy as a basis for dishonor if
        (1) timely notice is not given; or
        (2) the discrepancy is not stated in the notice, if timely notice is given.
   (d) Failure to give the notice specified in (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 AS 45.05.109(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. A determination of the issuer's observance of the standard practice is a matter of interpretation for a court. A 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 (e) of this section.
   (g) If an undertaking constituting a letter of credit under AS 45.05.102(a)(10) contains nondocumentary conditions, an issuer shall disregard the nondocumentary conditions and treat them as if they were not stated.
   (h) An issuer that dishonors 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 honors a presentation as permitted or required by this chapter
        (1) is entitled to be reimbursed by the applicant in immediately available funds not later than the date of the 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 AS 45.03.414 - 45.03.415;
        (4) except as otherwise provided in AS 45.05.110 and 45.05.117, 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 the issuer's performance under the letter of credit unless the issuer honored a presentation in which a required signature of a beneficiary was forged.

Authorities

45.05.102;45.05.104;45.05.112;45.05.113

Notes

References

AS 45.05.102 Definitions.
AS 45.05.104 Formal requirements.
AS 45.05.112 Transfer of letter of credit.
AS 45.05.113 Transfer by operation of law.

History

(Sec. 5.108 ch 114 SLA 1962; am Sec. 10 ch 75 SLA 1999)