N.Y. Uniform Commercial Code Law § 5-108: 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.