N.D. Cent. Code § 41-05-08
(5-108) Issuer's rights and obligations
Redline — December 1, 2021 → current.View current text →
Current — January 1, 2022
As of December 1, 2021
(1) Except as otherwise provided in section 41-05-09, an issuer shall honor a presentation that, as determined by the standard practice referred to in subsection 5, appears on its face strictly to comply with the terms and conditions of the letter of credit. Except as otherwise provided in section 41-05-13 and unless otherwise agreed with the applicant, an issuer shall dishonor a presentation that does not appear so to comply.
(1) Except as otherwise provided in section 41-05-09, an issuer shall honor a presentation that, as determined by the standard practice referred to in subsection 5, appears on its face strictly to comply with the terms and conditions of the letter of credit. Except as otherwise provided in section 41-05-13 and unless otherwise agreed with the applicant, an issuer 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 the seventh business day of the issuer after the day of its receipt of documents: To honor;
(2) 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 its receipt of documents: To honor;
(3) 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) 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
(4) To give notice to the presenter of discrepancies in the presentation.
(4) To give notice to the presenter of discrepancies in the presentation.
(5) Except as otherwise provided in subsection 4, 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.
(5) Except as otherwise provided in subsection 4, 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.
(6) Failure to give the notice specified in subsection 2 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 1 of section 41-05-09 or expiration of the letter of credit before presentation.
(6) Failure to give the notice specified in subsection 2 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 1 of section 41-05-09 or expiration of the letter of credit before presentation.
(7) 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.
(7) 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.
(8) An issuer is not responsible for: The performance or nonperformance of the underlying contract, arrangement, or transaction;
(8) An issuer is not responsible for: The performance or nonperformance of the underlying contract, arrangement, or transaction;
(9) An act or omission of others; or
(9) An act or omission of others; or
(10) Observance or knowledge of the usage of a particular trade other than the standard practice referred to in subsection 5.
(10) Observance or knowledge of the usage of a particular trade other than the standard practice referred to in subsection 5.
(11) If an undertaking constituting a letter of credit under subdivision j of subsection 1 of section 41-05-02 contains nondocumentary conditions, an issuer shall disregard the nondocumentary conditions and treat them as if they were not stated.
(11) If an undertaking constituting a letter of credit under subdivision j of subsection 1 of section 41-05-02 contains nondocumentary conditions, an issuer shall disregard the nondocumentary conditions and treat them as if they were not stated.
(12) 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.
(12) 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.
(13) An issuer that has honored a presentation as permitted or required by this chapter: Is entitled to be reimbursed by the applicant in immediately available funds not later than the date of its payment of funds;
(13) An issuer that has honored a presentation as permitted or required by this chapter: Is entitled to be reimbursed by the applicant in immediately available funds not later than the date of its payment of funds;
(14) Takes the documents free of claims of the beneficiary or presenter;
(14) Takes the documents free of claims of the beneficiary or presenter;
(15) Is precluded from asserting a right of recourse on a draft under sections 41-03-51 and 41-03-52;
(15) Is precluded from asserting a right of recourse on a draft under sections 41-03-51 and 41-03-52;
(16) Except as otherwise provided in sections 41-05-10 and 41-05-17, 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
(16) Except as otherwise provided in sections 41-05-10 and 41-05-17, 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
(17) 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.
(17) 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.
(18) Subsection (f) condones an issuer’s ignorance of “any usage of a particular trade”; that trade is the trade of the applicant, beneficiary, or others who may be involved in the underlying transaction. The issuer is expected to know usage that is commonly encountered in the course of document examination. For example, an issuer should know the common usage with respect to documents in the maritime shipping trade but would not be expected to understand synonyms used in a particular trade for product descriptions appearing in a letter of credit or an invoice.
(19) Where the issuer’s performance is the delivery of an item of value other than money, the applicant’s reimbursement obligation would be to make the “item of value” available to the issuer.
(20) An issuer is entitled to reimbursement from the applicant after honor of a forged or fraudulent drawing if honor was permitted under Section 5-109(a).
(21) The last clause of Section 5-108(i)(5) deals with a special case in which the fraud is not committed by the beneficiary, but is committed by a stranger to the transaction who forges the beneficiary’s signature. If the issuer pays against documents on which a required signature of the beneficiary is forged, it remains liable to the true beneficiary.
Official source: North Dakota Legislative Branch. Reproduced from public-domain North Dakota statutes; confirm against the official source for the current text. Not legal advice.