New York Laws
Article 5 - Letters of Credit
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.