GA Code § 11-5-108 (2021)
2021 Georgia Code|Title 11 - Commercial Code|Article 5 - Letters of Credit|§ 11-5-108. Issuer's Rights and Obligations

  Except as otherwise provided in Code Section 11-5-109, an issuer shall honor a presentation that, as determined by the standard practice referred to in subsection (e) of this Code section, appears on its face strictly to comply with the terms and conditions of the letter of credit. Except as otherwise provided in Code Section 11-5-113 and unless otherwise agreed with the applicant, an issuer shall dishonor a presentation that does not appear to comply.   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;   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   To give notice to the presenter of discrepancies in the presentation.     Except as otherwise provided in subsection (d) of this Code section, an issuer is precluded from asserting as a basis for dishonor any discrepancy if timely notice is not given or from asserting as a basis for dishonor any discrepancy not stated in the notice if timely notice is given.   Failure to give the notice specified in subsection (b) of this Code 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 Code Section 11-5-109 or expiration of the letter of credit before presentation.   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.   An issuer is not responsible for:   The performance or nonperformance of the underlying contract, arrangement, or transaction;   An act or omission of others; or   Observance of knowledge of the usage of a particular trade other than the standard practice referred to in subsection (e) of this Code section.     If an undertaking constituting a letter of credit under paragraph (10) of subsection (a) of Code Section 11-5-102 contains nondocumentary conditions, an issuer shall disregard the nondocumentary conditions and treat them as if they were not stated.   An issuer that has dishonored a presentation shall return the documents to the presenter or hold the documents at the disposal of the presenter and send advice to that effect to the presenter.   An issuer that has honored a presentation as permitted or required by this article:   Is entitled to be reimbursed by the applicant in immediately available funds not later than the date of its payment of funds;   Takes the documents free of claims of the beneficiary or presenter;   Is precluded from asserting a right of recourse on a draft under Code Sections 11-3-414 and 11-3-415;   Except as otherwise provided in Code Sections 11-5-110 and 11-5-117, 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   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.       (Code 1981, §11-5-108, enacted by Ga. L. 2002, p. 995, § 1.)   Law reviews.   - For article supporting the retention of waiver of defense clauses in credit card agreements, see 10 Ga. St. B.J. 17 (1973). For note on 1992 amendment of this Code section, see 9 Ga. St. U.L. Rev. 168 (1992).   JUDICIAL DECISIONS   Editor's notes.   - In light of the similarity of the provisions, decisions under former Article 5 are included in the annotations for this Code section.   Meaning of issuer's duty of "care."    - Duty resting on issuer is one of exercising "care" and this will undoubtedly be interpreted as meaning "reasonable care under the circumstances" so that to some extent, a deviation, if permissible, in exercise of due care would not impose liability. First Nat'l Bank v. Wynne, 149 Ga. App. 811, 256 S.E.2d 383 (1979).    A beneficiary must comply with terms of letter of credit or there is no liability on part of issuer to honor beneficiary's draft. First Nat'l Bank v. Wynne, 149 Ga. App. 811, 256 S.E.2d 383 (1979).   Failure to comply with terms.   - The beneficiary, which failed to present all the documents called for in the letter of credit, did not substantially comply with the letter of credit, although the omitted documents passed through another department of the bank to which the letter of credit was presented. Pro-Fab, Inc. v. Vipa, Inc., 772 F.2d 847 (11th Cir. 1985).   Placing refusal to pay on one ground waives all others.    - Where letters of credit are concerned, by formally placing refusal to pay on one ground, defendant is held to have waived all others. Barclays Bank D.C.O. v. Mercantile Nat'l Bank, 339 F. Supp. 457 (N.D. Ga. 1972), aff'd, 481 F.2d 1224 (5th Cir. 1973), cert. dismissed, 414 U.S. 1139, 94 S. Ct. 888, 39 L. Ed. 2d 96 (1974).   Failure to comply with terms.   - The beneficiary, which failed to present all the documents called for in the letter of credit, did not substantially comply with the letter of credit, even though the omitted documents passed through another department of the bank to which the letter of credit was presented. Pro-Fab, Inc. v. Vipa, Inc., 772 F.2d 847 (11th Cir. 1985).   Fraud exception to independence principle inapplicable.    - In an action to enjoin enforcement of a letter of credit, the fraud exception to the "independence principle" of O.C.G.A. § 11-5-114 did not apply because the complaint did not allege fraud and the allegations in plaintiff's brief were not sufficient to show fraud. Jurisco, Inc. v. Bank South, 228 Ga. App. 799, 492 S.E.2d 765 (1997).    Cited in Barclays Bank v. Mercantile Nat'l Bank, 481 F.2d 1224 (5th Cir. 1973); Barclays Bank v. Mercantile Nat'l Bank, 481 F.2d 1224 (5th Cir. 1973); Dibrell Bros. Int'l v. Banca Nazionale Del Lavoro, 38 F.3d 1571 (11th Cir. 1994); Vass v. Gainesville Bank & Trust, 224 Ga. App. 259, 480 S.E.2d 294 (1997); Strozzo v. Sea Island Bank, 240 Ga. App. 183, 521 S.E.2d 392 (1999).   RESEARCH REFERENCES   Am. Jur. 2d.   - 11 Am. Jur. 2d, Banks and Financial Institutions, §§ 993, 996. 50 Am. Jur. 2d, Letters of Credit, and Credit Cards, §§ 35 et seq., 37 et seq., 58 et seq.   6A Am. Jur. Pleading and Practice Forms, Commercial Code, § 5:15.   U.L.A.   - Uniform Commercial Code (U.L.A.) § 5-108.   ALR.    - Variance between description of goods in letter of credit and documents accompanying draft as affecting duty to accept draft, 30 A.L.R. 353; 8 A.L.R.5th 463.    Rights and remedies of holder of draft issued under letter of credit which is dishonored, 53 A.L.R. 57.    Recovery of money paid for unused traveler's check, letter of credit, or foreign exchange, 62 A.L.R. 509.   Procuring signature by fraud as forgery, 11 A.L.R.3d 1074.   What constitutes fraud or forgery justifying refusal to honor, or injunction against honoring, letter of credit under UCC § 5-114(1)(2), 25 A.L.R.4th 239.   Applicability of waiver or estoppel to preclude claim of nonconformance of documents as ground for dishonor or presentment under letter of credit under UCC § 5-114, 53 A.L.R.5th 667.   Validity, construction, and application of the uniform customs and practice for documentary credits (UCP), 56 A.L.R.5th 565.