MARVIN MANDEL, Governor

213

conform to the underlying contract for sale or other
contract between the customer and the beneficiary. The
issuer is not excused from honor of such a draft or
demand by reason of an additional general term that all
documents must be satisfactory to the issuer, but an
issuer may require that specified documents must be
satisfactory to it,

(2)    Unless otherwise agreed when documents appear
on their face to comply with the terms of a credit but a
required document does not in fact conform to the
warranties made on negotiation or transfer of a document
of title (§ 7-507) or of a security (§ 8-306) or is
forged or fraudulent or there is fraud in the transaction

(a)   The issuer must honor the draft or demand
for payment if honor is demanded by a negotiating bank or
other holder of the draft or demand which has taken the
draft or demand under the credit and under circumstances
which would make it a holder in due course (§ 3—302) and
in an appropriate case would make it a person to whom a
document of title has been duly negotiated (§ 7—502) or a
bona fide purchaser of a security (§ 8—302); and

(b)    In all other cases as against its
customer, an issuer acting in good faith may honor the
draft or demand for payment despite notification from the
customer of fraud, forgery or other defect not apparent
on the face of the documents but a court of appropriate
jurisdiction may enjoin such honor.

(3)   Unless otherwise agreed an issuer which has
duly honored a draft or demand for payment is entitled to
immediate reimbursement of any payment made under the
credit and to be put in effectively available funds not
later than the day before maturity of any acceptance made
under the credit.

5—115. Remedy for improper dishonor or anticipatory
repudiation.

(1) When an issuer wrongfully dishonors a draft or
demand for payment presented under a credit the person
entitled to honor has with respect to any documents the
rights of a person in the position of a seller (§ 2—707)
and may recover from the issuer the face amount of the
draft or demand together with incidental damages under §
2—710 on seller's incidental damages and interest but
less any amount realized by resale or other use or
disposition of the subject matter of the transaction.
In the event no resale or other utilization is made the
documents, goods or other subject matter involved in the
transaction must be turned over to the issuer on payment
of judgment.