Issuer Reviews Presentation
A bank receives documents under a letter of credit issued for a sale of goods. The issuer examines the documents for facial compliance with the credit terms before deciding whether to honor.
Also known as: UCC Art. 5 · Uniform Commercial Code Article 5 · U.C.C. Article 5 · letters of credit · UCC § 5
Written by attorneys · grounded in primary & secondary sources — see below
A statutory framework within the Uniform Commercial Code that governs letters of credit. It establishes rules for issuance, performance by issuers, and remedies when performance fails.
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A bank receives documents under a letter of credit issued for a sale of goods. The issuer examines the documents for facial compliance with the credit terms before deciding whether to honor.
After a beneficiary tenders complying documents, the issuer refuses to pay. The beneficiary sues for wrongful dishonor and seeks damages under the article's remedy provisions.
An issuer must follow standard banking practice when examining documents. A court determines compliance with that practice using evidence offered by the parties.
UCC Article 5 regulates letters of credit. It covers issuance, the issuer's duty to honor complying presentations, and remedies for wrongful dishonor.
Article 5 supplies the governing law for letters of credit while the UCP supplies banking practice that courts consult when interpreting standard performance obligations.
Yes. Article 5 governs both commercial letters of credit used in sales and standby letters of credit that back up performance obligations.