(a) If an issuer wrongfully dishonors or repudiates its obligation to
pay money under a letter of credit before presentation, the beneficiary, successor, or nominated
person presenting on its own behalf may recover from the issuer the amount that is the subject of the
dishonor or repudiation. If the issuer's obligation under the letter of credit is not for the payment of
money, the claimant may obtain specific performance or, at the claimant's election, recover an
amount equal to the value of performance from the issuer. In either case, the claimant may also
recover incidental but not consequential damages. The claimant is not obligated to take action to
avoid damages that might be due from the issuer under this subsection. If, although not obligated to
do so, the claimant avoids damages, the claimant's recovery from the issuer must be reduced by the
amount of damages avoided. The issuer has the burden of proving the amount of damages avoided.
In the case of repudiation the claimant need not present any document.
(b) If an issuer wrongfully dishonors a draft or demand presented under a letter of credit or
honors a draft or demand in breach of its obligation to the applicant, the applicant may recover
damages resulting from the breach, including incidental but not consequential damages, less any
amount saved as a result of the breach.
(c) If an adviser or nominated person other than a confirmer breaches an obligation under this
chapter or an issuer breaches an obligation not covered in subsection (a) or (b), a person to whom
the obligation is owed may recover damages resulting from the breach, including incidental but not
consequential damages, less any amount saved as a result of the breach. To the extent of the
confirmation, a confirmer has the liability of an issuer specified in this subsection and subsections
(a) and (b).
(d) An issuer, nominated person, or adviser who is found liable under subsection (a), (b), or (c)
shall pay interest on the amount owed thereunder from the date of wrongful dishonor or other
(e) Reasonable attorney's fees and other expenses of litigation must be awarded to the prevailing
party in an action in which a remedy is sought under this chapter.
(f) Damages that would otherwise be payable by a party for breach of an obligation under this
chapter may be liquidated by agreement or undertaking, but only in an amount or by a formula that
is reasonable in light of the harm anticipated.
Source: SL 1998, ch 283, § 1.