Ohio Code 1305.10 – Remedies – UCC 5-111
(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 division. 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.
Terms Used In Ohio Code 1305.10
- Adviser: means a person who, at the request of the issuer, a confirmer, or another adviser, notifies or requests another adviser to notify the beneficiary that a letter of credit has been issued, confirmed, or amended. See Ohio Code 1305.01
- Applicant: means a person at whose request or for whose account a letter of credit is issued. See Ohio Code 1305.01
- Confirmer: means a nominated person who undertakes, at the request or with the consent of the issuer, to honor a presentation under a letter of credit issued by another. See Ohio Code 1305.01
- Damages: Money paid by defendants to successful plaintiffs in civil cases to compensate the plaintiffs for their injuries.
- Document: means a draft or other demand, document of title, investment security, certificate, invoice, or other record, statement, or representation of fact, law, right, or opinion that is (a) presented in a written or other medium permitted by the letter of credit or, unless prohibited by the letter of credit, by the standard practice referred to in division (E) of section 1305. See Ohio Code 1305.01
- Issuer: means a bank or other person that issues a letter of credit, but does not include an individual who makes an engagement for personal, family, or household purposes. See Ohio Code 1305.01
- Letter of credit: means a definite undertaking that satisfies the requirements of section 1305. See Ohio Code 1305.01
- Litigation: A case, controversy, or lawsuit. Participants (plaintiffs and defendants) in lawsuits are called litigants.
- Nominated person: means a person whom the issuer (a) designates or authorizes to pay, accept, negotiate, or otherwise give value under a letter of credit and (b) undertakes by agreement or custom and practice to reimburse. See Ohio Code 1305.01
- Obligation: An order placed, contract awarded, service received, or similar transaction during a given period that will require payments during the same or a future period.
- Person: includes an individual, corporation, business trust, estate, trust, partnership, and association. See Ohio Code 1.59
- Presentation: means delivery of a document to an issuer or nominated person for honor or giving of value under a letter of credit. See Ohio Code 1305.01
- Undertaking: includes a bond. See Ohio Code 1.02
(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 division (A) or (B) of this section, 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 division and division (A) or (B) of this section.
(D) An issuer, nominated person, or adviser who is found liable under division (A), (B), or (C) of this section shall pay interest on the amount owed thereunder from the date of wrongful dishonor or other appropriate date.
(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.