- Consolidated Laws - Uniform Commercial Code
PART 5
COLLECTION OF DOCUMENTARY DRAFTS
Section 4--501. Handling of Documentary Drafts; Duty to Send for
Presentment and to Notify Customer of Dishonor.
A bank which takes a documentary draft for collection must present or
send the draft and accompanying documents for presentment and upon
learning that the draft has not been paid or accepted in due course must
seasonably notify its customer of such fact even though it may have
discounted or bought the draft or extended credit available for
withdrawal as of right.
Section 4--502. Presentment of "On Arrival" Drafts.
When a draft or the relevant instructions require presentment "on
arrival", "when goods arrive" or the like, the collecting bank need not
present until in its judgment a reasonable time for arrival of the goods
has expired. Refusal to pay or accept because the goods have not arrived
is not dishonor; the bank must notify its transferor of such refusal but
need not present the draft again until it is instructed to do so or
learns of the arrival of the goods.
Section 4--503. Responsibility of Presenting Bank for Documents and
Goods; Report of Reasons for Dishonor; Referee in Case
of Need.
Unless otherwise instructed and except as provided in Article 5 a bank
presenting a documentary draft
(a) must deliver the documents to the drawee on acceptance of the
draft if it is payable more than three days after presentment;
otherwise, only on payment; and
(b) upon dishonor, either in the case of presentment for acceptance or
presentment for payment, may seek and follow instructions from any
referee in case of need designated in the draft or if the presenting
bank does not choose to utilize his services it must use diligence and
good faith to ascertain the reason for dishonor, must notify its
transferor of the dishonor and of the results of its effort to ascertain
the reasons therefor and must request instructions.
But the presenting bank is under no obligation with respect to goods
represented by the documents except to follow any reasonable
instructions seasonably received; it has a right to reimbursement for
any expense incurred in following instructions and to prepayment of or
indemnity for such expenses.
Section 4--504. Privilege of Presenting Bank to Deal With Goods;
Security Interest for Expenses.
(1) A presenting bank which, following the dishonor of a documentary
draft, has seasonably requested instructions but does not receive them
within a reasonable time may store, sell, or otherwise deal with the
goods in any reasonable manner.
(2) For its reasonable expenses incurred by action under subsection
(1) the presenting bank has a lien upon the goods or their proceeds,
which may be foreclosed in the same manner as an unpaid seller`s lien.
