Section 55-4-503 - 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: (1) 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 (2) 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 the referee's 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. However 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 those expenses. History: 1953 Comp., § 50A-4-503, enacted by Laws 1961, ch. 96, § 4-503; 1992, ch. 114, § 195.

for any expense incurred in following instructions and to prepayment of or indemnity for those expenses. History: 1953 Comp., § 50A-4-503, enacted by Laws 1961, ch. 96, § 4-503; 1992, ch. 114, § 195. OFFICIAL COMMENTS UCC Official Comments by ALI & the NCCUSL. Reproduced with permission of the PEB for the UCC. All rights reserved. 1. This section states the rules governing, in the absence of instructions, the duty of the presenting bank in case either of honor or of dishonor of a documentary draft. The section should be read in connection with Section 2-514 [55-2-514 NMSA 1978] on when documents are deliverable on acceptance, when on payment. In the case of a dishonor of the draft, the bank, subject to Section 4-504 [55-4-504 NMSA 1978], must return possession or control of the documents to its principal. 2. If the draft is drawn under a letter of credit, Article 5 controls. See Sections 5-109 [55-5-109 NMSA 1978] through 5-114 [55-5-114 NMSA 1978]. ANNOTATIONSThe 1992 amendment, effective July 1, 1992, substituted numbers for letters in the paragraph designations and made minor stylistic changes throughout the section. Am. Jur. 2d, A.L.R. and C.J.S. references. — 10 Am. Jur.

effective July 1, 1992, substituted numbers for letters in the paragraph designations and made minor stylistic changes throughout the section. Am. Jur. 2d, A.L.R. and C.J.S. references. — 10 Am. Jur. 2d Banks §§ 706, 713. 9 C.J.S. Banks and Banking § 414 et seq.