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ably; taking proper action within a reasonably longer time may be seasonable but the bank has the burden of so establishing. (3) Subject to subsection (l)(a), a bank is not liable for the insolvency, neglect, misconduct, mistake or default of another bank or person or for loss or destruction of an item in transit or in the possession of others. § 28:4—203. Effect of instructions Subject to the provisions of article 3 concerning conversion of instruments (section 28:3—419) and the provisions of both article 3 and (his article concerning restrictive indorsements only a collecting bank's transferor can give instructions which affect the bank or constitute notice to it and a collecting bank is not liable to prior parties for any action taken pursuant to such instructions or in accordance with any agreement with its transferor. §28:4—204. Methods of sending and presenting; sending direct to payor bank (1) A collecting bank must send items by reasonably prompt method taking into consideration any relevant instnictions, the nature of the item, the number of such items on hand, and the cost of collection involved and the method generally used by it or others to present such items. (2) A collecting bank may send (a) any item direct to the payor bank; (b) any item to any non-bank payor if authorized by its transferor; and (c) any item other than documentary drafts to any non-bank payor, if authorized by Federal Reserve regulation or operating letter, clearing house rule or the like. (3) Presentment may be made by a presenting bank at a place where the payor bank has requested that presentment be nuide. § 28:4—^205. Supplying missing indorsement; no notice from prior indorsement (1) A depositary bank which has taken an item for collection may supply any indorsement of the customer which is necessary to title unless the item contains the words "payee's indorsement required" or the like. In the absence of such a requirement a statement placed on the item by the depositary bank to the effect that the item was deposited by a customer or credited to his account is effective as the <'UStomer"s indorsement. (2) An intermediary bank, or payor bank which is not a depositary bank, is neither given notice nor otherwise affected by a restrictive indorsement of any person except the bank's immediate transferor. §28:4—206. Transfer between banks Any agreed method which identifies the transferor bank is sufficient for the item's further transfer to another bank. § 28:4—^207. Warranties of customer and collecting bank on transfer or presentment of items; time for claims (1) Each customer or collecting bank who obtains payment or acceptance of an item and each prior customer and collecting bank warrants to the payor bank or other payor who m good fait^ pays or accepts the item that (a) he has a good title to the item or is authoiized to obtain payment or acceptance on behalf of one who has a good title; and (b) he has no knowledge that the si^iature of the maker or drawer is unauthorized, except that this warranty is not given

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by any customer or collex'ting bank that is a holder in due course and acts in good faith (i) to a maker with respect to the maker's own signature; or (ii) to a drawer with respect to the drawer's own signature, whether or not the drawer is also the drawee; or (iii) to an acceptor of an item if the holder in due course took the item after the acceptance or obtained the acceptance without knowledge that the drawer's signature was unauthorized; and (c) the item has not been materially altered, except that this warranty is not given by any customer or collecting bank that is a holder in due course and acts in good faith (i) to the maker of a note; or (ii) to the drawer of a draft whether or not the drawer is also the drawee; or (iii) to the acceptor of an item with respect to an alteration made prior to the acceptance if the holder in due course took the item after the acceptance, even though the acceptance provided "payable as originally drawn" or equivalent terms; or (iv) to the acceptor of an item with respect to an alteration made after the acceptance. (2) Each customer and collecting bank who transfers an item and receives a settlement or other consideration for it warrants to his transferee and to any subsequent collecting bank who takes the item in good faith that (a) he has a good title to the item or is authorized to obtain payment or acceptance on behalf of one who lias a good title and the transfer is otherwise rightful; and (b) all signatures are genuine or authorized; and (c) the item has not been materially altered; and (d) no defense of any party is good against him; and (e) he has no knowledge of any insolvency proceeding instituted with respect to the maker or acceptor or the drawer of an unaccepted item. In addition each customer and collecting bank so transferring an item and receiving a settlement or other consideration engages that upon dishonor and any necessary notice of dishonor and protest he will take up the item. (3) The warranties and the engagement to honor set forth in the two preceding subsections arise notwithstanding the absence of indorsement of words of guaranty or warranty in the transfer or presentment and a collecting bank remains liable for their breach despite remittance to its transferor. Damages for breach of such warranties or engagement to. honor shall not exceed the consideration received by the customer or collecting bank responsible plus finance charges and expenses related to the item, if any. (4) Unless a claim for breach of warranty under this section is made within a reasonable time after the person claiming learns of the breach, the person liable is discharged to the extent of any loss caused by the delay in making claim. §28:4—^208. Security interest of collecting bank in items, accompanying documents and proceeds (1) A bank has a security interest in an item and any accompanying documents or the proceeds of either (a) in case of an item deposited in an account to the extent to which credit given for the item has been withdrawn or applied;

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(b) in case of an item for whioli it lias given credit available for withdrawal as of right, to the extent of the credit given whether or not the credit is drawn upon and whether or not there is a ri^ht of charge-back; or (c) if it makes an advance on or against the item. (2) When credit which has been given for several items received, at one time or pursuant to a single agreement is withdrawn or applied in part the security interest remains upon all the items, any accompanying documents or the proceeds of either. For the purpose of this section, credits first given are first withdrawn. (3) Receipt by a collecting bank of a final settlement for an item is a realization on its security interest in the item, accompanying documents and proceeds. To the extent and so long as the bank does not receive final settlement for the item or give up possession of the item or accompanying documents for purposes other than collection, the security interest continues and is subject to the provisions of article 9 except that (a) no security agreement is necessary to make the security interest enforceable (subsection (1)(b) of section 28:9—203); and (b) no filing is required to perfect the security interest; and (c) the security interest has priority over conflicting perfected security interests in the item, accompanying documents or proceeds. § 28:4—^209. When bank gives value for purposes of holder in due course For purposes of determining its status as a holder in due course, the bank has ^iven value to the extent that it has a security interest in an item provided that the bank otherwise complies with the requirements of section 28:3—302 on what constitutes a holder in due course. §28:4—^210. Presentment by notice of item not payable by, through or at a bank; liability of secondary parties (1) Unless otherwise instiiicted, a collecting bank may present an item not payable by, through or at a bank by sending to the party to accept or pay a written notice that the bank holds the item for acceptance or payment. The notice must be sent in time to be received on or before the day when presentment is due and the bank must meet any requirement of the party to accept or pay under section 28:3—505 by the close of the bank's next banking day after it knows of the requirement. (2) Where presentment is made by notice and neither honor nor request for compliance with a requirement under section 28:3—505 is received by the close of business on the day after maturity or in the case of demand items by the close of business on the third banking day after notice was sent, the presenting bank may treat the item as dishonored and charge any secondary party by sending him notice of the facts. § 28:4—211. Media of remittance; provisional and final settlement in remittance cases (1) A collecting bank may take in settlement of an item (a) a check of the remitting bank or of another bank on any bank except the remitting bank; or (b) a cashier's check or similar primary obligation of a remitting bank which is a member of or clears through a member of the same clearing house or group as the collecting bank; or (c) appropriate authority to charge an account of the remitting bank or of another bank with the collectiiiir bank: or

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(d) if the item is drawn upon or payable by a person other tlian a bank, a cashier's check, certified check or other bank check or obligation. (2) If before its midnight deadline the collecting bank properly dishonors a remittance check or authorization to charge on itself or presents or forwards for collection a remittance instrument of or on another bank which is of a kind approved by subsection (1) or has not been authorized by it, the collecting bank is not liable to prior parties in the event of the dishonor of such check, instrument or authorization. (3) A settlement for an item by means of a remittance instrument or authorization to charge is or becomes a final settlement as to both the person making and the person receiving the settlement. (a) if the remittance instrument or authorization to charge is of a kind approved by subsection (1) or has not been authorized by the person receiving the settlement and in either case the person receiving the settlement acts seasonably before its midnight deadline in presenting, forwarding for collection or paying the instrument or authorization,—at the time the remittance instrument or authorization is finally paid by the payor by which it is payable; (b) if the person receiving the settlement has authorized remittance by a non-bank check or obligation or by a cashier's check or similar primary obligation of or a check upon the payor, or other remitting bank which is not of a kind approved by sub. section (l)(b), — a t the time of the receipt of such remittance check or obligation; or (c) if in a case not covered by sub-paragraphs (a) or (b) the person receiving the settlement fails to seasonably present, forward for collection, pay or return a remittance instrument or authorization to it to charge before its midnight deadline,—at such midnight deadline. § 28:4—212. Right of charge-back or refund (,1) If a collecting bank has made provisional settlement with its customer for an item and itself fails by reason of dishonor, suspension of payments by a bank or otherwise to receive a settlement for the item which is or becomes final, the bank may revoke the settlement ^iven by it, charge back the amount of any credit given for the item to its customer's account or obtain refund from its customer whether or not it is able to return the items if by its midnight deadline or within a longer reasonable time after it learns the facts it returns the item or sends notification of the facts. These rights to revoke, charge-back and obtain refund terminate if and when a settlement for the item received by the bank is or becomes final (subsection (3) of section 28:4—211 and subsections (2) and (3) of section 28:4—213). (2^ (Omitted.) (3) A depositary bank which is also the payor may charge-back the amount of an item to its customer's account or obtain refund in accordance with the section governing return of an item received by a payor bank for credit on its books (section 28:4—301). (4) The ri^ht to charge-back is not affected by ^a) prior use of the credit given for the item; or (b) failure by any bank to exercise ordinary care with respect to the item but any bank so failing remains liable. (5) A failure to charge-back or claim refund does not affect other rights of the bank against the customer or any other party. (6) If ci-edit is given in dollars as the equivalent of the value of an item payable in a foreign currency the dollar amount of any charge-

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back or refund shall be calculated on the basis of the buying sight rate for the foreign currency prevailing on the day when the person entitled to the charge-back or refund learns that it will not receive payment in ordinary course. §28:4—^213. Final payment of item by payor bank; when provisional debits and credits become final; when certain credits become available for withdrawal (1) An item is finally paid by a payor bank when the bank has done any of the following, whichever happens first: (a) paid the item in cash; or (b) settled for the item without reserving a right to revoke the settlement and without having such right under statute, clearing house rule or agreement; or (c) completed the process of posting the item to the indicated account of the drawer, maker or other person to be charged therewith; or (d) made a provisional settlement for the item and failed to revoke the settlement in the time and manner permitted by statute, clearing house rule or agreement. I"^pon a final payment under subparagraphs (b), (c) or (d) the payor bank shall be accountable for the amount of the item. (2) If provisional settlement for an item between the presenting and payor banks is made through a clearing house or by debits or credits m an account between them, then to the extent that provisional debits or credits for the item are entered in accounts between the presenting and payor banks or between the presenting and successive prior collecting banks seriatim, they become final upon final payment of the item by the payor bank. (3) If a collecting bank receives a settlement for an item which is or becomes final (subsection (3) of section 28:4—211, subsection (2) of section 28:4—213) the bank is accountable to its customer for the amount of the item and any provisional credit given for the item in an account with its customer becomes final. (4) Subject to any right of the bank to apply the credit to an obligation of the customer, credit given by a bank for an item in an account with its customer becomes available for withdrawal gs of right (a) in any case where the bank has received a provisional settlement for the item,—when such settlement becomes final and the bank has had a reasonable time to learn that the settlement is final; (b) in any case where the bank is both a depositary bank and a payor bank and the item is finallj^ paid,—at the opening of the bank's second banking day following receipt of th,e item. (5) A deposit of money in a bank is final when made but, subject to any right of the bank to apply the deposit to an obligation of the customer, the deposit becomes available for withdrawal as of right at the opening of the bank's next banking day following receipt of the deposit. §28:4—^214. Insolvency and preference (1) Any item in or coming into the possession of a payor or collecting bank which suspends payment and which item is not finally paid shall be returned by the receiver, trustee or agent in charge of the closed bank to the presenting bank or the closedl)ank's customer. (2) If a payor bank finally pays an item and suspends payments without making a settlement for the item with its customer or the presenting bank which settlement is or becomes final, the owner of the item has a preferred claim against the payor bank.

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(3) If a payor bank gives or a collecting; bank gives or receives a provisional settlement for an item and thereafter suspends payments, the suspension does not prevent or interfere with the settlement becoming final if such finality occurs automatically upon the lapse of certain time or the happening of certain events (subsection (3) of section 28:4—211, subsections (1)(d), (2) and (3) of section 28:4—213). (4) If a collecting bank receives froni subsequent parties settlement for an item which settlement is or becomes final and suspends payments without making a settlement for the item with its customer which is or becomes final, the owner of the item has a preferred claim against such collecting bank. PART 3—COLLECTION OF ITEMS: PAYOR B A N K S § 28:4—301. Deferred posting; recovery of payment by return of items; time of dishonor (1) Where an authorized settlement for a demand item (other than a documentary draft) received by a payor bank otherwise than for immediate payment over the counter has been made before midnight of the banking day of receipt the payor bank may revoke the settlement and recover any payment if before it has made final payment (subsection (1) of section 28:4—213) and before its midnight deadline it (a) returns the item; or (b) sends written notice of dishonor or nonpayment if the item is held for protest or is otherwise unavailable for return. (2) If a demand item is received by a payor bank for credit on its books it may return such item or send notice of dishonor and may revoke any credit given or recover the amount thereof withdrawn by its customer, if it acts within the time limit and in the manner specified in the preceding subsection. (3) Unless previous notice of dishonor has been sent an item is dishonored at the time when for purposes of dishonor it is returned or notice sent in accordance with this section. (4) An item is returned: (a) as to an item received through a clearing house, when it is delivered to the presenting or last collecting bank or to the clearing house or is sent or delivered in accordance with its rules; or (b) in all other cases, when it is sent or delivered to the bank's customer or transferor or pursuant to his instructions. § 28:4—302. Payor bank's responsibility for late return of item I n the absence of a valid defense such as breach of a presentment warranty (subsection (1) of section 28:4—207), settlement effected or the like, if an item is presented on and received by a payor bank the bank is accountable for the amount of (a) a demand item other than a documentary draft whether properly payable or not if the bank, in any case where it is not also the depositary bank, retains the item beyond midnight of the banking day of receipt without settling for it or, regardless of whether it is also the depositary bank, does not pay or return the item or send notice of dishonor until after its midnight deadline; or (b) any other properly payable item unless within the time allowed for acceptance or payment of that item the bank either accepts or pays the item or returns it and accompanying documents.

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§ 28:4—303. When items subject to notice, stop-order, legal process or setoff; order in which items may be charged or certified (1) Any kiiowledire, notice or stop-order received by, lejojal process served upon or setoff exercised by a payor bank, whether or not effective under other rules of hiw to terminate, suspend or modify the bank's right or duty to pay an item or to charge its customer's account for the item, comes too late to so terminate, suspend or modify such right or duty if the knowledge, notice, stop-order or legal process is received or serxed and a reasonable time for the bank to act thereon expires or the setoff is exercised after the bank has done any of the following: (a) accepted or certified the item; (b) paid the item in cash; (c) settled for the item without reserving a right to l'e^'oke the settlement and without having such right under statute, clearing house rule or agreement; (d) completed the process of posting the item to the indicated account of the drawer, maker or other person to be charged therewith or otherwise has evidenced by examination of such indicated account and by action its decision to pay the item; or (e) become accountable for the amount of the item under subsection (1)(d) of section 28:4—213 and section 28:4—802 dealing with the payor bank's resix)nsibility for late return items. (2) Subject to the provisions of subsection (1) items may be accepted, paid, certified or charged to the indicated account of its customer in any order convenient to the bank. PART 4 - - R E L A T I 0 N S H I P BETWEEN PAYOR BANK AND ITS CUSTOMER § 28:4—401. When bank may charge customer's account (1) As against its customer, a bank may charge against his account any item which is otherwise properly payable from that account even though the charge creates an overdraft. (2) A bank which in good faith makes payment to a holder may charge the indicated account of its customer according to (a) the original tenor of his altered item; or (b) the tenor of his completed item, even though the bank knows the item has been completed unless the bank has notice that the completion was improper. § 28:4—402. Bank's liability to customer for wrongful dishonor A payor bank is liable to its customer for damages proximately caused by the wrongful dishonor of an item. When the dishonor occurs through mistake liability is limited to actual damages proved. If so proximately caused and proved damages may include damages for an arrest or prosecution of the customer or other consequential damages. Whether any consequential damages are proximately caused by the wrongful dishonor is a question of fact to be determined in each case. § 28:4—403. Customer's right to stop payment; burden of proof of loss (1) A customer may by order to his bank stop payment of any item payable for his account but the order must be received at such time and in such manner as to afford the bank a reasonable opportunity to act on it prior to any action by the bank with respect to the item described in section 28:4—303. No such order shall be Valid, however, unless it shall be in writing specifically describing the item to which it relates by stating the amount, date and payee thereof. 93-025 0-64-47

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(2) Anything- in this section 28:4—i08 to the contrary notwithstanding, any stop payment order transmitted by telephone by a customer to an officer of a bank, while such officer is on the {jremises thereof, shall be accepted by such bank, upon such identification that will insure the order has been transmitted by such customer, as an effective order for a period of twenty-four hours, after which time it shall no longer be valid unless followed by a written order as provided in this section 28 'A—i03. A written order is effective for only six months unless renewed in writing. The bank may, at its option and without liability, stop payment of an item after the expiration of a stop payment order or any renewal thereof relating to such item. (3) The burden of establishing the fact and amount of loss resulting from the payment of an item contrary to a binding stop payment order is on the customer. § 28:4—404. Bank not obligated to pay check more than six months old A bank is under no obligation to a customer having a checking account to pay a check, other than a certified check, which is presented more than six months after its date, but it may charge its customer's account for a payment made thereafter in the absence of an effective stop payment order in accordance with section 28:4—i03. § 28:4—405. Death or incompetence of customer (1) A payor or collecting bank's authority to accept, pay or collect an item or to account for proceeds of its collection if otherwise effective is not rendered ineffective by incompetence of a customer of either bank existing at the time the item is issued or its collection is undertaken if the bank does not know of an adjudication of incompetence. Xeither death nor incompetence of a customer revokes such authority to accept, pay, collect or account until the bank knows of the fact of death or of an adjudication of incompetence and has reasonable opportunity to act on it. (2) Even with knowledge a bank may for ten days after the date of death pay or certify checks drawn on or prior to that date unless ordered to stop payment by a person claiming an interest in the account. §28:4—406.

Customer's duty to discover and report unauthorized signature or alteration (1) When a bank sends to its customer a statement of account accompanied by items paid in good faith in support of the debit entries or holds the statement and items pursuant to a request or instructions of its customer or otherwise in a reasonable manner makes the statement and items available to the customer, the customer must exercise reasonable care and promptness to examine the statement and items to discover his unauthorized signature or any alteration on an item and must notify the bank promptly after discovery thereof. (2) If the bank establishes that the customer failed with respect to an item to comply with the duties imposed on the customer by subsection (1) the customer is precluded from asserting against the bank (a) his unauthorized signature or any alteration on the item if the bank also establishes that it suffered a loss by reason of such failure; and (b) an unauthorized signature or alteration by the same wrongdoer on any other item paid in good faith by the bank after the first item and statement was available to the customer for a reasonable period not exceeding fourteen calendar days and before the bank receives notification from the customer of any such unauthorized signature or alteration.

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(3) The preclusion under subsection (2) does not apply if the customer establishes lack of ordinary care on the part of the bank in paying the item (s). (4) Without regard to care or lack of care of either the customer or the bank a customer who does not within one year from the time the statement and items are made available to the customer (subsection (1)) discover and report his unauthorized signature or any alteration on the face or back of the item or does not within three years from that time discover and report any unauthorized indorsement is precluded from asserting against the bank such unauthorized signature or indorsement or such alteration. (5) If under this section a payor bank has a valid defense against n claim of a customer upon or resulting from payment of an item and waives or fails upon request to assert the defense the bank may not fissert against any collecting bank or other prior party presenting or transferring the item a claim based upon the miauthorized signature or alteration giving rise to the customer's claim. § 28:4—407. Payor bank's right to subrogation on improper payment If a payor bank has paid an item over the stop payment order of the drawer or maker or otherwise under circumstances giving a basis for objection by the drawer or maker, to prevent unjust enrichment and only to the extent necessary to prevent loss to the bank by reason of its payment of the item, the payor bank shall be subrogated to the rights (a) of any holder in due course on the item against the drawer or maker; and (b) of the payee or any other holder of the item against the drawer or maker either on the item or under the transaction out of which the item arose; and (c) of the drawer or maker against the payee or any other holder of the item with respect to the transaction out of which the item arose. PART 5—COLLECTION OF DOCUMENTARY DRAFTS §28:4—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. § 28:4—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. § 28:4—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

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(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. §28:4—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.

ARTICLE 5—LETTERS OF CREDIT Sec. 28: 5—101. 28:5—102. 28:5—103. 28: 5—104. 28: 5—105. 28: 5—106. 28: 5—107. 28: 5—108. 28: 5—109. 28: 5—110. 28: 5—111. 28: 5—112. 28:5—113. 28: 5—114. 28: 5—115. 28: 5—116. 28: 5—117.

Citation of ai"'^i^-

Short title. Scope. Definitions. Formal requirements; signing. Consideration. Time and effect of establishment of credit. Advice of credit; confirmation; error in statement of terms. "Notation credit"; exhaustion of credit. Issuer's obligation to its customer. Availability of credit in portions; presenter's reservation of lien or claim. Warranties on transfer and presentment. Time allowed for honor or rejection; withholding honor or rejection by consent; "presenter". Indemnities. Issuer's duty and privilege to honor; right to reimbursement. Remedy for improper dishonor or anticipatory repudiation. Transfer and assignment. Insolvency of bank holding funds for documentary credit.

§28:5—101. Short title The article shall be known and may be cited as Uniform Commercial Code—Letters of Credit. §28:5—102. Scope (1) This article applies (a) to a credit issued by a bank if the credit requires a documentary draft or a documentary demand for payment; and (b) to a credit issued by a person other than a bank if the credit requires that the draft or demand for payment be accompanied by a document of title; and (c) to a credit issued by a bank or other person if the credit is not within subparagraphs (a) or (b) but conspicuously states that it is a letter of credit or is conspicuously so entitled.

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(2) Unless the eii^ragenient meets the requirements of subsection (1), this article does not Jipply to enofagements to make advances or to honor drafts or demands for payment, to authorities to pay or purcliase, to guarantees or to general agreements. (3) This article deals with some but not all of the rules and concepts of letters of credit as such rules or concepts have developed prior to this subtitle or may hereafter develop. The fact that this article states a rule does not by itself require, imply or negate application of the same or a converse rule to a situation not provided for or to a person not specified by this article. §28:5—103. Definitions (1) I n this article unless the context otherwise requires (a) "Credit" or "letter of credit'' means an engagement by a bank or other person made at the request of a customer and of a kind within the scope of this article (section 28:5—102) that the issuer will honor drafts or other demands for payment upon compliance with the conditions specified in the credit. A credit may be either revocable or irrevocable. The engagement may be either an agreement to honor or a statement that the bank or other person is authorized to honor. (b) A "documentary draft"' or a "documentary demand for payment" is one honor of which is conditioned upon the presentation of a document or documents. "Document" means any paper including document of title, security, invoice, certificate, notice of default and the like. (c) An "issuer" is a bank or other person issuing a credit. (d) A "beneficiary" of a credit is a person who is entitled under its terms to draw or demand payment. (e) An "advising bank" is a bank which gives notification of the issuance of a credit by another bank. (f) A "confirming bank'" is a bank which engages either that it will itself honor a credit already issued by another bank or that such a credit will be honored by the issuer or a third bank. (g) A "customer" is a buyer or other person who causes an issuer to issue a credit. The terai also includes a bank which procures issuance or confirmation on behalf of that bank's customer. (2) Other definitions applying to this article and the sections in which they appear are: "Notation of credit". Section 28:5—108. "Presenter"._ Section 28:5—112(3). (3) Definitions in other articles applying to this article and the sections in which they appear are: "Accept" or "Acceptance". Section 28:3—410. "Contract for sale". Section 28:2—106. "Draft". Section 28:3—104. "Holder in due course". Section 28:3—302. "Midnight deadline". Section 28:4—104. "Security". Section 28:8—102. (4) I n addition, article 1 contains general definitions and principles of construction and interpretation applicable throughout this article. §28:5—104. Formal requirements; signing (1) Except as otherwise required in subsection (l)(c) of section 28:5—102 on scope, no particular form of phrasing is required for a credit. A credit must be in writing and signed by the issuer and a confirmation must be in writing and signed by the confirming bank. A modification of the terms of a credit or confirmation must be signed by the issuer or confirming bank.

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(2) A telegram may be a sufficient signed writing if it identifies its sender by an authorized authentication. The authentication may be in code and the authorized naming of the issuer in an advice of credit is a sufficient signing. §28:5—105. Consideration No consideration is necessary to establisli a credit or to enlarge or otherwise modify its terms. § 28:5—106. Time and effect of establishment of credit (1) Unless otherwise agreed a credit is established (a) as regards the customer as soon as a letter of credit is sent to him or the letter of credit or an authorized written advice of its issuance is sent to the beneficiary; and (b) as regards the beneficiary when he receives a letter of credit or an authorized written advice of its issuance. (2) Unless otherwise agreed once an irrevocable credit is established as regards the customer it can be modified or revoked only with the consent of the customer and once it is established as regards the beneficiary it can be modified or revoked only with his consent. (3) Unless otherwise agreed after a revocable credit is established it may be modified or revoked by the issuer without notice to or consent from the customer or beneficiary. (4) Notwithstanding any modification or revocation of a revocable credit any person authorized to lionor or negotiate under the terms of the orignial credit is entitled to reimbursement for or honor of any draft or demand for payment duly honored or negotiated before receipt of notice of the modification or revocation and the issuer in turn is entitled to reimbursement from its customer. §28:5—107. Advice of credit; confirmation; error in statement of terms (1) Unless otherw^ise specified an advising bank by advising a credit issued by another bank does not assume any obligation to honor drafts drawn or demands for payment made under the credit but it does assume obligation for the accuracy of its owm statement. (2) A confirming bank by confirming a credit becomes directly obligated on the credit to the extent of its confirmation as though it were its issuer and acquires the rights of an issuer. (3) Even though an advising bank incorrectly advises the terms of a credit it has been authorized to advise the credit is established as against the issuer to the extent of its original terms. (4) Unless otherwise specified the customer bears as against the issuer all risks of transmission and reasonable translation or interpretation of any message relating to a credit. § 28:5—108. "Notation credit"; exhaustion of credit (1) A credit which specifies that any person purchasing or paying drafts drawn or demands for payment made under it must note the amount of the draft or demand on the letter or advice of credit is a "notation credit". (2) Under a notation credit (a) a person paying the beneficiary or purchasing a draft or demand for payment from liim acquires a right to honor only if the appropriate notation is made and by transferring or forwarding for honor the documents under the credit such a person warrants to the issuer that the notation has been made; and (b) unless the credit or a signed statement that an appropriate notation has been made accompanies the draft or demand for payment the issuer may delay honor until evidence of notation has been procured which is satisfactory to it but its obligation and

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that of its cnstoivier coutiniie for a reasonable time not exceeding!; thirty days to obtain such evidence. (8) If the credit is not a notation credit (a) the issuer may honor complying drafts or demands for payment presented to it in the order in which they are presented and is discharged pro tanto by honor of any such draft or demand; (b) as between competing good faith purchasers of complying drafts or demands the person first purchasing has priority over a subsequent purchaser even though the later purchased draft or demand has been first honored. §28:5^109. Issuer's obligation to its customer (1) An issuer's obligation to its customer includes good faith and observance of any general banking usage but unless otherwise agreed does not include liability or responsibility (a) for performance of the underlying contract for sale or other transaction between the customer and the beneficiary; or (b) for any act or omission of any person other than itself or its own branch or for loss or destruction of a draft, demand or document in transit or in the possession of others; or (c) based on knowledge or lack of knowledge of any usage of any particular trade. (2) An issuer must examine documents with care so as to ascertain that on their face they appear to comply with the terms of the credit but unless otherwise agreed assumes no liability or responsibility for the genuineness, falsification or effect of any document which appears on such examination to be regular on its face. (3) A non-bank issuer is not bound by any banking usage of which it has no knowledge. § 28:5—110. Availability of credit in portions; presenter's reservation of lien or claiin (1) Unless otherwise specified a credit may be used in portions in the discretion of the beneficiary. (2)| Unless otherwise specified a person by presenting a documentary draft or demand for payment under a credit relinquishes upon its honor all claims to the documents and a person by transferring such draft or demand or causing such presentment authorizes such relinquishment. An explicit reservation of claim makes the draft or demand non-complying. § 28:5—111. Warranties on transfer and presentment (1) Unless otherwise agreed the beneficiary by transferring or presenting a documentary draft or demand for payment warrants to all interested parties that the necessary conditions of the credit have been complied with. This is in addition to any warranties arising under articles 3, 4, 7 and 8-. (2) Unless otherwise agreed a negotiating, advising, confirming, collecting or issuing bank presenting or transferring a draft or demand for payment under a credit warrants only the matters warranted by a collecting bank under article 4 and any such bank transferring a document warrants only the matters warranted by an intermediary under articles 7 and 8. §28:5—112. Time allowed for honor or rejection; withholding honor or rejection by consent; "presenter" (1) A bank to which a documentary draft or demand for payment is presented under a credit may without dishonor of the draft, demand, or credit

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(a) defer honor until the close of the third banking- day following- receipt of the documents; and (b) further defer honor if the presenter lias expressly or impliedly consented thereto. Failure to honor within the time here specified constitutes dishonor of the draft or demand and of the credit. (2) Upoi; dishonor the bank may unless otherwise instructed fulfill its duty to return the draft or demand and the documents by holding them at the disposal of the presenter and sending him an advice to that effect. (3) "Presenter" means any person presenting a draft oi' demand for payment for honor under a credit even though that person is a confinning bank or other coiTespondent which is acting under an issuer's authorization. § 28:5—113. Indemnities (1) A bank seeking to obtain (whether for itself or another) honor, negotiation or reimbursement under a credit may give an indemnity to induce such honor, negotiation or reimbursement. (2) An indemnity agreement inducing honor, negotiation or reim))ursement (a) unless otherwise explicitly agreed applies to defects in. the documents but not in the goods; and (b) unless a longer time is explicitly agreed expires at the end of ten business days following receipt of the documents by the ultimate customer unless notice of objection is sent before such expiration date. The ultimate customer may send notice of objection to the person from whom he received the documents and any bank receiving such notice is under a duty to send notice to its transferor before its midnight deadline. §28:5—114. Issuer's duty and privilege to honor; right to reimbursement (1) An issuer must honor a draft or demand for payment which complies with the terms of the relevant credit regardless of whether the goods or documents conform to the underlying contract for sale or other contract between the customer and the beneficiary. The issuer is not excused from honor of such a draft or demand by reason of an additional general term that all documents must be satisfactory to the issuer, but an issuer may require that specified documents must be satisfactory to it. (2) Unless otherwise agreed when documents appear on their face to comply with the terms of a credit but a required document does not in fact conform to the warranties made on negotiation or transfer of a document of title (section 28:7—507) or of a security (section 28:8—306) or is forged or fraudulent or there is fraud in the transaction (a) the issuer must honor the draft or demand for payment if honor is demanded by a negotiating bank or other holder of the draft or demand which has taken the draft or demand under the credit and under circumstances which would make it a holder in due course (section 28:3—302) and in an appropriate case would make it a person to whom a document of title has been duly negotiated (section 28:7—502) or a bona fide purchaser of a security (section 28:8—302); and (b) in all other cases as against its customer, an issuer acting in good faith may honor the draft or demand for payment despite notification from the customer of fraud, forgery or other detect not apparent on the face of the documents but a court of appropriate jurisdiction may enjoin such honor.

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(3) L'nless otherwise agreed an issuer which has duly lioiiored a draft or demand for payment is entitled to immediate reimbursement of any payment made under the credit and to be put in effectively available funds not later than the day before maturity of any ac^-eptance made under the credit. (4)(5) (Omitted.) §28:5^115. Remedy for improper dishonor or anticipatory repudiation (1) "When an issuer wrongfully dishonors a draft or demand for payment presented under a credit the person entitled to honor has with respect to any documents the rights of a person in the position of a seller (section 28:2—707) and may recover from the issuer the face amount of the draft or demand together with incidental damages under section 28:2—710 on seller's incidental damages and interest but less any amount realized by resale or other use or disposition of the subject matter of the transaction. In the event no resale or other utilization is made the documents, goods or other subject matter involved in the transaction must be turned over to the issuer on payment of judgment. (2) When an issuer wrongfully cancels or otherwise repudiates a credit before presentment of a draft or demand for payment drawn under it the beneficiary has the rights of a seller after anticipatory repudiation by the buyer under section 28:2—610 if he learns of the repudiation in time reasonably to avoid procurement of the required documents. Otherwise the beneficiary has an immediate right of action for wrongful dishonor. § 28:5—116. Transfer and assignment (1) The right to draw under a credit can be transferred or assigned only when the credit is expressly designated as transferable or assignable. (2) Even though the credit specifically states that it is nontransferable or nonassignable the beneficiary may before performance of the conditions of the credit assign his right to proceeds. Such an assignment is an assignment of a contract right under article 9 on secured transactions and is governed by that article except that (a) the assignment is ineffective until the letter of credit or advice of credit is delivered to the assignee which delivery constitutes perfection of the security interest under article 9; and (b) the issuer may honor drafts or demands for payment drawn under the credit until it receives a notification of the assignment signed by the beneficiary which reasonably identifies the credit involved in the assignment and contains a request to pay the assignee; and (c) after what reasonably appears to be such a notification has been received the issuer may without dishonor refuse to accept or pay even to a person otherwise entitled to honor until the letter of credit or advice of credit is exhibited to the issuer. (3) Except where the beneficiary has effectively assigned his right to draw or his right to proceeds, nothing in this section limits his right to transfer or negotiate drafts or demands drawn under the credit. § 28:5—117. Insolvency of bank holding funds for documentary credit (1) Where an issuer or an advising or confirming bank or a bank which has for a customer procured issuance of a credit by another bank becomes insolvent before final payment under the credit and the credit is one to which this article is made applicable by paragraphs (a) or (b) of section 28:5—102(1) on scope, the receipt or allocation

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of funds or collateral to secure or meet obligations under the credit shall have the following results: (a) to the extent of any funds or collateral turned over after or before the insolvency as indemnity against or specifically for the purpose of payment of drafts or demands for payment drawn under the designated credit, the drafts or demands are entitled to payment in preference over depositors or other general creditors of the issuer or bank; and (b) on expiration of the credit or surrender of the beneficiary's rights under it unused any person who has given such funds or collateral is similarly entitled to return thereof; and (c) a charge to a general or current account with a bank if specifically consented to for the purpose of indemnity against or payment of drafts or demands for payment drawn under the designated credit falls under the same rules as if the funds had been drawn out in cash and then turned over with specific instructions. (2) After honor or reimbursement under this section the customer or other person for whose account the insolvent bank has acted is entitled to receive the documents involved.

ARTICLE 6—BULK TRANSFERS Sec, 28:6—101. Short title. 28:6—102. "Bulk transfer"; transfers of eciuipment; enterprises subject to this article; bulk transfers subject to this article. 28 -.6—103. Transfers excepted from this article. 28:6—104. Schedule of property, list of creditors. 28:6—105. Notice to creditors. 28:6—106. (Omitted.) 28:6—107. The notice. 28:6—108. Auction sales; "auctioneer" 28:6—109. What creditors protected. 28:6—110. Subsequent transfers, 28:6—111. Limitation of actions and levies.

Citation of a«"'=^*-

§28:6—101. Short title This articlc shall be known and may be cited as Uniform Commercial Code—Bulk Transfers. § 28:6—102. "Bulk transfer"; transfers of equipment; enterprises subject to this article; bulk transfers subject to this article (1) A "bulk transfer" is any transfer in bulk and not in the ordinary course of the transferor's business of a major part of the materials, supplies, merchandise or other inventory (section 28:9— 109) of an enterprise subject to this article. (2) A transfer of a substantial part of the equipment (section 28:9—109) of such an enterprise is a bulk transfer if it is made in connection with a bulk transfer of inventory, but not otherwise. (3) The enterprises subject to this article are all those whose principal business is the sale of merchandise from stock, including those who manufacture what they sell. (4) Except as limited by the following section all bulk transfers of goods located within the District are subject to this article. § 28:6—103. Transfers excepted from this article The following transfers are not subject to this article: (1) Those made to give security for the performance of an obligation; (2) General assignments for the benefit of all the creditors of the transferor, and subsequent transfers by the assignee thereunder;

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(3) Tnmsfers in settlement or realization of a lien or other security interest; (4) Sales by executors, administrators, receivers, trustees in bankruptcy, or any public officer under judicial process; (5) Sales made in the course of judicial or administrative proceedings for the dissolution or reorganization of a corporation and of which notice is sent to the creditors of the corporation pursuant to order of the court or administrative agency; (6) Transfers to a person maintaining a known place of business in the District who becomes bound to pay the debts of the transferor in full and gives public notice of that fact, and who is solvent after becoming so bound; (7) A transfer to a new business enterprise organized to take over and continue the business, if public notice of the transaction is given and the new enterprise assumes the debts of the transferor and he receives nothing from the transaction except an interest in the new enterprise junior to the claims of creditors; (8) Transfers of property which is exempt from execution. Public notice under subsection (6) or subsection (T) may be given l>y publishing once a week for two consecutive weeks in a newspaper of general circulation where the transferor had its principal place of business in the District an advertisement including the names and addresses of the transferor and transferee and the effective date of the transfer. §28:6—104. Schedule of property, list of creditors (1) Except as provided with respect to auction sales (section 28:6— 108), a bulk transfer subject to this article is ineffective against any creditor of the transferor unless: (a) The transferee requires the transferor to furnish a list of his existing creditors prepared as stated in this section; and (b) The parties prepare a schedule of the property transferred sufficient to identify it; and (c) The transferee preserves the list and schedule for six months next following the transfer and permits inspection of either or both and copying therefrom at all reasonable hours by any creditor of the transferor, or files the list and schedule in the office of the Kecorder of Deeds of the District. (2) The list of creditors must be signed and sworn to or affirmed by the transferor or his agent. It must contain the names and business addresses of all creditors of the transferor, with the amounts when known, and also the names of all persons who are known to the transferor to jissert claims against him even though such claims are disputed. If the transferor is the obligor of an outstanding issue of bonds, debentures or the like as to which there is an indenture trustee, the list of creditors need include only the name and address of the indenture trustee and the aggregate outstanding principal amount of the issue. (3) Responsibility for the completeness and accuracy of the list of creditors rests on the transferor, and the transfer is not rendered ineffective by errors or omissions therein unless the transferee is shown to have had knowledge, §28:6—105. Notice to creditors In addition to the requirements of the preceding section, any bulk transfer subject to this article except one made by auction sale (section 28:6—108) is ineffective against any creditor of the transferor unless at least ten days before he takes possession of the goods or pays for them, whichever happens first, the transferee gives notice of the transfer in the manner and to the persons hereafter provided (section 28:6—107).

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§28:6—106. (Omitted.) §28:6—107. The notice (1) The notice to creditors (section 28:6—105) shall state: (a) that a bulk transfer is about to be made; and (b) the names and business addresses of the transferor and transferee, and all other business names and addresses used by the transferor within three years last past so far as known to the transferee; and (c) whether or not all the debts of the transferor are to be paid in full as they fall due as a result of the transaction, and if so, the address to which creditors should send their bills. (2) If the debts of the transferor are not to be paid in full as they fall due or if the transferee is in doubt on that point then the notice shall state further: (a) the location and general description of the property to be transferred and the estimated total of the transferor's debts; (b) the address where the schedule of property and list of creditors (section 28:6—104) may be inspected; (c) whether the transfer is to pay existing debts and if so the amount of such debts and to whom owing; (d) whether the transfer is for new consideration and if so the amount of such consideration and the time and place of payment. (8) The notice in any case shall be delivered personally or sent by registered or certified mail to all the persons shown on the list of creditors furnished by the transferor (section 28:6—104) and to all other persons who are known to the transferee to hold or assert claims against the transferor. § 28:6—108. Auction sales; "auctioneer" (1) A bulk transfer is subject to this article even though it is by sale at auction, but only in the manner and with the results stated in this section. (2) The transferor shall furnish a list of his creditors and assist in the preparation of a schedule of the property to be sold, both prepared as before stated (section 28:6—104). (3) The person or persons other than the transferor who direct, control or are responsible for the auction are collectively called the '•auctioneer". The auctioneer shall: (a) receive and retain the list of creditors and prepare and retain the schedule of property for the period stated in this article (section 28:6—104); (b) give notice of the auction personally or by registered or certified mail at least ten days before it occurs to all persons shown on the list of creditors and to all other persons who are known to him to hold or assert claims against the transferor. (4) Failure of the auctioneer to perform any of these duties does not affect the validity of the sale or the title of the purchasers, but if the auctioneer knows that the auction constitutes a bulk transfer such failure renders the auctioneer liable to the creditors of the transferor as a class for the sums owing to them from the transferor up to but not exceeding the net proceeds of the auction. If the auctioneer consists of several persons their liability is joint and several. §28:6—109. What creditors protected (1) The creditors of the transferor mentioned in this article are those holding claims based on transactions or events occurring before the bulk transfer, but creditors who become such after notice to

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creditors is given (sections 28:6—105 and 28:6—107) are not entitled to notice. (2) (Omitted.) §28:6—110. Subsequent transfers When the title of a transferee to property is subject to a defect by reason of his non-compliance with the requirements of this article, then: (1) a purchaser of any of such property from such transferee who pays no value or who takes with notice of such non-compliance takes subject to such defect, but (2) a purchaser for value in good faith and without such notice takes free of such defect. §28:6—111. Limitation of actions and levies ISTo action under this article shall be brought nor levy made more than six months after the date on which the transferee took possession of the goods unless the transfer has been concealed. If the transfer has oeen concealed, actions may be brought or levies made within six months after its discovery.

ARTICLE 7—WAREHOUSE RECEIPTS, BILLS OF LADING AND OTHER DOCUMENTS OF TITLE Sec. 28:7—101. 28:7—102. 28:7—103. 28:7—104.

P A B T 1—GENEEAL

Short title, Definitions and index of definitions. Relation of article to treaty, statute, tariff, classification or regulation. Negotiable and non-negotiable warehouse receipt, bill of lading or other document of title. 28:7—105. Construction against negative implication. PART 2 — W A R E H O U S E R E C E I P T S: SPECIAL PROVISIONS

28:7—201. Who may issue a warehouse receipt; storage under government bond. 28:7—202. Form of warehouse receipt; essential term s; optional terms. 28:7—203. Liability for non-receipt or misdescription. 28:7—204. Duty of c a r e; contractual limitation of warehouseman's liability. 28:7—205. Title under warehouse receipt defeated in certain cases. 28;7—206. Termination of storage a t warehouseman's option. 28:7—207. Goods must be kept s e p a r a t e; fungible goods. 28:7—208. Altered warehouse receipts. 28:7—209. Lien of warehouseman. 28:7—^210. Enforcement of warehouseman's lien. PART 3 — B I L L S OF LADING: SPECIAL PROVISIONS

28:7—301. Liability for non-receipt or misdescription; "said to "shipper's load and c o u n t "; improper handling. 28:7—302. Through bills of lading and similar documents. 28:7—303. Diversion; reconsignment; change of instructions. 28:7—304. Bills of lading in a set. 28:7—305. Destination bills. 28:7—306. Altered bills of lading. 28:7—307. Lien of carrier. 28:7—308. Enforcement of carrier's lien. 28:7—309. D u t y of c a r e; contractual limitation of c a r r i e r ' s liability.

contain";

PART 4 — W A R E H O U S E R E C E I P T S AND B I L L S OF LADING: GENERAL OBLIGATIONS

28:7—401. 28:7—402. 28:7—403. 28:7—404.

I r regular i t i e s in issue of receipt or bill or conduct of issuer. Duplicate receipt or bill; overissue. Obligation of warehouseman or carrier to deliver; excuse. No liability for good faith delivery pursuant to receipt or bill.

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ARTICLE 7—WAREHOUSE RECEIPTS, BILLS OF LADING AND OTHER DOCUMENTS OF TITLE— Continued PART O — W A R E H O I ' S K RECKIPTS AND B I L L S OF LADING: NEGOTIATION AND TRANSFER

Sec. 28:7—501. 28:7—502. 28:7—503. 28:7—504. 28:7—505. 28:7—506. 28:7—507. 28:7—508. 28:7—509.

Form of negotiation and requirements of "due negotiation". Rights acquired bj* due negotiation. Document of title to goods defeated in certain cases. Rights acquired in the absence of due negotiation; effect of diversion; seller's stoppage of delivery. Indorser not a g u a r a n to r for other parties. Delivers' without i n d o r s e m e n t: right to comijel indorsement. W a r r a n t i e s on negotiation or transfer of receipt or bill. W a r r a n t i e s of collecting bank as to documents. Receipt or b i l l: when adequate compliance with commercial contract.

PART 6 — W A R E H O U S E R E C E I P T S AND B I L L S OF LADING: MISCELLANEOUS PROVISIONS

28:7—601. Lost and missing documents. 28:7—602. Attachment of goods covered by a negotiable document. 28:7—603. Conflicting c l a i m s; interpleader.

PART 1—GENERAL Citation of at^ ti''!*-

§ 28:7—101. Short title This article shall be known and may be cited as Unifonn Commeroial Code—Documents of Title. §28:7—102. Definitions and index of definitions (1) In this article, unless the context otherwise requires: (a) "Bailee'- means the person who by a warehouse receipt, bill of lading or other document of title acknowledges possession of goods and contracts to deliver them. (b) "Consignee" means the person named in a bill to whom or to whose order the bill promises delivery. (c) "Consignor" means the person named in a bill as the person from whom the goods have been received for shipment. (d) "Delivery o r d e r ' means a written order to deliver goods directed to a warehouseman, carrier or other person who in the ordinary course of business issues warehouse receipts or bills of lading. (e) "Document" means document of title as defined in the general definitions in article 1 (section 28:1—201). (f) "Goods" means all things which are treated as movable for the purposes of a contract of storage or transportation. (g) "Issuer" means a bailee who issues a document except that in relation to an unaccepted delivery order it means the person who orders the possessor of goods to deliver. Issuer includes any person for whom an agent or employee purports to act in issuing a document if the agent or employee has real or apparent authority to issue documents, notwithstanding that the issuer received no goods or that the goods were misdescribed or that in any other respect the agent or employee violated his instructions. (h) "Warehouseman" is a person engaged in the business of storing goods for hire. (2) Other definitions applying to this article or to specified parts thereof, and the sections in which they appear are: "Duly negotiate" section 28:7—501. "Person entitled under the document" section 28:7—403(4).

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(8) Definitions in other articles applying to this article and the sections in •vvliicli they appear are: "Contract for sale'' section 28:2—106. "Overseas" section 28:2—323. "Receipt-' of goods section 28:2—103. (4) I n addition article 1 contains general definitions and principles of construction and interpretation applicable throughout this article. §28:7—103. Relation of article to treaty, statute, tariff, classification or regulation To the extent that any treaty or statute of the l"J"nited States, regulatory statute of the District or tariff, classification or regulation filed or issued pursuant thereto is applicable, the provisions of this article are subject thereto. § 28:7—104. Negotiable and non-negotiable warehouse receipt, bill of lading or other document of title (1) A warehouse receipt, bill of lading or other document of title is negotiable (a) if by its terms the goods are to be delivered to bearer or to the order of a named person; or (b) where recognized in overseas trade, if it runs to a named person or assigns. (2) Any other document is non-negotiable. A bill of lading in which it is stated that the goods are consigned to a named person is not made negotiable by a provision that the goods are to be delivered only against a written order signed by the same or another named person. §28:7—105. Construction against negative implication The omission from either part 2 or part 3 of this article of a provision corresponding to a provision made in the other part does not imply that a coiresponding rule of law is not applicable. PART 2—WAREHOUSE RECEIPTS: SPECIAL PROVISIONS § 28:7—201. Who may issue a warehouse receipt; storage under government bond (1) A warehouse receipt may be issued by any warehouseman. (2) Where goods including distilled spirits and agricultural commodities are stored under a statute requiring a bond against withdrawal or a license for the issuance of receipts in the nature of warehouse receipts, a receipt issued for the goods has like effect as a warehouse receipt even though issued by a person who is the owner of the goods and is not a warehouseman. § 28:7—202. Form of warehouse receipt; essential terms; optional terms (1) A warehouse receipt need not be in any particular form. (2) Unless a warehouse receipt embodies within its written or printed terms each of the following, the warehouseman is liable for damages caused by the omission to a person injured thereby: (a) the location of the warehouse where the goods are stored; ^b) the date of issue of the receipt; (c) the consecutive number of the receipt; (d) a statement whether the goods received will be delivered to the bearer, to a specified person, or to a specified person or his order; (e) the rate of storage and handling charges, except that where goods are stored under a field warehousing arrangement a statement of that fact is sufficient on a non-negotiable receipt;

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(f) a des('ription of the goods or of the packages containing them; (g) the signature of the warehouseman, which may be made by his authorized agent; (h) if the receipt is issued for goods of which the warehouseman IS owner, either solely or jointly or in common with others, the fact of such ownership; and (i) a statement of the amount of advances made and of liabilities incurred for which the warehouseman claims a lien or security interest (section 28:7—209). If the precise amount of such advances made or of such liabilities incurred is, at the time of the issue of the receipt, unknown to the warehouseman or to his agent who issues it, a statement of the fact that advances have been made or liabilities incurred and the purpose thereof is sufficient. (3) A warehouseman may insert in his receipt any other terms which are not contrary to the provisions of this subtitle and do not impair his obligation of delivery (section 28:7—±08) or his duty of care (section 28:7—204). Any contrary provisions shall be ineffective. §28:7—203. Liability for non-receipt or misdescription A party to or purchaser for value in good faith of a document of title other than a bill of lading relying in either case upon the description therein of the goods may recover from the issuer damages caused by the non-receipt or misdescription of the goods, except to the extent that the document conspicuously indicates that the issuer does not know whether any part or all of the goods in fact were^ received or conform to the description, as where the description is in terms of marks or labels or kind, quantity or condition, or the receipt or description is qualified by "contents, condition and quality unknown", "said to contain" or the like, if such indication be true, or the party or purchaser otherwise has notice. §28:7—^204. Duty of care; contractual limitation of warehouseman's liability (1) A warehouseman is liable for damages for loss of or injury to the goods caused by his failure to exercise such care in regard to them as a reasonably careful man would exercise under like circumstances but unless otherwise agreed he is not liable for damages which could not have been avoided by the exercise of such care. (2) Damages may be limited by a term in the warehouse receipt or storage agreement limiting the amount of liability in case of loss or damage, and setting forth a specific liability per article or item, or value per unit of weight, beyond which the warehouseman shall not be liable: Provided, however, That such liability may on written request of the bailor at the time of signing such storage agreement or within a reasonable time after receipt of the warehouse receipt be increased on part or all of the goods thereunder, in which event increased rates may be charged based on such increased valuation, but that no such increase shall be permitted contrary to a lawful limitation of liability contained in the warehouseman's tariff, if any. No such limitation is effective with respect to the warehouseman's liability for conversion to his own use. (3) Reasonable provisions as to the time and manner of presenting claims and instituting actions based on the bailment may be included in the warehouse receipt or tariff. (4) (Omitted.)

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§28:7—^205. Title under warehouse receipt defeated in certain cases A buyer in the ordinary course of business of fungible goods sold and delivered by a warehouseman who is also in the business of buying and selling such goods takes free of any claim under a warehouse receipt even though it has been duly negotiated. § 28:7—206. Termination of storage at warehouseman's option (1) A warehouseman may on notifying the person on whose account the goods are held and any other person known to claim an interest in the,goods require payment of any charges and removal of the goods from the warehouse at the termination of the period of storage fixed by the document, or, if no period is fixed, within a stated period not less than thirty days after the notification. If the goods are not removed before the date specified in the notification, the warehouseman may sell them in accordance with the provisions of the section on enforcement of a warehouseman's lien (section 28:7—210). (2) If a warehouseman in good faith believes that the goods are about to deteriorate or decline in value to less than the amount of his lien within the time prescribed in subsection (1) for notification, advertisement and sale, the warehouseman may specify in the notification any reasonable shorter time for removal of the goods and in case the goods are not removed, may sell them at public sale held not less than one week after a single advertisement or posting. (3) If as a result of a quality or condition of the goods of which the warehouseman had no notice at the time of deposit the goods are a hazard to other property or to the warehouse or to persons, the warehouseman may sell the goods at public or private sale without advertisement on reasonable notification to all persons known to claim an interest in the goods. If the warehouseman after a reasonable effort is unable to sell the goods he may dispose of them in any lawful manner and shall incur no liability by reason of such disposition. (4) The warehouseman must d.eliver the goods to any person entitled to them under this article upon due demand made at any time prior to sale or other disposition under this section. (5) The warehouseman may satisfy his lien from the proceeds of any sale or disposition under this section but must hold the balance for delivery on the demand of any person to whom he would have been bound to deliver the goods. § 28:7—207. Goods must be kept separate; fungible goods (1) Unless the warehouse receipt otherwise provides, a warehouseman must keep separate the ^oods covered by each receipt so as to permit at all times identification and delivery of those goods except that different lots of fungible goods may be conuningled. (2) Fungible goods so commingled are owned in common by the persons entitled thereto and tKe warehouseman is severally liable to each owner for that owner's share. Where because of overissue a mass of fungible goods is insufficient to meet all the receipts which the warehouseman has issued against it, the persons entitled include all holders to whom overissued receipts have been duly negotiated. §28:7—208. Altered warehouse receipts Where a blank in a negotiable warehouse receipt has been filled in without authority, a purchaser for value and without notice of the want of authority, may treat the insertion as authorized. Any other unauthorized alteration leaves any receipt enforceable against the issuer according to its original tenor. 93-025 0-64-48

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§28:7—209. Lien of warehouseman (1) A warelioiisemau has a lien against the bailor on the goods covered by a warehouse receipt or on the proceeds thereof in his possession for charges for storage or transportation (including demurrage and terminal charges), insurance, labor, or charges present or future ii'i relation to the goods, and for expenses necessary for preservation of the goods or reasonably incurred in their sale pursuant to law. If the person on whose account the goods are held is liable for like charges or expenses in relation to other goods whenever deposited and it is stated in the receipt that a lien is claimed for charges and expenses in relation to other goods, the warehouseman also has a lien against him for such charges and expenses whether or not the other goods have been delivered by the warehouseman. But against a person to whom a negotiable warehouse receipt is duly negotiated a warehouseman's lien is limited to charges in an amount or at a rate specified on the receipt or if no charges are so specified then to a reasonable charge for storage of the goods covered by the receipt subsequent to the date of the receipt. (2) The warehouseman may also reserve a security interest against the bailor for a maximum amount specified on the receipt for charges other than those specified in subsection (1), such as for money advanced and interest. Such a security interest is governed by the article on secured transactions (article 9). (3) A warehouseman's lien for charges and expenses under subsection (1) or a security interest under subsection (2) is also effective against any person who so entrusted the bailor with possession of the goods that a pledge of them by him to a good faith purchaser for value would have been valid but is not effective against a person as to whom the document confers no right in the goods covered by it under section 28:7—503. (4) A warehouseman loses his lien on any goods which he voluntarily delivers or which he unjustifiably refuses to deliver. §28:7—210. Enforcement of warehouseman's lien (1) Except as provided in subsection (2), a warehouseman's lien may be enforced by public or private sale of the goods in bloc or in parcels, at any time or place and on any terms which are commercially reasonable, after notifying all persons known to claim an interest in the goods. Such notification must include a statement of the amount due, the nature of the proposed sale and the time and place of any public sale. The fact that a better price could have been obtained by a sale at a different time or in a different method from that selected by the warehouseman is not of itself sufficient to establish that the sale was not made in a commercially reasonable manner. If the warehouseman either sells the goods in the usual manner in any recognized market therefor, or if he sells at the price current in such market at the time of his sale, or if he has otherwise sold in conformity with commercially reasonable practices among dealers in the type of goods sold, he has sold in a commercially reasonable manner. A sale of more goods than apparently necessary to be offered ^o insure satisfaction of the obligation is not commercially reasonable except in cases covered by the preceding sentence. (2) A warehouseman's lien on goods other than goods stored by a merchant in the course of his business may be enforced only as follows: (a) All persons known to claim an interest in the goods must be notified. (b) The notification must be delivered in person or sent by registered or certified letter to the last known address of any person to be notified.

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(c) The notification nuist include an itemized statement of the claim, a description of the ^oods subject to the lien, a demand for payment within a specified time not less than ten days after receipt of the notification, and a conspicuous statement that unless the claim is paid within that time the goods will be advertised for sale and sold by auction at a specified time and place. (d) The sale must conform to the terms of the notification. (e) The sale must be held at the nearest suitable place to that where the goods are held or stored. (f) After the expiration of the time given in the notification, an advertisement of the sale must be published once a week for two weeks consecutively in a newspaper of general circulation where the sale is to be held. The advertisement must include a description of the goods, the name of the person on whose account they are being held, and the time and place of the sale. The sale must take place at least fifteen days after the first publication. If there is no newspaper of general circulation where the sale is to be held, the advertisement must be posted at least ten days before the sale in not less than six conspicuous places in the neighborhood of the proposed sale. (3) Before any sale pursuant to this section any person claiming a right in the goods may pay the amount necessary to satisfy the lien and the reasonable expenses incurred under this section. In that event the goods must not be sold, but must be retained by the warehouseman subject to the terms of the receipt and this article. (4) The warehouseman may buy at any public sale pursuant to this section. (5) A purchaser in good faith of goods sold to enforce a warehouseman s lien takes the goods free of any rights of persons against whom the lien was valid, despite noncompliance by the warehouseman with the requirements of this section. (6) The warehouseman may satisfy his lien from the proceeds of any sale pursuant to this section but must hold the balance, if any, for delivery on demand to any person to whom he would have been bound to deliver the goods. (7) The rights provided by this section shall be in addition to all other rights allowed by law to a creditor against his debtor. (8) Where a lien is on goods stored by a merchant in the course of his business the lien may be enforced in accordance with either subsection (1) or (2). (9) The warehouseman is liable for damages caused by failure to comply with the requirements for sale under this section and in case of willful violation is liable for conversion. PART 3—BILLS OF LADING: SPECIAL PROVISIONS §28:7—301. Liability for non-receipt or misdescription; "said to contain"; "shipper's load and count"; improper handling (1) A consignee of a non-negotiable bill who has given value in good faith or a holder to whom a negotiable bill has been duly negotiated relying in either case upon the description therein of the goods, or upon the date therein shown, may recover from the issuer damages caused by the misdating of the bill or the non-receipt or misdescription of the goods, except to the extent that the document indicates that the issuer does not know whether any part or all of the goods in fact were received or conform to the description, as where the description is in terms of marks or labels or kind, quantity, or condition or the receipt or description is qualified by "contents or con-

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dition of contents of pacJ^ages unknown", "said to contain'", "shipper's weight, load and count" or the like, if such indication be true. (2) When goods are loaded by an issuer who is a common carrier, the issuer must count the packages of goods if package freight and ascertain the kind and quantity if bulk freight. I n such cases "shall)er"s weight, load and count"' or other words indicatuig that the description was made by the shipper are ineffective except as to freight concealed by packages. (3) When bulk freight is loaded by a shipper who makes available to the issuer adequate facilities for Aveighing such freight, an issuer who is a common carrier must ascertain the kind and quantity within a reasonable time after receiving the written request of the shipper to do so. I n such cases "shipper's weight/' or other words of like pui"port are ineffective. (4) The issuer may by inserting in the bill the words "shipper's weight, load and count'' or other words of like purport indicate that the goods were loaded by the shipper; and if such statement be true the issuer shall not be liable for damages caused by the improper loading. But their omission does not imply liability for such damages. (5) The shipper shall be deemed to have guaranteed to the issuer the accuracy at the time of shipment of the description, marks, labels, number, kind, quantity, condition and weight, as furnished by him; and the shipper shall indemnify the issuer against damage caused by inaccuracies in such particulars. The right of the issuer to such indemnity shall in no way limit his responsibility and liability under the contract of carriage to any person other than the shipper. § 28:7—302. Through bills of lading and similar documents (1) The issuer of a through bill of lading or other document embodying an undertaking to be performed in part by persons acting as its agents or by connecting carriers is liable to anyone entitled to recover on the document for any breach by such other persons or by a connecting carrier of its obligation under the document but to the extent that the bill covers an undertaking to be performed overseas or in territory not contiguous to the continental United States or an undertakin|r including matters other than transportation this liability may be varied by agreement of the parties. (2) Where goods covered by a through bill of lading oi- other document embodying an undertaking to be performed in part by persons other than the issuer are received by any such person, he is subject with respect to his own performance while the goods are in his possession to the obligation of the issuer. His obligation is discharged by delivery of the goods to another such person pursuant to the document, and does not include liability for breach by any other such persons or by the issuer. (3) The issuer of such through bill of lading or other document shall be entitled to recover from the connecting carrier or such other person in possession of the goods when the breach of the obligation under the dociiment occurred, the amount it may be required to pay to anyone entitled to recover on the document therefor, as may be evidenced by any receipt, judgment, or transcript thereof, and the amount of any expense reasonably incurred by it in defending any action brought by anyone entitled to recover on the document therefor. §28:s7—303. Diversion; reconsignment; change of instructions (1) Unless the bill of lading otherwise provides, the carrier may deliver the goods to a person or destination other than that stated in the bill or may otherwise dispose of the goods on instructions from (a) the holder of a negotiable bill; or

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(b) the consignor on a non-negotiable bill notwithstanding contrary histructions from the consignee; or (c) the consignee on a non-negotiable bill in the absence of contrary instructions from the consignor, if the goods have arrived at the billed destination or if the consignee is in possession of the bill; or (d) the consignee on a non-negotiable bill if he is entitled as against the consignor to dispose of them. (2) Unless such instructions are noted on a negotiable bill of lading, a person to whom the bill is duly negotiated can hold the bailee according to the original terms. § 28:7—304. Bills of lading in a set (1) Except where customary in overseas transportation, a bill of lading must not be issued in a set of parts. The issuer is liable for damages caused by violation of this subsection. (2) Where a bill of lading is lawfully drawn in a set of parts, each of which is numbered and expressed to be valid only if the goods have not been delivered against any other part, the whole of the parts constitute one bill. (3) Where a bill of lading is lawfully issued in a set of parts and different parts are negotiated to different persons, the title of the holder to whom thei first due negotiation is made prevails as to both the document and the goods even though any later holder may have received the goods from the carrier in good faith and discharged the carrier's obligation by surrender of his part. (4) Any person who negotiates or transfers a single part, of a bill of lading drawn in a set is liable to holders of that part as if it were the whole set. (5) The bailee is obliged to deliver in accordance with part 4 of this article against the first presented part of a bill of lading lawfully drawn in a set. Such delivery discharges the bailee's obligation on the whole bill. §28:7—305. Destination bills (1) Instead of issuing a bill of lading to the consignor at the place of shipment a carrier may at the request of the consignor procure the bill to be issued at destination or at any other place designated in the request. (2) Upon request of anyone entitled as against the carrier to control the goods while in transit and on surrender of any outstanding bill of lading or other receipt covering such goods, the issuer may procure a substitute bill to be issued at any place designated in the request. §28:7—306. Altered bills of lading An unauthorized alteration or filling in of a blank in a bill of lading leaves the bill enforceable according to its original tenor. §28:7—307. Lien of carrier (1) A carrier has a lien on the goods covered by a bill of lading for charges subsequent to the date of its receipt of the goods for storage or transportation (including demurrage and terminal charges) and for expenses necessary for preservation of the goods incident to their transportation or reasonably incurred in their sale pursuant to law. But against a purchaser for value of a negotiable bill of lading a carrier's lien is limited to charges stated in the bill or the applicable tariffs, or if no charges are stated then to a reasonable charge. (2) A lien for charges and expenses under subsection (1) on goods which the carrier was required by law to receive for transportation is effective against the consignor or any person entitled to the goods unless the carrier had notice that the consignor lacked authority to

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subject the goods to such charges and expenses. Any other lien under subsection. (1) is effective against the consignor and any person who permitted the bailor to have control or possession of the goods unless the carrier had notice that the bailor lacked such authority. (3) A carrier loses his lien on any goods which he voluntarily delivers or which he unjustifiably refuses to deliver. §28:7—308. Enforcement of carrier's lien (1) A carrier's lien may be enforced by public or private sale of the goods, in bloc or in parcels, at any time or place and on any terms which are commercially reasonable, after notifying all persons known to claim an interest in the goods. Such notification must include a statement of the amount due, the nature of the proposed sale and the time and place of any public sale. The fact that a better price could have been obtained by a sale at a different time or in a different method from that selected by the carrier is not of itself sufficient to establish that the sale was not made in a commercially reasonable manner. If the carrier either sells the goods in the usual manner in any recognized market therefor or if he sells at the price current in such market at the time of his sale or if he has otherwise sold in conformity with commercially reasonable practices among dealers in the type oi goods sold he has sold in a commercially reasonable manner. A sale of more goods than apparently necessary to be offered to ensure satisfaction of the obligation is not commercially reasonable except in cases covered by the preceding sentence. (2) Before any sale pursuant to this section any person claiming a right in the goods may pay the amount necessary to satisfy the lien and the reasonable expenses incurred under this section. I n that event the goods must not be sold, but must be retained by the carrier subject to the terms of the bill and this Article. (3) The carrier may buy at any public sale pursuant to this section. (4) A purchaser in good faith o* goods sold to enforce a carrier's f^ lien takes the goods free of any rights of persons against whom the lien was valid, despite noncompliance by the carrier with the requirements of this section. (5) The carrier may satisfy his lien from the proceeds of any sale pursuant to this section but must hold the balance, if any, for delivery on demand to any person to whom he would have been bound to deliver the goods. (6) The rights provided by this section shall be in addition to all other rights allowed by law to a creditor against his debtor. (7) A carrier's lien may be enforced in accordance with either subsection (1) or the procedure set forth in subsection (2) of section 28:7—210. (8) The carrier is liable for damages caused by failure to comply with the requirements for sale under this section and in case of willful violation is liable for conversion. §28:7—309. Duty of care; contractual limitation of carrier's liability (1) A carrier who issues a bill of lading whether negotiable or non-negotiable must exercise the degree of care in relation to the goods which a reasonably careful man would exercise under like circumstances. This subsection does not repeal or change any law or rule of law which imposes liability upon a common carrier for damages not caused by its negligence. (2) Damages may be limited by a provision that the carrier's liability shall not exceed a value stated in the document if the carrier's rates are dependent upon value and the consignor by the carrier's

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tariff is afforded an opportunity to declare a higher value or a value as lawfully provided in the tariff, or where no tariff is filed he is otherwise advised of such opportunity; but no such limitation is effective with respect to the carrier's liability for conversion to its own use. (3) Reasonable provisions as to the time and manner of presenting claims and instituting actions based on the shipment may be included in a bill of lading or tariff. PART 4—WAREHOUSE RECEIPTS AND BILLS OF LADING: GENERAL OBLIGATIONS §28:7—401. Iregularities in issue of receipt or bill or conduct of issuer The obligations imposed by this article on an issuer apply to a docujnent of title regardless of the fact that (a) the document may not comply with the requirements of this article or of any other law or regulation regarding its issue, form or content; or (b) the issuer may have violated laws regulating the conduct of his business; or (c) the goods covered by the document were owned by the bailee at the time the document was issued; or (d) the person issuing the document does not come within the I definition of warehouseman if it purports to be a warehouse receipt. §28:7—402. Duplicate receipt or bill; overissue Neither a duplicate nor any other document of title purporting to cover goods already represented by an outstanding document of the same issuer confers any right in the goods, except as provided in the case of bills in a set, overissue of documents for fungible goods and substitutes for lost, stolen or destroyed documents. But the issuer is - liable for damages caused by his overissue or failure to identify a duplicate document as such by conspicuous notation on its face. §28:7—403. Obligation of warehouseman or carrier to deliver; excuse (1) The bailee must deliver the goods to a person entitled under the document who complies with subsections (2) and (3), unless and to the extent that the bailee establishes any of the following: (a) delivery of the goods to a person whose receipt was rightful as against the claimant; (b) damage to or delay, loss or destruction of the goods for which the bailee is not liable; (c) previous sale or other disposition of the goods in lawful enforcement of a lien or on warehouseman's lawful termination of storage; (d) the exercise by a seller of his right to stop delivery pursuant to the provisions of the article on sales (section 28:2— '^05); . . (e) a diversion, reconsignment or other disposition pursuant to the provisions of this article (section 28:7—303) or tariff regulating such right; (f) release, satisfaction or any other fact affording a personal defense against the claimant; (g) any other lawful excuse. (2) A person claiming goods covered by a document of title must satisfy the bailee's lien where the bailee so requests or where the bailee is prohibited by law from delivering the goods until the charges are paid.

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