KANSAS OFFICE of
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84-4-503. Responsibility of presenting bank for documents and goods; report of reasons for dishonor; referee in case of need. Unless otherwise instructed and except as provided in article 5, a bank presenting a documentary draft:

(a) Must deliver the documents to the drawee on acceptance of the draft if it is payable more than three days after presentment; otherwise, only on payment; and

(b) upon dishonor, either in the case of presentment for acceptance or presentment for payment, may seek and follow instructions from any referee in case of need designated in the draft or if the presenting bank does not choose to utilize the referee's services, it must use diligence and good faith to ascertain the reason for dishonor, must notify its transferor of the dishonor and of the results of its effort to ascertain the reasons therefor, and must request instructions.

However, the presenting bank is under no obligation with respect to goods represented by the documents except to follow any reasonable instructions seasonably received; it has a right to reimbursement for any expense incurred in following instructions and to prepayment of or indemnity for those expenses.

History: L. 1965, ch. 564, § 236; L. 1991, ch. 296, § 109; February 1, 1992.

KANSAS COMMENT, 1996

This section is identical to the 1995 Official Text except that the arabic numerals in the Official Text have been replaced by lower case letters. The section is derived from the former 84-4-503 with stylistic amendments not meant to change the substantive law.

When a typical check is involved, the buyer's bank is drawee and either pays or dishonors the item within the midnight deadline when it is presented through the bank collection system. When documentary drafts are involved, by contrast, the buyer's bank is normally the presenting bank and the buyer is normally the drawee. The presenting bank's duties as collection agent are spelled out in this section.

The decisions in other jurisdictions dealing with collection of documentary drafts under Part 5 of Article 4 generally focus upon the distinction between the bank as a payor bank subject to the midnight deadline, and as a presenting bank given more time under Part 5 to obtain payment and relay notice of dishonor. See, e.g., Wiley, Tate & Irby v. Peoples Bank & Trust Co., 438 F.2d 513 (5th Cir. 1971); Union Bank of Benton v. First National Bank in Mt. Pleasant, 621 F.2d 790 (5th Cir. 1980); Suttle Motor Corp. v. Citizens Bank of Poquoson, 221 S.E.2d 784 (Va. 1976); White-hall Packing Co. v. First National City Bank, 390 N.Y.S.2d 189 (App. Div. 1976); Citizens First National Bank of Tyler v. Cinco Exploration Co., 540 S.W.2d 292 (Tex. 1976); Fidelity & Deposit Co. of Maryland v. Bank of Blandenboro, 596 F.2d 632 (4th Cir. 1979).


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