KANSAS OFFICE of
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84-4-504. Privilege of presenting bank to deal with goods; security interest for expenses. (a) A presenting bank that, 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.

(b) For its reasonable expenses incurred by action under subsection (a), 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.

History: L. 1965, ch. 564, § 237; L. 1991, ch. 296, § 110; February 1, 1992.

KANSAS COMMENT, 1996

This section is identical to the 1995 Official Text. The section is derived from the former 84-4-504 with stylistic amendments not meant to change the substantive law.

If no prior arrangements have been made, and the prior collecting bank has not seasonably sent instructions which are reasonable in content, the bank presenting documentary drafts "may store, sell, or otherwise deal with the goods in any reasonable manner" under subsection (1). In other words, the presenting bank has a privilege to deal with the goods under such condition, but is not obligated to do so. However, the UCC does not displace common-law agency concepts, and the presenting bank may not be free to walk away from the goods. For example, if the presenting bank is the "notify party" on a negotiable bill of lading covering perishable merchandise, and the buyer cannot be located, the bank would seem to have some duty to protect the goods from spoiling in spite of the "privilege" language used by the drafters of this section. As is so often the case under the UCC, the courts may well import general principles of law under 84-1-103 to modify UCC provisions in extreme cases.

To the extent that the bank incurs reasonable expenses in dealing with the goods, subsection (2) imposes a lien on the goods or proceeds, which may be foreclosed like an unpaid seller's lien under 84-2-706.


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