874                               LAWS OF MARYLAND                        [CH. 538

Part 5
Collection of Documentary Drafts

4—501. Handling of Documentary Drafts; Duty to Send for Pre-
sentment and to Notify Customer of Dishonor.

A bank which takes a documentary draft for collection must pre-
sent or send the draft and accompanying documents for present-
ment 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.

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 in-
structed to do so or learns of the arrival of the goods.

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 Sub-title 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 accept-
ance 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.

4—504. Privilege of Presenting Bank to Deal With Goods; Security
Interest for Expenses.

(1)  A presenting bank which, following the dishonor of a docu-
mentary 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 Sub-
section (1) the presenting bank has a lien upon the goods or their
proceeds, which may be foreclosed in the same manner as an unpaid
sellers lien.