J. MILLARD TAWES, Governor                        879

is presented under a credit may without dishonor of the draft, de-
mand or credit

(a)  defer honor until the close of the third banking day following
receipt of the documents; and

(b)  further defer honor if the presenter has expressly or im-
pliedly consented thereto.

Failure to honor within the time here specified constitutes dis-
honor of the draft or demand and of the credit.

(2)   Upon dishonor the bank may unless otherwise instructed ful-
fill 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 or demand
for payment for honor under a credit even though that person is a
confirming bank or other correspondent which is acting under an
issuer's authorization.

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 re-
imbursement

(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.

5—114. Issuer's Duty and Privilege to Honor; Right to Reimburse-
ment.

(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 7—507) or of a security
(Section 8—306) or is forged or fraudulent or there is fraud in the
transaction