Commercial Code, 1963

A seller creates an express warranty when statements, descriptions, samples, or models become part of the basis of the bargain and the goods must conform to them.

A sale of goods can include an implied warranty that the goods are merchantable, if the seller is a merchant for that kind of goods and the warranty is not excluded or modified.

If the seller knows the buyer’s intended purpose and the buyer is relying on the seller’s skill or judgment, the goods carry an implied warranty that they will be fit for that purpose, unless the next section excludes or modifies it.

This section explains when warranty language is consistent, and how implied warranties can be excluded or modified.

Warranties, express or implied, must be read together as consistent and cumulative unless that is unreasonable; then the parties’ intent controls which warranty dominates.

This section defines F.O.B. and F.A.S. delivery terms and assigns shipping, delivery, document, and payment duties between seller and buyer.

This section defines C.I.F. and C.& F. pricing terms and sets the seller’s document, insurance, and shipment duties, while requiring the buyer to pay against the tender of documents.

In certain sales contracts, the seller must reasonably estimate the price, settle any final adjustment promptly, and allow feasible preliminary inspection before payment when the contract calls for payment on or after arrival.

For an ex-ship delivery term, the goods must be delivered from a ship at the named port, the seller must clear carriage liens and give the buyer a delivery direction, and risk of loss stays with the seller until the goods are unloaded.

For certain overseas shipment contracts, the seller must obtain a negotiable bill of lading. The buyer may demand the full set of bills in some cases, and incomplete sets can still support payment if sent from abroad and backed by an adequate indemnity.

For a “no arrival, no sale” term, the seller must ship conforming goods and tender them when they arrive; the buyer may treat certain seller-unfaulted loss, deterioration, or late arrival as a casualty to identified goods.

The buyer must seasonably provide any agreed letter of credit. If a proper letter of credit is delivered, the buyer’s duty to pay is suspended; if the credit is dishonored, the seller may require direct payment after seasonable notice.

This section classifies certain sales as sale on approval or sale or return, limits creditor claims in some cases, and preserves title rules for consigned goods.

This section sets default rules for sale on approval and sale or return transactions, including when title and risk pass, when use counts as acceptance, and how returns must be handled.

This section sets rules for auction sales, including when a sale is complete, when lots are separate sales, when reserve and no-reserve auctions may proceed, and when a buyer can challenge seller bidding.

This section says when title to goods passes between seller and buyer, including special rules for shipment, delivery, and rejection of goods.

Unsecured creditors’ rights in identified goods are limited by the buyer’s rights, and a seller’s creditor may sometimes treat a sale or identification as void if the seller’s retention of possession is fraudulent or void.

This section says when a buyer gets title to goods, when a person with voidable title can pass good title, and when entrusting goods to a merchant lets that merchant transfer the owner’s rights.

This section says when a buyer gets a special property and insurable interest in goods, and when a seller keeps an insurable interest.

A buyer who has paid part or all of the price may recover the goods from the seller if the buyer tenders any unpaid balance and the stated conditions are met.

This section says how a seller must make a tender of delivery, including holding conforming goods for the buyer, giving needed notice, and providing documents when required.

If a seller must or is authorized to ship goods to the buyer and no destination is fixed, the seller must use a reasonable carrier arrangement, provide required documents promptly, and promptly notify the buyer of shipment unless the parties agreed otherwise.

If the seller ships identified goods and takes certain bills of lading, the seller may keep a security interest in the goods; some bills reserve possession instead of security, and a violation of the sale contract does not remove the buyer’s rights or the seller’s powers as a holder of a negotiable document of title.

A financing agency that pays or buys a draft tied to a shipment of goods gets the shipper’s rights in the goods, including stopping delivery and requiring the buyer to honor the draft.

Tender of delivery generally makes the buyer’s duty to accept and pay for the goods come due, and it gives the seller a right to acceptance and payment under the contract.

A seller may cure a rejected nonconforming tender by notifying the buyer and making a conforming delivery within the contract time, or in some cases get a further reasonable time to substitute a conforming tender.

This section says when the risk of loss passes to the buyer in different sale-and-delivery situations.

This section says who bears the risk of loss for goods when delivery does not conform, when the buyer revokes acceptance, and when the buyer breaches before risk passes.

Payment generally has to be tendered before the seller must deliver goods, and ordinary business forms of payment are sufficient unless the seller asks for legal tender.

If a contract requires payment before inspection, the buyer must still pay unless a stated exception applies.

The buyer generally may inspect goods before payment or acceptance, but not in certain C.O.D. or document-of-title payment situations.

Unless otherwise agreed, documents against which a draft is drawn must be delivered to the drawee when the draft is accepted if it is payable more than three days after presentment; otherwise, delivery is only on payment.

Either party may inspect, test, and sample the goods on reasonable notice to the other party for fact-finding and preserving evidence. The parties may also agree to a third-party inspection or survey, and may make its findings binding in later disputes.

If goods or delivery fail to conform to the contract, the buyer may reject the whole, accept the whole, or accept any commercial unit and reject the rest, subject to the stated exceptions.

A buyer must reject goods within a reasonable time and notify the seller seasonably; after rejection, the buyer may not exercise ownership over the rejected goods and may have to hold them with reasonable care for the seller to remove them.

A merchant buyer who rejects goods may have to follow the seller’s reasonable instructions, or if none are given, make reasonable efforts to sell the goods for the seller’s account when the goods are perishable or likely to lose value quickly.

If the seller gives no instructions within a reasonable time after rejection, the buyer may store, reship, or resell the rejected goods for the seller’s account.

A buyer generally cannot rely on an unstated defect to reject goods or prove breach if the defect was discoverable by reasonable inspection, with listed exceptions.

This section says when a buyer accepts goods.

A buyer must pay the contract rate for accepted goods and give timely notice of any breach after discovering it. In some infringement claims, the buyer must also notify the seller promptly after receiving notice of litigation. The section also places the burden of proving breach on the buyer and allows notice-and-control procedures for related litigation.

A buyer may revoke acceptance of nonconforming goods if the nonconformity substantially impairs their value and the statutory conditions are met.

In a sales contract, each party must not impair the other’s expectation of due performance. If reasonable grounds for insecurity arise, a party may demand adequate assurance in writing and may suspend further performance commercially reasonably until assurance is received.

If a party repudiates a contract before performance is due, and the loss would substantially impair the contract’s value, the aggrieved party may wait briefly for performance, use breach remedies, or suspend its own performance.

A repudiating party may retract the repudiation before its next performance is due, unless the aggrieved party has already canceled, materially changed position, or treated the repudiation as final.

This section defines an installment contract and sets when a buyer may reject an installment, when the buyer must accept it, and when a breach of the whole contract occurs.

If identified goods are lost without fault before risk passes to the buyer, the contract is avoided if the loss is total. If the loss is partial or the goods are damaged, the buyer may inspect the goods and choose to avoid the contract or accept them with a price allowance.

If delivery becomes commercially impracticable but a reasonable substitute is available, that substitute must be tendered and accepted. If payment fails because of government regulation, the seller may withhold or stop delivery unless the buyer provides a commercially equivalent payment method; if delivery was already taken, payment under the regulation discharges the buyer unless the regulation is discriminatory, oppressive, or predatory.

A seller may avoid breach for delayed or partial nondelivery if performance became impracticable or the seller complied in good faith with applicable government regulation or order, but the seller must allocate available supply fairly and notify the buyer seasonably.

A buyer who gets notice of a material or indefinite delay, or a justified allocation, may notify the seller in writing, terminate the unexecuted part of the contract, or modify it by taking the available quota; if the buyer does not modify within up to 30 days after seller notice, the affected deliveries lapse.

Remedies for breach of collateral or ancillary promises in a sales contract are not limited by this division.

If the seller discovers the buyer is insolvent, the seller may refuse delivery, stop delivery, and in some cases reclaim goods within 10 days after receipt.

If the buyer wrongfully rejects goods, revokes acceptance, misses a payment due before delivery, or repudiates, the aggrieved seller may use several remedies.

An aggrieved seller may identify conforming goods to the contract and may handle unfinished goods by completing them, stopping production and reselling for scrap or salvage, or using another reasonable method.

A seller may stop delivery of goods in transit in specified situations, and the bailee must then hold and deliver the goods as the seller directs.

This section lets a seller resell goods after a buyer’s breach, but requires commercially reasonable resale practices and notice in some cases.

A person in the position of a seller may withhold or stop delivery, resell goods, and recover incidental damages, subject to this division.

This section sets the seller’s damages for a buyer’s nonacceptance or repudiation, using market-price and contract-price differences, with incidental damages and certain deductions or alternative profit-based damages when needed.

If the buyer does not pay when due, the seller may recover the price and incidental damages. If the seller sues for the price, the seller must hold certain identified goods for the buyer, may resell them if resale becomes possible before judgment is collected, and must credit resale proceeds to the buyer.

An aggrieved seller may recover commercially reasonable incidental damages tied to stopping delivery, handling the goods, or return/resale after the buyer’s breach.

If the seller does not deliver or repudiates, the buyer may cancel and pursue other remedies; if the buyer rightfully rejects or justifiably revokes acceptance, the buyer also gets a security interest in goods held or controlled and may resell them.

After a breach, the buyer may cover by making a reasonable substitute purchase in good faith and without unreasonable delay, and may recover certain damages from the seller.

If a seller does not deliver or repudiates, damages are measured by the difference between market price when the buyer learned of the breach and the contract price, plus certain incidental and consequential damages, minus expenses saved.

A buyer who accepted goods and gave the required notice may recover damages for nonconforming tender, with warranty damages measured by the value difference at acceptance, and incidental or consequential damages may also be recovered in a proper case.

This section says what counts as incidental and consequential damages when a seller breaches.

A court may decree specific performance for unique goods or other proper circumstances, and the buyer has a right of replevin for identified goods when stated conditions are met.

A buyer may deduct contract damages from the price still due after notifying the seller.

This section lets parties agree to liquidated damages, gives the buyer a restitution right after the seller withholds delivery for the buyer’s breach, and allows offsets and resale-related limits.

A sales agreement may add or replace remedies and may limit damages, but any exclusive or limited remedy can fail if it does not serve its essential purpose. Consequential damages may also be limited or excluded unless that limitation is unconscionable.

Words like “cancellation” or “rescission” of a contract are not treated as giving up damage claims for an earlier breach, unless a contrary intention clearly appears.

For material misrepresentation or fraud, the available remedies include all remedies available for a nonfraudulent breach.

A party to a sales contract may have a right of action against a third party who injures identified goods, and either party may sue with the other’s consent.

Market-price damages for anticipatory repudiation are measured by the price when the aggrieved party learned of the repudiation, with limited alternate-price evidence allowed if the usual price is unavailable.

Market reports may be admitted into evidence when the prevailing price or value of goods in an established commodity market is at issue.

A breach of contract for sale must be sued on within 4 years after the claim accrues, subject to limited agreement-based reduction and a 6-month refiling rule after certain terminations.

In this chapter, “goods” means goods used or bought mainly for personal, family, or household purposes.

In retail sales, a written warranty or guarantee is not unenforceable just because the buyer did not return a required form, and any buyer waiver of this section must be in writing.

This division may be cited as Uniform Commercial Code—Negotiable Instruments.

This section says Division 3 applies to negotiable instruments, but not to money, certain payment orders, or securities.

This section defines key terms used in this division on negotiable instruments.

This section defines key negotiable-instrument terms, including when a writing is a negotiable instrument, note, draft, check, cashier’s check, teller’s check, traveler’s check, certificate of deposit, or demand draft.

This section defines “issue” and “issuer” for negotiable instruments.

This section says when a promise or order is treated as unconditional, and lists several situations that do not make it conditional.

If an instrument states an amount payable in foreign money, it may be paid in that foreign money or in an equivalent dollar amount calculated at the current bank-offered spot rate at the place of payment on the payment day, unless the instrument says otherwise.

This section defines when a promise or order is payable on demand or at a definite time.

This section explains when a promise or order is payable to bearer or to order, and how its status can change by indorsement.

This section explains how to identify the payee of a negotiable instrument and who may negotiate, discharge, or enforce it when multiple payees are named.

This section sets the default place where a negotiable instrument is payable, depending on what payment information is stated in the instrument.

An instrument is generally not payable with interest unless the instrument says otherwise, and any interest-bearing instrument pays interest from the date of the instrument.

An instrument may be dated before or after its actual date, and if it is undated, its date is set by issue or first possession.

If an instrument has conflicting terms, the order of priority is typewritten, then handwritten, then printed, and words control over numbers.

This section defines an incomplete instrument and says when it may be enforced, and who must prove lack of authority for added words or numbers.

People with the same liability on a negotiable instrument are jointly and severally liable unless the instrument says otherwise.

A party’s payment obligation on an instrument may be changed, added to, or canceled by a separate agreement between the obligor and a person entitled to enforce the instrument, if the agreement was relied on or arose from the same transaction.

This section sets time limits for lawsuits to enforce payment obligations on notes, drafts, checks, certificates of deposit, and related claims.

A defendant may notify a third person about litigation, and the notified person may pass that notice on to another liable person. If the notice warns that the person may defend and that failing to do so will bind them, the person is bound unless they timely come in and defend.

This section defines “negotiation” of an instrument and explains when transfer alone is enough and when indorsement is also required.

Negotiation remains effective even if the instrument was obtained through certain defects or wrongdoing, and rescission or other remedies may be limited against later protected holders.

This section explains when an instrument is transferred, what rights pass to the transferee, and when transfer does not count as negotiation.

This section defines “indorsement” and “indorser,” and allows a holder to indorse an instrument in specified name forms when the instrument is payable to a holder under a different name.

A holder can turn a blank indorsement into a special indorsement by adding identifying words above the indorser’s signature.

This section limits the effect of certain indorsements on negotiable instruments and sets rules for banks and purchasers handling them.

A former holder who gets the instrument back may cancel later indorsements, and if that makes the instrument payable to the reacquirer or to bearer, the reacquirer may negotiate it.

This section defines who is a person entitled to enforce an instrument.

This section defines when a holder is a holder in due course and limits that status in several situations.

This section explains when an instrument is treated as issued or transferred for value, defines consideration, and gives the drawer, maker, or issuer certain defenses in limited situations.

This section says when a negotiable instrument becomes overdue, depending on whether it is payable on demand or at a definite time.

This section limits who can use certain defenses and claims when enforcing payment on an instrument.

A person taking an instrument is subject to property or possessory claims in the instrument or its proceeds, unless the person has rights of a holder in due course. A holder in due course takes free of that claim.

This section defines “fiduciary” and “represented person,” then states when a taker of an instrument is treated as having notice of a claimed breach of fiduciary duty.

This section sets rules for proving signature validity on an instrument and when a plaintiff is entitled to payment.

A person who is not in possession of an instrument may enforce it if specified conditions are met.

This section explains when taking a check, note, or other instrument for an obligation discharges or suspends the obligation, and when the obligee may enforce the instrument or the obligation.

A claim may be discharged if a person proves they tendered an instrument in good faith as full satisfaction, the claim was disputed or unliquidated, and the claimant received payment.

This section defines key terms and lets a claimant make a loss claim to an obligated bank for a lost, destroyed, or stolen cashier’s check, teller’s check, or certified check.

A person is not liable on an instrument unless the person signed it, or an authorized agent or representative signed it and the signature binds the represented person under Section 3402.

This section says when a representative’s signature binds the represented person and when the representative is, or is not, personally liable on the instrument.

An unauthorized signature is generally ineffective, except in the stated good-faith/value scenario, and it may be ratified.

This section sets rules for instruments obtained by impostor or fictitious-payee situations, including when an endorsement is effective and when a loss may be recovered for lack of ordinary care.

This section defines key terms about employee responsibility for instruments and says a fraudulent indorsement can be treated as effective if the employer entrusted the employee with responsibility and the indorsement is made in the named person’s name.

A person whose lack of ordinary care helps cause an alteration or forged signature cannot use that alteration or forgery against a good-faith payer or taker.

The section defines “alteration” and says a fraudulent alteration can discharge an affected party, unless that party assents or is barred from objecting; other alterations do not discharge the party.

A check or draft does not automatically assign funds held by the drawee, and the drawee is not liable on the instrument until it accepts it.

This section defines acceptance and certified checks, allows a holder in some cases to fill in a missing acceptance date in good faith, and says a drawee does not have to certify a check.

If an acceptance changes the terms of a draft, the holder may refuse it and treat the draft as dishonored; the drawee may then cancel the acceptance.

An obligated bank may have to pay compensation, interest losses, and sometimes consequential damages if it wrongly refuses or stops payment on certain checks.

The issuer of a note, cashier’s check, or similar draft must pay the instrument.

The acceptor of a draft must pay it under the stated terms, with special rules for varied, incomplete, or certified/accepted instruments.

The drawer generally must pay a dishonored unaccepted draft, subject to listed exceptions.

An indorser of a dishonored instrument must pay the amount due, unless an exception applies.

A person who transfers an instrument for consideration gives specified warranties to the transferee, and a good-faith recipient may recover damages for breach.

This section says certain people who handle an unaccepted draft or other instrument must give warranty promises to a good-faith drawee or payer, and it sets recovery rights if those warranties are breached.

This section lets a drawee or other payer recover money paid or cancel acceptance when a draft or instrument was handled by mistake, but not against certain good-faith holders for value.

An accommodation party may sign an instrument and is generally liable to pay it in that role, with special rules for collection guarantees and reimbursement.

This section sets when an instrument is treated as converted, limits who may sue for conversion, caps recovery, and gives a limited protection to certain good-faith representatives.

This section defines presentment and sets rules for how it can be made, what the presenter must do on demand, and when the recipient may treat presentment as occurring on the next business day.

This section says when a note or draft is treated as dishonored, mainly based on whether it is paid, accepted, and presented on time.

Notice of dishonor may be given by any person, and it must be given within the stated deadlines for collecting-bank and other instruments if the obligation of an indorser or drawer is to be enforced.

This section excuses presentment for payment or acceptance, excuses notice of dishonor in two situations, and excuses delay in giving notice when the delay was beyond the notifier’s control and diligence was used afterward.

Certain records and documents are admissible as evidence and can create a presumption of dishonor and related notice of dishonor.

A party’s duty to pay an instrument is discharged under this division or by an agreement or act that would discharge a simple-contract money obligation, but that discharge does not work against a holder in due course who took without notice.

An instrument is paid and the payer’s obligation is discharged when payment is made by or for the party who must pay and to someone entitled to enforce it, subject to listed exceptions.

Tender of payment can discharge certain obligations on a negotiable instrument, including interest after the due date and, if tender is refused, part of an indorser’s or accommodation party’s obligation.

A person entitled to enforce an instrument may discharge a party’s payment obligation by intentional acts or by a signed agreement not to sue.

This section limits when an indorser or accommodation party is discharged after changes to an instrument or its collateral.

This division may be cited as Uniform Commercial Code—Bank Deposits and Collections.

This section says which division or place's law controls when bank-item rules overlap or when a bank's liability is involved.

Parties may vary this division by agreement, but they cannot waive a bank’s responsibility for bad faith or failure to use ordinary care, or cap damages for that failure.

This section defines terms used in Division 4 of the Commercial Code, including account, banking day, customer, item, draft, midnight deadline, settle, and suspends payments.

This section defines several banking terms used in the division.

If an item is payable through or at a named bank, that bank is treated as a collecting bank, the item may be presented only by or through the bank, and the bank is not authorized by that label alone to pay it.

A bank branch or separate office is treated as a separate bank for timing and notice/place purposes under this division and Division 3.

A bank may set a cutoff hour of 2 p.m. or later for handling money and items and making book entries.

A collecting bank may, in good faith and unless instructed otherwise, extend certain time limits by up to two additional banking days. Delay beyond the code’s or instructions’ time limits is excused only for specified disruptions and only if the bank acts with required diligence.

This section defines electronic presentment and explains when presentment is treated as made.

Actions to enforce rights, duties, or obligations under this division must be filed within 3 years after the cause of action accrues.

For certain items indorsed “pay any bank,” only a bank may acquire holder rights until the item is returned to the customer or specially indorsed to a non-bank.

A collecting bank must exercise ordinary care when handling items, notices, settlements, and transit losses, generally by acting before its midnight deadline.

Only a collecting bank’s transferor may give instructions that affect the bank or count as notice to it, subject to Division 3. The collecting bank is not liable to prior parties for actions taken under those instructions or under an agreement with the transferor.

A collecting bank must send items by a reasonably prompt method, considering stated factors. It may also send items in several specified ways, and a presenting bank may make presentment at a requested place.

When a customer delivers an item to a depositary bank for collection, the bank becomes a holder of the item if the customer was a holder when delivering it, and it may become a holder in due course if Section 3302’s other requirements are met. The bank also warrants to collecting banks, the payor bank or other payor, and the drawer that the item’s amount was paid to the customer or deposited to the customer’s account.

An agreed method that identifies the transferor bank is enough to allow an item to be transferred to another bank.

A transferring customer or collecting bank gives warranties about the item, must pay if the item is dishonored, and cannot disclaim that payment obligation or the warranty rules for checks.

This section gives warranty rules for drafts and other items when payment or acceptance is made, including who warrants what, who can recover for breach, and a 30-day notice rule for warranty claims.

A person who encodes information on an item after issue, or who retains an item for electronic presentment, gives warranties to certain banks and payors about correctness and compliance. A good-faith recipient of those warranties may recover damages for breach.

A collecting bank gets a security interest in deposited items and related documents or proceeds, and in some cases does not need a security agreement or filing to enforce or perfect it.

A bank is treated as having given value, for holder-in-due-course purposes, to the extent it has a security interest in an item and otherwise meets Section 3302.

A collecting bank may use written notice to present certain items, and related notices and responses must meet specific timing rules.

This section sets default rules for when bank settlement happens and what form it takes if no other rule or agreement controls.

A collecting bank may revoke a provisional settlement, charge back a customer’s credit, or get a refund if final settlement fails and it returns the item or gives notice on time; if it is late, it can still act but is liable for delay losses.

This section says when an item or deposit is treated as finally paid and when bank credits become available for withdrawal.

If a bank closes after receiving an item, the item may have to be returned, and in some cases the item owner gets a preferred claim.

A payor bank may undo a settlement for certain demand items if it acts before final payment and its midnight deadline, either by returning the item or by sending written notice of dishonor or nonpayment when return is impossible.

A payor bank that receives an item can be liable for its amount unless it handles the item within the time rules stated here or has a listed defense.

A payor bank may process items in any order, but late notice, stop-payment orders, legal process, or setoff can come too late to change the bank’s duty to pay or charge the customer’s account once certain events have already happened.

A bank may charge a customer’s account for properly payable items, including overdrafts and certain postdated or altered checks, but it can be liable for damages if it pays a postdated check after receiving proper notice.

A payor bank must not dishonor a properly payable item, but it may dishonor an item that would create an overdraft unless it agreed to pay it.

A customer, or another authorized signer in some cases, may stop payment on an item or close the account by giving the bank a reasonably certain order in time for the bank to act.

A bank generally does not have to pay a stale check presented more than six months after its date, except certified checks, but it may still charge the customer’s account if the later payment was made in good faith.

A bank’s authority to handle an item is not cancelled by a customer’s incompetence or death until the bank knows of it and has a reasonable chance to act. After death, the bank may still pay or certify certain checks for 10 days, unless a person with an interest in the account orders stop payment.

Banks must give customers enough information or the paid items themselves when sending account statements, and customers must review statements promptly and report unauthorized payments quickly.

A payor bank may be subrogated to certain rights if it pays an item in specified problematic circumstances, but only to prevent unjust enrichment and only as needed to avoid the bank’s loss.

A bank that takes a documentary draft for collection must present or send the draft and accompanying documents for presentment, and must notify its customer seasonably if the draft is not paid or accepted in due course.

A collecting bank may wait to present a draft until a reasonable time for the goods to arrive, and it must notify its transferor if payment or acceptance is refused because the goods have not arrived.

A bank handling a documentary draft must deliver the documents based on whether the draft is accepted or paid, and on dishonor it must act with diligence, notify its transferor, and request instructions unless it uses a designated referee.

A presenting bank may reasonably store, sell, or otherwise deal with goods after a dishonored documentary draft if it requested instructions and none arrive within a reasonable time.

This division may be cited as Uniform Commercial Code—Letters of Credit.

This section defines key terms used in the letters of credit division.

This section says the division applies to letters of credit and related rights and obligations, and that some of its effects can be varied by agreement except for listed exceptions.

A letter of credit, confirmation, advice, transfer, amendment, or cancellation may be issued in any form that is a signed record.

No consideration is required to issue, amend, transfer, or cancel a letter of credit, advice, or confirmation.

This section explains when a letter of credit becomes enforceable, when it can be revoked, how consent affects amendments or cancellation, and when it expires.

A confirmer must take on issuer-like obligations for a letter of credit to the extent of its confirmation; certain non-confirming nominated persons and advisers are not required to honor or give value for a presentation.

An issuer must honor presentations that strictly comply with the letter of credit, dishonor noncomplying presentations, follow standard banking practice, and respond within a reasonable time.

This section says when an issuer must honor a letter-of-credit presentation, when it may choose to honor or dishonor it, and when a court may block honor because of forgery or material fraud.

If a presentation is honored, the beneficiary must warrant that there was no specified fraud or forgery and that the drawing does not violate the relevant agreements.

This section sets remedies for wrongful dishonor, repudiation, and related breaches under a letter of credit.

A beneficiary generally may not transfer the right to draw or demand performance under a letter of credit unless the letter says it is transferable, subject to Section 5113.

A successor of a letter-of-credit beneficiary may act in the beneficiary’s name or as disclosed successor, and the issuer must recognize a disclosed successor if the stated recognition requirements are met.

A beneficiary may assign proceeds of a letter of credit, and the issuer or nominated person generally does not have to recognize the assignment until it consents.

A lawsuit to enforce a right or obligation under this article must be started within one year, measured from the later of the letter of credit’s expiration date or the date the claim accrues.