A collecting bank or other intermediary known to be entrusted with documents on behalf of another or with collection of a draft or other claim against delivery of documents warrants by such delivery of the documents only its own good faith and authority. This rule applies even though the intermediary has purchased or made advances against the claim or draft to be collected.
CREDIT(S)
(Dec. 30, 1963, 77 Stat. 730, Pub. L. 88-243, § 1.)
Prior Uniform Statutory Provision: None.
Purposes:
1. To state the limited warranties given with respect to the documents accompanying a documentary draft.
2. In warranting its authority a bank only warrants its authority from its transferor. See Section 4-203. It does not warrant the genuineness or effectiveness of the document. Compare Section 7-507.
3. Other duties and rights of banks handling documentary drafts for collection are stated in Article 4, Part 5.
Cross References:
Sections 4-203 and 7-507, 4-501 through 4-504.
Definitional Cross References:
“Collecting bank”. Section 4-105.
“Delivery”. Section 1-201.
“Document”. Section 7-102.
“Draft”. Section 5-103.
“Good faith”. Section 1-201.
HISTORICAL AND STATUTORY NOTES
Prior Codifications
1981 Ed., § 28:7-508.
1973 Ed., § 28:7-508.