U.C.C. - ARTICLE 5
LETTERS OF CREDIT
§ 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 reimbursement
- (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.
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