Section 3--507. Dishonor; Holder's Right of Recourse; Term Allowing

Re-Presentment.

(1) An instrument is dishonored when

(a) a necessary or optional presentment is duly made and due

acceptance or payment is refused or cannot be obtained within

the prescribed time or in case of bank collections the

instrument is seasonably returned by the midnight deadline

(Section 4--301); or

(b) presentment is excused and the instrument is not duly

accepted or paid.

(2) Subject to any necessary notice of dishonor and protest, the
holder has upon dishonor an immediate right of recourse against the
drawers and indorsers.

(3) Return of an instrument for lack of proper indorsement is not
dishonor.

(4) A term in a draft or an indorsement thereof allowing a stated time
for re-presentment in the event of any dishonor of the draft by
nonacceptance if a time draft or by nonpayment if a sight draft gives
the holder as against any secondary party bound by the term an option to
waive the dishonor without affecting the liability of the secondary
party and he may present again up to the end of the stated time.