7-4-105
Section 7-4-105 "Bank"; "depositary bank"; "payor bank"; "intermediary
bank"; "collecting bank"; "presenting bank." In this article: (1)
"Bank" means a person engaged in the business of banking, including a savings bank,
savings and loan association, credit union, or trust company; (2) "Depositary bank"
means the first bank to take an item even though it is also the payor bank, unless the item
is presented for immediate payment over the counter; (3) "Payor bank" means a bank
that is the drawee of a draft; (4) "Intermediary bank" means a bank to which an
item is transferred in course of collection except the depositary or payor bank; (5) "Collecting
bank" means a bank handling an item for collection except the payor bank; (6) "Presenting
bank" means a bank presenting an item except a payor bank. (Acts 1965, No. 549, p. 811;
repealed by Acts 1995, No. 95-668, p. 1381, §2; added by Acts 1995, No. 95-668, p. 1381,
§2.)...
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7-4-204
Section 7-4-204 Methods of sending and presenting; sending directly to payor bank. (a) A collecting
bank shall send items by a reasonably prompt method, taking into consideration relevant instructions,
the nature of the item, the number of those items on hand, the cost of collection involved,
and the method generally used by it or others to present those items. (b) A collecting bank
may send: (1) An item directly to the payor bank; (2) An item to a nonbank payor if authorized
by its transferor; and (3) An item other than documentary drafts to a nonbank payor, if authorized
by Federal Reserve regulation or operating circular, clearing-house rule, or the like. (c)
Presentment may be made by a presenting bank at a place where the payor bank or other payor
has requested that presentment be made. (Acts 1965, No. 549, p. 811; repealed by Acts 1995,
No. 95-668, p. 1381, §2; added by Acts 1995, No. 95-668, p. 1381, §2.)...
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7-4-402
Section 7-4-402 Bank's liability to customer for wrongful dishonor; time of determining insufficiency
of account. (a) Except as otherwise provided in this article, a payor bank wrongfully dishonors
an item if it dishonors an item that is properly payable, but a bank may dishonor an item
that would create an overdraft unless it has agreed to pay the overdraft. (b) A payor bank
is liable to its customer for damages proximately caused by the wrongful dishonor of an item.
Liability is limited to actual damages proved and may include damages for an arrest or prosecution
of the customer or other consequential damages. Whether any consequential damages are proximately
caused by the wrongful dishonor is a question of fact to be determined in each case. (c) A
payor bank's determination of the customer's account balance on which a decision to dishonor
for insufficiency of available funds is based may be made at any time between the time the
item is received by the payor bank and the time that...
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7-4-216
Section 7-4-216 Insolvency and preference. (a) If an item is in or comes into the possession
of a payor or collecting bank that suspends payment and the item has not been finally paid,
the item must be returned by the receiver, trustee, or agent in charge of the closed bank
to the presenting bank or the closed bank's customer. (b) If a payor bank finally pays an
item and suspends payments without making a settlement for the item with its customer or the
presenting bank which settlement is or becomes final, the owner of the item has a preferred
claim against the payor bank. (c) If a payor bank gives or a collecting bank gives or receives
a provisional settlement for an item and thereafter suspends payments, the suspension does
not prevent or interfere with the settlement's becoming final if the finality occurs automatically
upon the lapse of certain time or the happening of certain events. (d) If a collecting bank
receives from subsequent parties settlement for an item, which settlement...
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7-3-417
Section 7-3-417 Presentment warranties. (a) If an unaccepted draft is presented to the drawee
for payment or acceptance and the drawee pays or accepts the draft, (i) the person obtaining
payment or acceptance, at the time of presentment, and (ii) a previous transferor of the draft,
at the time of transfer, warrant to the drawee making payment or accepting the draft in good
faith that: (1) The warrantor is, or was, at the time the warrantor transferred the draft,
a person entitled to enforce the draft or authorized to obtain payment or acceptance of the
draft on behalf of a person entitled to enforce the draft; (2) The draft has not been altered;
and (3) The warrantor has no knowledge that the signature of the drawer of the draft is unauthorized.
(b) A drawee making payment may recover from any warrantor damages for breach of warranty
equal to the amount paid by the drawee less the amount the drawee received or is entitled
to receive from the drawer because of the payment. In addition,...
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7-4-109
Section 7-4-109 Delays. (a) Unless otherwise instructed, a collecting bank in a good faith
effort to secure payment of a specific item drawn on a payor other than a bank, and with or
without the approval of any person involved, may waive, modify, or extend time limits imposed
or permitted by this article for a period not exceeding two additional banking days without
discharge of drawers or indorsers or liability to its transferor or a prior party. (b) Delay
by a collecting bank or payor bank beyond time limits prescribed or permitted by this article
or by instructions is excused if (i) the delay is caused by interruption of communication
or computer facilities, suspension of payments by another bank, war, emergency conditions,
failure of equipment, or other circumstances beyond the control of the bank, and (ii) the
bank exercises such diligence as the circumstances require. (Acts 1995, No. 95-668, p. 1381,
§2.)...
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7-4-202
Section 7-4-202 Responsibility for collection or return; when action timely. (a) A collecting
bank must exercise ordinary care in: (1) Presenting an item or sending it for presentment;
(2) Sending notice of dishonor or nonpayment or returning an item other than a documentary
draft to the bank's transferor after learning that the item has not been paid or accepted,
as the case may be; (3) Settling for an item when the bank receives final settlement; and
(4) Notifying its transferor of any loss or delay in transit within a reasonable time after
discovery thereof. (b) A collecting bank exercises ordinary care under subsection (a) by taking
proper action before its midnight deadline following receipt of an item, notice, or settlement.
Taking proper action within a reasonably longer time may constitute the exercise of ordinary
care, but the bank has the burden of establishing timeliness. (c) Subject to subsection (a)(1),
a bank is not liable for the insolvency, neglect, misconduct, mistake,...
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7-3-416
Section 7-3-416 Transfer warranties. (a) A person who transfers an instrument for consideration
warrants to the transferee and, if the transfer is by indorsement, to any subsequent transferee
that: (1) The warrantor is a person entitled to enforce the instrument; (2) All signatures
on the instrument are authentic and authorized; (3) The instrument has not been altered; (4)
The instrument is not subject to a defense or claim in recoupment of any party which can be
asserted against the warrantor; and (5) The warrantor has no knowledge of any insolvency proceeding
commenced with respect to the maker or acceptor or, in the case of an unaccepted draft, the
drawer. (b) A person to whom the warranties under subsection (a) are made and who took the
instrument in good faith may recover from the warrantor as damages for breach of warranty
an amount equal to the loss suffered as a result of the breach, but not more than the amount
of the instrument plus expenses and loss of interest incurred as a...
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7-4-405
Section 7-4-405 Death or incompetence of customer. (a) A payor or collecting bank's authority
to accept, pay, or collect an item or to account for proceeds of its collection, if otherwise
effective, is not rendered ineffective by incompetence of a customer of either bank existing
at the time the item is issued or its collection is undertaken if the bank does not know of
an adjudication of incompetence. Neither death nor incompetence of a customer revokes the
authority to accept, pay, collect, or account until the bank knows of the fact of death or
of an adjudication of incompetence and has reasonable opportunity to act on it. (b) Even with
knowledge, a bank may for 10 days after the date of death pay or certify checks drawn on or
before that date unless ordered to stop payment by a person claiming an interest in the account.
(Acts 1965, No. 549, p. 811; repealed by Acts 1995, No. 95-668, p. 1381, §2; added by Acts
1995, No. 95-668, p. 1381, §2.)...
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7-4-403
Section 7-4-403 Customer's right to stop payment; burden of proof of loss. (a) A customer or
any person authorized to draw on the account if there is more than one person may stop payment
of any item drawn on the customer's account or close the account by an order to the bank describing
the item or account with reasonable certainty received at a time and in a manner that affords
the bank a reasonable opportunity to act on it before any action by the bank with respect
to the item described in Section 7-4-303. If the signature of more than one person is required
to draw on an account, any of these persons may stop payment or close the account. (b) A stop-payment
order is effective for six months, but it lapses after 14 calendar days if the original order
was oral and was not confirmed in writing within that period. A stop-payment order may be
renewed for additional six-month periods by a writing given to the bank within a period during
which the stop-payment order is effective. (c) The...
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