7-4-301
Section 7-4-301 Deferred posting; recovery of payment by return of items; time of dishonor;
return of items by payor bank. (a) If a payor bank settles for a demand item other than a
documentary draft presented otherwise than for immediate payment over the counter before midnight
of the banking day of receipt, the payor bank may revoke the settlement and recover the settlement
if, before it has made final payment and before its midnight deadline, it (1) returns the
item; or (2) sends written notice of dishonor or nonpayment if the item is unavailable for
return. (b) If a demand item is received by a payor bank for credit on its books, it may return
the item or send notice of dishonor and may revoke any credit given or recover the amount
thereof withdrawn by its customer, if it acts within the time limit and in the manner specified
in subsection (a). (c) Unless previous notice of dishonor has been sent, an item is dishonored
at the time when for purposes of dishonor it is returned or...
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7-4-214
Section 7-4-214 Right of charge-back or refund; liability of collecting bank; return of item.
(a) If a collecting bank has made provisional settlement with its customer for an item and
fails by reason of dishonor, suspension of payments by a bank, or otherwise to receive settlement
for the item which is or becomes final, the bank may revoke the settlement given by it, charge
back the amount of any credit given for the item to its customer's account, or obtain refund
from its customer, whether or not it is able to return the item, if by its midnight deadline
or within a longer reasonable time after it learns the facts it returns the item or sends
notification of the facts. If the return or notice is delayed beyond the bank's midnight deadline
or a longer reasonable time after it learns the facts, the bank may revoke the settlement,
charge back the credit, or obtain refund from its customer, but it is liable for any loss
resulting from the delay. These rights to revoke, charge back, and...
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7-4-302
Section 7-4-302 Payor bank's responsibility for late return of item. (a) If an item is presented
to and received by a payor bank, the bank is accountable for the amount of: (1) A demand item,
other than a documentary draft, whether properly payable or not, if the bank, in any case
in which it is not also the depositary bank, retains the item beyond midnight of the banking
day of receipt without settling for it or, whether or not it is also the depositary bank,
does not pay or return the item or send notice of dishonor until after its midnight deadline;
or (2) Any other properly payable item unless, within the time allowed for acceptance or payment
of that item, the bank either accepts or pays the item or returns it and accompanying documents.
(b) The liability of a payor bank to pay an item pursuant to subsection (a) is subject to
defenses based on breach of a presentment warranty (Section 7-4-208) or proof that the person
seeking enforcement of the liability presented or transferred...
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7-4-104
Section 7-4-104 Definitions and index of definitions. (a) In this article, unless the context
otherwise requires: (1) "Account" means any deposit or credit account with a bank,
including a demand, time, savings, passbook, share draft, or like account, other than an account
evidenced by a certificate of deposit; (2) "Afternoon" means the period of a day
between noon and midnight; (3) "Banking day" means the part of a day on which a
bank is open to the public for carrying on substantially all of its banking functions; (4)
"Clearing house" means an association of banks or other payors regularly clearing
items; (5) "Customer" means a person having an account with a bank or for whom a
bank has agreed to collect items, including a bank that maintains an account at another bank;
(6) "Documentary draft" means a draft to be presented for acceptance or payment
if specified documents, certificated securities (Section 7-8-102) or instructions for uncertificated
securities (Section 7-8-308), or...
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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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7-4-402
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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7-3-502
Section 7-3-502 Dishonor. (a) Dishonor of a note is governed by the following rules: (1) If
the note is payable on demand, the note is dishonored if presentment is duly made to the maker
and the note is not paid on the day of presentment. (2) If the note is not payable on demand
and is payable at or through a bank or the terms of the note require presentment, the note
is dishonored if presentment is duly made and the note is not paid on the day it becomes payable
or the day of presentment, whichever is later. (3) If the note is not payable on demand and
paragraph (2) does not apply, the note is dishonored if it is not paid on the day it becomes
payable. (b) Dishonor of an unaccepted draft other than a documentary draft is governed by
the following rules: (1) If a check is duly presented for payment to the payor bank otherwise
than for immediate payment over the counter, the check is dishonored if the payor bank makes
timely return of the check or sends timely notice of dishonor or...
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7-4-303
Section 7-4-303 When items subject to notice, stop-payment order, legal process, or setoff;
order in which items may be charged or certified. (a) Any knowledge, notice, or stop-payment
order received by, legal process served upon, or setoff exercised by a payor bank comes too
late to terminate, suspend, or modify the bank's right or duty to pay an item or to charge
its customer's account for the item if the knowledge, notice, stop-payment order, or legal
process is received or served and a reasonable time for the bank to act thereon expires or
the setoff is exercised after the earliest of the following: (1) The bank accepts or certifies
the item; (2) The bank pays the item in cash; (3) The bank settles for the item without having
a right to revoke the settlement under statute, clearing-house rule, or agreement; (4) The
bank becomes accountable for the amount of the item under Section 7-4-302 dealing with the
payor bank's responsibility for late return of items; or (5) With respect to...
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7-4-406
Section 7-4-406 Customer's duty to discover and report unauthorized signature or alteration.
(a) A bank that sends or makes available to a customer a statement of account showing payment
of items for the account shall either return or make available to the customer the items paid
or provide information in the statement of account sufficient to allow the customer reasonably
to identify the items paid. The statement of account provides sufficient information if the
item is described by item number, amount, and date of payment. (b) If the items are not returned
to the customer, the person retaining the items shall either retain the items or, if the items
are destroyed, maintain the capacity to furnish legible copies of the items until the expiration
of seven years after receipt of the items. A customer may request an item from the bank that
paid the item, and that bank must provide in a reasonable time either the item or, if the
item has been destroyed or is not otherwise obtainable, a...
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7-4-215
Section 7-4-215 Final payment of item by payor bank; when provisional debits and credits become
final; when certain credits become available for withdrawal. (a) An item is finally paid by
a payor bank when the bank has first done any of the following: (1) Paid the item in cash;
(2) Settled for the item without having a right to revoke the settlement under statute, clearing-house
rule, or agreement; or (3) Made a provisional settlement for the item and failed to revoke
the settlement in the time and manner permitted by statute, clearing-house rule, or agreement.
(b) If provisional settlement for an item does not become final, the item is not finally paid.
(c) If provisional settlement for an item between the presenting and payor banks is made through
a clearing house or by debits or credits in an account between them, then to the extent that
provisional debits or credits for the item are entered in accounts between the presenting
and payor banks or between the presenting and successive...
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