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repealed by Acts 1995, No. 95-668, p. 1381, §2; added by Acts 1995, No. 95-668, p. 1381,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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7-4-104
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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7-3-103
Section 7-3-103 Definitions. (a) In this article: (1) "Acceptor" means a drawee who
has accepted a draft. (2) "Drawee" means a person ordered in a draft to make payment.
(3) "Drawer" means a person who signs or is identified in a draft as a person ordering
payment. (4) "Good faith" means honesty in fact in the conduct or transaction concerned.
(5) "Maker" means a person who signs or is identified in a note as a person undertaking
to pay. (6) "Order" means a written instruction to pay money signed by the person
giving the instruction. The instruction may be addressed to any person, including the person
giving the instruction, or to one or more persons jointly or in the alternative but not in
succession. An authorization to pay is not an order unless the person authorized to pay is
also instructed to pay. (7) "Ordinary care" in the case of a person engaged in business
means observance of reasonable commercial standards, prevailing in the area in which the person
is located, with respect...
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7-3-206
Section 7-3-206 Restrictive indorsement. (a) An indorsement limiting payment to a particular
person or otherwise prohibiting further transfer or negotiation of the instrument is not effective
to prevent further transfer or negotiation of the instrument. (b) An indorsement stating a
condition to the right of the indorsee to receive payment does not affect the right of the
indorsee to enforce the instrument. A person paying the instrument or taking it for value
or collection may disregard the condition, and the rights and liabilities of that person are
not affected by whether the condition has been fulfilled. (c) If an instrument bears an indorsement
(i) described in Section 7-4-201(b), or (ii) in blank or to a particular bank using the words
"for deposit," "for collection," or other words indicating a purpose of
having the instrument collected by a bank for the indorser or for a particular account, the
following rules apply: (1) A person, other than a bank, who purchases the instrument...
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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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7-4-205
Section 7-4-205 Depositary bank holder of unindorsed item. If a customer delivers an item to
a depositary bank for collection: (1) The depositary bank becomes a holder of the item at
the time it receives the item for collection if the customer at the time of delivery was a
holder of the item, whether or not the customer indorses the item, and, if the bank satisfies
the other requirements of Section 7-3-302, it is a holder in due course; and (2) The depositary
bank warrants to collecting banks, the payor bank or other payor, and the drawer that the
amount of the item was paid to the customer or deposited to the customer's 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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7-4-215
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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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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7-4-209
Section 7-4-209 Encoding and retention warranties. (a) A person who encodes information on
or with respect to an item after issue warrants to any subsequent collecting bank and to the
payor bank or other payor that the information is correctly encoded. If the customer of a
depositary bank encodes, that bank also makes the warranty. (b) A person who undertakes to
retain an item pursuant to an agreement for electronic presentment warrants to any subsequent
collecting bank and to the payor bank or other payor that retention and presentment of the
item comply with the agreement. If a customer of a depositary bank undertakes to retain an
item, that bank also makes this warranty. (c) A person to whom warranties are made under this
section and who took the item 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, plus expenses
and loss of interest incurred as a result of the breach. (Acts 1995, No....
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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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