§ 4-402. 4-402
222 words·~1 min read·
/us/ucc/a4/s4-402A research copy — for the controlling text, always check the official state or federal source. Not legal advice.
(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 the payor bank returns the item or gives notice in lieu of return, and no more than one determination need be made. If, at the election of the payor bank, a subsequent balance determination is made for the purpose of reevaluating the bank's decision to dishonor the item, the account balance at that time is determinative of whether a dishonor for insufficiency of available funds is wrongful.
Connections12 cite this
Citation graph
cites case law
§ 4-402
4-402
Fed. Reg.×11
C.F.R.×1
Cites 0Cited by 12 across 2 sources