Section 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 […]
Section 4-210 – Security Interest of Collecting Bank in Items, Accompanying Documents, and Proceeds
(a) A collecting bank has a security interest in an item and any accompanying documents or the proceeds of either: (1) In case of an item deposited in an account, to the extent to which credit given for the item has been withdrawn or applied; (2) In case of an item for which it has given credit available […]
Section 4-211 – When Bank Gives Value for Purposes of Holder in Due Course
For purposes of determining its status as a holder in due course, a bank has given value to the extent that it has a security interest in an item, if the bank otherwise complies with the requirements of § 3-302 on what constitutes a holder in due course.
Section 4-212 – Presentment by Notice of Item Not Payable By, Through, or at Bank; Liability of Drawer or Indorser
(a) Unless otherwise instructed, a collecting bank may present an item not payable by, through, or at a bank by sending to the party to accept or pay a written notice that the bank holds the item for acceptance or payment. The notice must be sent in time to be received on or before the day […]
Section 4-213 – Medium and Time of Settlement by Bank
(a) With respect to settlement by a bank, the medium and time of settlement may be prescribed by Federal Reserve regulations or circulars, clearing-house rules, and the like, or agreement. In the absence of such prescription: (1) The medium of settlement is cash or credit to an account in a Federal Reserve bank of or specified by […]
Section 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 […]
Section 4-215 – Final Payment of Item by Payor Bank; When Provisional Debits and Credits Become Available for Withdrawal
(a) An item is finally paid by a payor bank when the bank has 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 […]
Section 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 […]
Section 4-201 – Status of Collecting Bank as Agent and Provisional Status of Credits; Applicability of Title; Item Indorsed “Pay Any Bank”
(a) Unless a contrary intent clearly appears and before the time that a settlement given by a collecting bank for an item is or becomes final, the bank, with respect to the item, is an agent or subagent of the owner of the item and any settlement given for the item is provisional. This provision applies […]
Section 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 […]