(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 obtain refund terminate if and when a settlement
for the item received by the bank is or becomes final.
(b) A collecting bank returns an item when it is sent or delivered to the bank's customer
or transferor or pursuant to its instructions.
(c) A depositary bank that is also the payor may charge back the amount of an item
to its customer's account or obtain refund in accordance with the section governing
return of an item received by a payor bank for credit on its books (section 490:4-301).
(d) The right to charge back is not affected by:
(1) Previous use of a credit given for the item; or
(2) Failure by any bank to exercise ordinary care with respect to the item, but a
bank so failing remains liable.
(e) A failure to charge back or claim refund does not affect other rights of the bank
against the customer or any other party.
(f) If credit is given in dollars as the equivalent of the value of an item payable
in foreign money, the dollar amount of any charge back or refund must be calculated
on the basis of the bank-offered spot rate for the foreign money prevailing on the
day when the person entitled to the charge back or refund learns that it will not
receive payment in ordinary course.
FindLaw Codes may not reflect the most recent version of the law in your jurisdiction. Please verify the status of the code you are researching with the state legislature or via Westlaw before relying on it for your legal needs.
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