1. If an item is presented to and received by a payor bank, the bank is accountable
for the amount of:
a. 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
b. 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
2. The liability of a payor bank to pay an item pursuant to subsection 1 is subject
to defenses based on breach of a presentment warranty (section 554.4208) or proof that the person seeking enforcement of the liability presented or transferred
the item for the purpose of defrauding the payor bank.
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