(a) Except as otherwise provided by this chapter, 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.
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