Nebraska Uniform Commercial Code 4-302

UCC 4-302

4-302.

Payor bank's responsibility for late return of item.

(a) If an item is presented to and received by a payor bank, the bank is accountable for the amount of:

(1) 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

(2) 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 accompanying documents.

(b) The liability of a payor bank to pay an item pursuant to subsection (a) is subject to defenses based on breach of a presentment warranty (section 4-208) or proof that the person seeking enforcement of the liability presented or transferred the item for the purpose of defrauding the payor bank.

Source

Annotations

  • The primary reason for automatic or strict liability under this section is a need for finality and certainty in business transactions; accordingly, if a payor bank fails to fulfill its statutory duty to return or dishonor an item in a timely manner, the payor bank is subject to sanction for its tardiness. Citizens Fidelity Bank v. Southwest Bank, 238 Neb. 677, 472 N.W.2d 198 (1991).

  • Under former law, the statutory rule that a payor bank is accountable for a demand item presented to it and not settled for, paid, returned, or a notice of dishonor sent before the midnight deadline may be varied or waived by agreement. Stauffer Seeds, Inc. v. Nebraska Sec. Bank of Deshler, 222 Neb. 594, 386 N.W.2d 2 (1986).

  • Under former law, the rule that a payor bank is accountable for a demand item presented to it and not paid, settled for, returned, or a notice of dishonor sent before the midnight deadline may be varied or waived by agreement. Idaho Forest Industries, Inc. v. Minden Exch. Bank & Trust Co., 212 Neb. 820, 326 N.W.2d 176 (1982).

  • Under former law, a payor bank becomes obligated on an item if it does not settle provisionally or return the item on day of receipt. Berman v. United States Nat. Bank, 197 Neb. 268, 249 N.W.2d 187 (1976).

  • Under former law, payor bank must provisionally settle demand drafts on day of receipt, unless it timely returns or dishonors draft with notice. Berman v. United States Nat. Bank, 197 Neb. 268, 249 N.W.2d 187 (1976).