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Can you summarize 11 MERS Section 4-406?
RELATIONSHIP BETWEEN PAYOR BANK AND ITS CUSTOMER > Customer's duty to discover and report unauthorized signature or alteration
Short Summary
This legal document, part of the Maine Revised Statutes under the Uniform Commercial Code, pertains to the relationship between a payor bank and its customer regarding bank deposits and collections. It outlines the customer’s duty to discover and report unauthorized signatures or alterations on items paid by the bank. The document states that the bank must either return the items paid or provide sufficient information in the statement of account for the customer to identify the items. If the items are not returned, the person retaining them must maintain the capacity to furnish legible copies for 7 years. The customer is required to exercise reasonable promptness in examining the statement or items and promptly notify the bank if any unauthorized payment is discovered. Failure to comply with these duties may preclude the customer from asserting against the bank the unauthorized signature or alteration. However, lack of ordinary care on the part of the bank or failure to exercise ordinary care in paying the item may negate the preclusion. If the customer fails to discover and report the unauthorized signature or alteration within one year, they are precluded from asserting it against the bank. The document does not specify any specific penalties for non-compliance.
Whom does it apply to?
Customers and banks
What does it govern?
Customer's duty to discover and report unauthorized signature or alteration
What are exemptions?
No exemptions are mentioned.
What are the Penalties?
No specific penalties are mentioned.
Jurisdiction
Maine