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Can you summarize 4406.?
Relationships Between Payor Bank And Its Customer > Customer's Duty to Discover and Report Unauthorized Signature or Alteration.
Short Summary
This legal document governs the duty of customers to discover and report unauthorized signatures or alterations on bank statements and items. Customers are required to exercise reasonable care and promptness in examining the statement and items and must notify the bank promptly upon discovering any unauthorized signature or alteration. Failure to comply with these duties may result in the customer being precluded from asserting unauthorized signatures or alterations against the bank. However, the preclusion does not apply if the customer can establish lack of ordinary care on the part of the bank. Additionally, if the customer fails to discover and report unauthorized signatures or alterations within one year from the time the statement and items are made available, the customer is precluded from asserting such unauthorized signatures or alterations against the bank. The burden of proof lies with the customer to establish the fact of unauthorized signatures, alterations, or endorsements. Furthermore, if a payor bank has a valid defense against a customer’s claim and waives or fails to assert the defense, the bank cannot assert a claim based on the unauthorized signature or alteration against any collecting bank or prior party presenting or transferring the item.
Whom does it apply to?
Customers of 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?
Preclusion from asserting unauthorized signature or alteration against the bank
Jurisdiction
Guam