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Can you summarize 55-4-401 NMSA?
RELATIONSHIP BETWEEN PAYOR BANK AND ITS CUSTOMER > When bank may charge customer's account.
Short Summary
This legal document, part of the New Mexico Statutes Annotated 1978, specifically addresses the relationship between a payor bank and its customer in the context of bank deposits and collections. It outlines the circumstances under which a bank may charge a customer’s account for an item, even if it creates an overdraft. The item must be properly payable, authorized by the customer, and in accordance with any agreement between the customer and the bank. The document also states that a customer is not liable for an overdraft if they neither signed the item nor benefited from its proceeds. Additionally, it allows a bank to charge a customer’s account for a check that is otherwise properly payable, even if payment was made before the date of the check, unless the customer has given notice of postdating. The notice must be received by the bank in a timely manner to afford them a reasonable opportunity to act on it. If the bank charges against the customer’s account before the date stated in the notice, they may be liable for damages. The document also addresses the bank’s ability to charge the customer’s account based on the original or completed terms of an altered item, as long as the bank acted in good faith and without notice of improper completion. Overall, this document provides guidelines and regulations for the charging of a customer’s account by a bank in various scenarios.
Whom does it apply to?
Customers and banks
What does it govern?
Bank Deposits and Collections
What are exemptions?
No exemptions are mentioned.
What are the Penalties?
The bank may be liable for damages for dishonor of subsequent items if it charges against the customer's account a check before the date stated in the notice of postdating.
Jurisdiction
New Mexico