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Can you summarize 6 DECO 4-401?
Relationship Between Payor Bank and its Customer > When bank may charge customers account.
Short Summary
This legal document, found in the Delaware Code, specifically in the Commerce and Trade section under the Uniform Commercial Code, pertains to the relationship between a payor bank and its customer. It outlines the circumstances under which a bank may charge a customer’s account. According to the document, a bank can charge against the customer’s account for an item that is properly payable, even if it creates an overdraft. An item is considered properly payable if it is authorized by the customer and aligns with any agreement between the customer and the bank. The document also states that a customer is not liable for an overdraft if they did not sign the item or benefit from its proceeds. Additionally, the bank may charge a check from the customer’s account, even if payment was made before the date of the check, unless the customer has given notice of postdating. If the bank charges the check before the stated date, they may be liable for damages. The document also addresses the bank’s liability when making payment to a holder of an altered or completed item in good faith. Overall, this document provides guidelines for when a bank can charge a customer’s account and outlines the rights and liabilities of both parties involved.
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 charging a check before the date stated in the notice of postdating.
Jurisdiction
Delaware