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Can you summarize 6 DECO 4-406?
Relationship Between Payor Bank and its Customer > Customers duty to discover and report unauthorized signature or alteration.
Short Summary
This legal document, found in the Delaware Code under the section on Bank Deposits and Collections, pertains to the relationship between a payor bank and its customer. It outlines the customer’s duty to discover and report any unauthorized signature or alteration on their account. The document states that when a bank provides a statement of account to the customer, it must either return the paid items or provide sufficient information in the statement for the customer to identify the items. If the items are not returned, the bank must retain them or maintain the capacity to provide legible copies for seven years. The customer is required to promptly examine the statement or items and notify the bank if any unauthorized payment is discovered. Failure to comply with this duty may preclude the customer from asserting unauthorized signatures or alterations against the bank. The document also addresses the allocation of loss between the customer and the bank based on their respective failures. Additionally, it sets a one-year time limit for discovering and reporting unauthorized signatures or alterations. Breach of warranty claims related to unauthorized signatures or alterations may be precluded if this time limit is exceeded.
Whom does it apply to?
Customers of banks
What does it govern?
Customers 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
Delaware