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Can you summarize 810 ILCS 5/4-406?
RELATIONSHIP BETWEEN PAYOR BANK AND ITS CUSTOMER >
Short Summary
This legal document, Section 4-406 of the Illinois Compiled Statutes, governs the relationship between a payor bank and its customer in the context of bank deposits and collections. It outlines the duties and responsibilities of the bank and the customer regarding unauthorized signatures or alterations on items. The bank is required to provide the customer with a statement of account that either returns the paid items or provides sufficient information for the customer to identify the items paid. The customer is expected to promptly examine the statement or items and notify the bank if any unauthorized payment is discovered. Failure to comply with these duties 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 establishes a one-year time limit for the customer to discover and report unauthorized signatures or alterations. Breach of warranty claims related to unauthorized signatures or alterations may be precluded if this time limit is exceeded. No specific exemptions or penalties are mentioned in this document.
Whom does it apply to?
Banks and their customers
What does it govern?
Relationship between payor bank and its customer
What are exemptions?
No exemptions are mentioned.
What are the Penalties?
No penalties are mentioned.
Jurisdiction
Illinois