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Can you summarize ALCA 7-4-406?
Relationship Between Payor Bank and Its Customer. > Customer's duty to discover and report unauthorized signature or alteration.
Short Summary
This legal document, part of the Code of Alabama’s Commercial Code on Bank Deposits and Collections, governs the relationship between a payor bank and its customer. It outlines the duties and responsibilities of the bank and the customer regarding the handling of items and statements of account. The bank is required to either return the items paid or provide sufficient information in the statement of account 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. 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 sets time limits for the discovery and reporting of unauthorized signatures, alterations, or endorsements. Overall, it establishes the obligations and potential consequences for both the bank and the customer in relation to unauthorized transactions.
Whom does it apply to?
Customers and banks
What does it govern?
Relationship between Payor Bank and Its Customer
What are exemptions?
No exemptions are mentioned.
What are the Penalties?
No specific penalties are mentioned.
Jurisdiction
Alabama