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Can you summarize Chapter 4 ?
Bank Deposits and Collections > Relationships Between Payor Bank And Its Customer
Short Summary
This legal document governs the relationships between payor banks and their customers in the context of bank deposits and collections. It grants the customer or any authorized person the right to stop payment of any item payable for or drawn against the customer’s account. However, the bank can disregard the stop payment order unless it is in writing, signed by the customer or authorized person, describes the item with certainty, and is received by the bank within a reasonable time before certain events occur. The customer can renew the stop payment order in writing within six months of its receipt. If the bank pays an item contrary to a binding stop payment order, it is liable to the customer for the actual loss incurred, up to the amount of the item, unless the bank is guilty of negligence. The burden of proving the fact and amount of loss resulting from the payment of an item contrary to a stop payment order lies with the customer. A bank is under no obligation to a customer having a checking account to pay a check, other than a certified check, which is presented more than six months after its date, but it may charge its customer’s account for a payment made thereafter. This legal document, found in the Guam Code Annotated under the Uniform Commercial Code, specifically addresses the relationships between payor banks and their customers in the context of bank deposits and collections. According to the document, the authority of a payor or collecting bank to accept, pay, or collect an item or account for its proceeds is not affected by the incompetence of a customer, unless the bank is aware of an adjudication of incompetence. The death or incompetence of a customer does not automatically revoke the bank’s authority until the bank becomes aware of the fact and has a reasonable opportunity to act on it. The document also states that a bank may continue to pay or certify checks for 10 days after the date of death, unless ordered to stop payment by someone with a claim to the account. Additionally, a bank has the right to refuse payment if it believes or receives an affidavit stating that the person involved is mentally or physically disabled or under the influence of drugs or alcohol. The bank is protected from legal action for refusing payment in good faith based on such circumstances. The document does not specify any penalties for non-compliance or violations. This legal document governs the duty of customers to discover and report unauthorized signatures or alterations on bank statements and items. Customers are required to exercise reasonable care and promptness in examining the statement and items and must notify the bank promptly upon discovering any unauthorized signature or alteration. Failure to comply with these duties may result in the customer being precluded from asserting unauthorized signatures or alterations against the bank. However, the preclusion does not apply if the customer can establish lack of ordinary care on the part of the bank. Additionally, if the customer fails to discover and report unauthorized signatures or alterations within one year from the time the statement and items are made available, the customer is precluded from asserting such unauthorized signatures or alterations against the bank. The burden of proof lies with the customer to establish the fact of unauthorized signatures, alterations, or endorsements. Furthermore, if a payor bank has a valid defense against a customer’s claim and waives or fails to assert the defense, the bank cannot assert a claim based on the unauthorized signature or alteration against any collecting bank or prior party presenting or transferring the item. If a payor bank has paid an item over the stop payment order of the drawer or maker or otherwise under circumstances giving a basis for objection by the drawer or maker, the payor bank shall be subrogated to the rights of any holder in due course on the item against the drawer or maker, the payee or any other holder of the item against the drawer or maker either on the item or under the transaction out of which the item arose, and the drawer or maker against the payee or any other holder of the item with respect to the transaction out of which the item arose.
Whom does it apply to?
Payor banks and their customers
What does it govern?
Relationships between payor banks and their customers in the context of bank deposits and collections
What are exemptions?
No exemptions are mentioned.
What are the Penalties?
No penalties are mentioned.
Jurisdiction
Guam