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Can you summarize CORS 4-4-406?
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 Colorado Revised Statutes, specifically falls under the Uniform Commercial Code and 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 both the bank and the customer regarding the discovery and reporting of unauthorized signatures or alterations on items such as checks. The document states that the bank must provide the customer with a statement of account showing payment of items, either by returning the items or providing sufficient information for the customer to identify them. The customer is then required to promptly examine the statement or items and notify the bank if any unauthorized payment is reasonably discoverable. Failure to comply with these duties may preclude the customer from asserting claims against the bank for unauthorized signatures or alterations. The document also addresses the allocation of loss between the customer and the bank based on their respective failures to comply with their duties. Additionally, it sets a one-year time limit for the customer to discover and report unauthorized signatures or alterations. Overall, this document establishes the obligations and consequences related to unauthorized signatures or alterations in the banking context.
Whom does it apply to?
Customers and banks
What does it govern?
Customer's 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
Colorado