Ask Reggi Your Question Now
Can you summarize GACO 11-4-401?
Relationship Between Payor Bank and Its Customer > When bank may charge customers account.
Short Summary
This legal document governs the circumstances under which a bank may charge a customer’s account. A bank is allowed to charge against the account of a customer for an item that is properly payable from that account, even if it creates an overdraft. An item is considered properly payable if it is authorized by the customer and is in accordance with any agreement between the customer and the bank. However, the customer is not liable for the amount of an overdraft if they did not sign the item or benefit from its proceeds. Additionally, a bank may charge against the customer’s account a check that is otherwise properly payable, even if payment was made before the date of the check, unless the customer has given notice to the bank of the postdating. If a bank charges against the account before the date stated in the notice of postdating, the bank is liable for damages. This document also discusses the liability of a bank for wrongful honor of a forged endorsement and the payment of overdrafts. It is important for banks and their customers to understand these provisions to ensure compliance and avoid penalties.
Whom does it apply to?
Banks and their customers
What does it govern?
Charging a customer's account by a bank
What are exemptions?
The customer is not liable for the amount of an overdraft if they neither signed the item nor benefited from the proceeds of the item.
What are the Penalties?
If a bank charges against the account of a customer a check before the date stated in the notice of postdating, the bank is liable for damages for the loss resulting from its act.
Jurisdiction
Georgia