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Can you summarize GACO 11-4-406?
Relationship Between Payor Bank and Its Customer > Customers duty to discover and report unauthorized signature or alteration.
Short Summary
This legal document, found in the Georgia Code, specifically in the Commercial Code under the section on Bank Deposits and Collections, outlines the duty of customers to discover and report unauthorized signatures or alterations. It applies to both customers and banks. The document states that banks must provide customers with statements of account that allow them to identify the items paid. If the items are not returned, the bank must retain them or provide legible copies. Customers are required to promptly examine the statements or items and notify the bank if they discover any unauthorized payments. 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 sets time limits for customers to discover and report unauthorized signatures, alterations, or indorsements. Failure to report within these time limits may preclude the customer from asserting these claims against the bank. The document provides historical context, cross-references, and references to judicial decisions related to the topic.
Whom does it apply to?
Customers and banks
What does it govern?
Customers duty to discover and report unauthorized signature or alteration
What are exemptions?
No exemptions are mentioned.
What are the Penalties?
The customer is precluded from asserting against the bank the unauthorized signature or alteration, and the bank is precluded from recovering for breach of warranty under Code Section 11-4-208.
Jurisdiction
Georgia