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Can you summarize HIRS 490:4-406?
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 Hawaii Revised Statutes, specifically addresses the relationship between a payor bank and its customer in the context of bank deposits and collections. It outlines the duties and responsibilities of the bank and the customer regarding the handling of items paid and the provision of statements of account. The document requires the bank 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 for seven years. 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 addresses the allocation of loss between the customer and the bank based on their respective failures. Additionally, it establishes a one-year time limit for discovering and reporting unauthorized signatures or alterations. Breach of warranty claims related to unauthorized signatures or alterations may be precluded if this time limit is exceeded. Overall, this document sets forth the obligations and rights of both the bank and the customer in relation to unauthorized signatures, alterations, and prompt examination of statements and items.
Whom does it apply to?
Customers and banks involved in bank deposits and collections
What does it govern?
Relationship between Payor Bank and its Customer
What are exemptions?
No exemptions are mentioned.
What are the Penalties?
No penalties are mentioned.
Jurisdiction
Hawaii