Ask Reggi Your Question Now
Can you summarize IACO 554.12204?
UNIFORM COMMERCIAL CODE > Refund of payment and duty of customer to report with respect to unauthorized payment order.
Short Summary
This legal document, governed by the Iowa Code under the Uniform Commercial Code, addresses the refund of payment and the duty of customers to report unauthorized payment orders. If a receiving bank accepts a payment order that is not authorized or enforceable against the customer, the bank must refund any payment related to the order to the extent it is not entitled to enforce payment. The bank is also required to pay interest on the refundable amount. However, the customer is not entitled to interest if they fail to exercise ordinary care in determining the unauthorized nature of the order and notifying the bank within a reasonable time. The document clarifies that the bank cannot recover any amount from the customer for a failure to provide timely notification. The concept of ‘reasonable time’ can be agreed upon, but the obligation of the bank to refund payment cannot be varied by agreement. Overall, this document establishes the rights and responsibilities of receiving banks and customers regarding unauthorized payment orders and refund obligations.
Whom does it apply to?
Receiving banks and their customers
What does it govern?
Refund of payment and duty of customer to report with respect to unauthorized payment order
What are exemptions?
No exemptions are mentioned.
What are the Penalties?
No penalties are mentioned.
Jurisdiction
Iowa