Ask Reggi Your Question Now
Can you summarize IACO 554.4401?
UNIFORM COMMERCIAL CODE > When bank may charge customers account.
Short Summary
This legal document, governed by the Iowa Code under the Uniform Commercial Code, outlines the rules regarding when a bank may charge a customer’s account. According to the document, a bank can charge against the customer’s account for an item that is properly payable, even if it creates an overdraft. An item is considered properly payable if it is authorized by the customer and in accordance with any agreement between the customer and the bank. The document also states that a customer is not liable for an overdraft if they neither signed the item nor benefited from its proceeds. Additionally, the document specifies that a bank can charge against the customer’s account for a check that is otherwise properly payable, unless the customer has given notice of postdating. If a bank charges against the account before the date stated in the notice, the bank is liable for damages. The document also addresses the bank’s liability for making payment to a holder in good faith, stating that the bank may charge the customer’s account according to the original or completed terms of the item, unless it has notice of improper completion. Overall, this document provides guidelines for banks and customers regarding the charging of accounts and liability for overdrafts.
Whom does it apply to?
Banks and customers
What does it govern?
Charging a customer's account and liability for overdrafts
What are exemptions?
No exemptions are mentioned.
What are the Penalties?
The bank is liable for damages if it charges against the account of a customer a check before the date stated in the notice of postdating.
Jurisdiction
Iowa