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Can you summarize MGL Chapter 106, Article 4, Section 4-401?
BANK DEPOSITS AND COLLECTIONS > When Bank May Charge Customer's Account
Short Summary
This section of the Massachusetts General Law governs the circumstances under which a bank may charge a customer’s account. A bank is allowed to 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 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 a check that is otherwise properly payable, even if payment was made before the date of the check, unless the customer has given notice of postdating. If a bank charges a check before the date stated in the notice, the bank is liable for damages. Furthermore, a bank that makes payment to a holder in good faith may charge the customer’s account according to the original terms of an altered item or the terms of a completed item, unless the bank has notice of improper completion.
Whom does it apply to?
Banks and their customers
What does it govern?
Charging customer's account, overdraft, postdated checks, altered or completed items
What are exemptions?
No exemptions are mentioned.
What are the Penalties?
The bank is liable for damages for charging a check before the date stated in the notice of postdating.
Jurisdiction
Massachusetts