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Can you summarize MGL Chapter 106, Article 4, Section 4-406?
BANK DEPOSITS AND COLLECTIONS > Customer's Duty to Discover and Report Unauthorized Signature or Alteration
Short Summary
This legal document, Section 4406 of the Massachusetts General Law, falls under the Uniform Commercial Code and specifically pertains to bank deposits and collections. It outlines the duties and responsibilities of both banks and customers regarding the discovery and reporting of unauthorized signatures or alterations on items such as statements of account. The document requires banks to either return the paid items to the customer or provide sufficient information in the statement of account for the customer to identify the items paid. If the items are not returned, the person retaining them must maintain the capacity to furnish legible copies for seven years. Customers are expected to promptly examine the statement or items provided 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 and the bank’s good faith in paying the item. Additionally, it establishes a one-year time limit for customers to discover and report unauthorized signatures or alterations. The provisions of this section are subject to certain other sections of the Massachusetts General Law.
Whom does it apply to?
Customers and banks
What does it govern?
Customer's Duty to Discover and Report Unauthorized Signature or Alteration
What are exemptions?
The provisions of this section are subject to section 27 of chapter 167D and section 31 of chapter 171.
What are the Penalties?
No specific penalties mentioned.
Jurisdiction
Massachusetts