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Can you summarize MNST 336.4-402?
UNIFORM COMMERCIAL CODE > BANK'S LIABILITY TO CUSTOMER FOR WRONGFUL DISHONOR; TIME OF DETERMINING INSUFFICIENCY OF ACCOUNT.
Short Summary
This legal document, part of the Minnesota Statutes under the Uniform Commercial Code, governs the liability of payor banks to their customers for wrongful dishonor of items. It states that a payor bank wrongfully dishonors an item if it dishonors an item that is properly payable, but it may dishonor an item that would create an overdraft unless it has agreed to pay the overdraft. The payor bank is liable to its customer for damages caused by the wrongful dishonor, including actual damages and consequential damages such as arrest or prosecution of the customer. The determination of the customer’s account balance on which the decision to dishonor is based can be made at any time between the receipt of the item by the payor bank and the return of the item or giving notice in lieu of return. Only one determination is required, but the payor bank may make a subsequent balance determination to reevaluate its decision. The account balance at the time of the subsequent determination determines whether the dishonor for insufficiency of available funds is wrongful.
Whom does it apply to?
Payor banks and their customers
What does it govern?
BANK'S LIABILITY TO CUSTOMER FOR WRONGFUL DISHONOR; TIME OF DETERMINING INSUFFICIENCY OF ACCOUNT
What are exemptions?
No exemptions are mentioned.
What are the Penalties?
Liability of the payor bank to the customer for damages caused by wrongful dishonor
Jurisdiction
Minnesota