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Can you summarize MSCO 75-4-406?
Relationship Between Payor Bank and Its Customer. > Customers duty to discover and report unauthorized signature or alteration.
Short Summary
This legal document governs the duty of bank customers to discover and report unauthorized signatures or alterations on their accounts. It applies to all bank customers and requires them to exercise reasonable promptness in examining their account statements and items to identify any unauthorized payments. If the customer fails to comply with this duty, the bank may be precluded from liability for the unauthorized signature or alteration. However, if the bank can prove that the customer’s failure to comply caused a loss, the loss may be allocated between the customer and the bank. The document also establishes a time limit for customers to discover and report unauthorized signatures or alterations, after which they may be precluded from asserting such claims against the bank. The penalties for non-compliance include the preclusion of claims and the allocation of losses.
Whom does it apply to?
Bank customers
What does it govern?
Customers duty to discover and report unauthorized signature or alteration
What are exemptions?
No exemptions are mentioned.
What are the Penalties?
Preclusion from asserting unauthorized signature or alteration, loss allocation between customer and bank
Jurisdiction
Mississippi