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Can you summarize MTCO 30-4-401?
Relationship Between Payor Bank and Its Customer > When bank may charge customer's account
Short Summary
This legal document, found in the Montana Code under the section on Uniform Commercial Code Bank Deposits and Collections, governs the relationship between a payor bank and its customer. According to this document, a bank has the authority to charge a customer’s account for an item that is properly payable from that account, even if it creates an overdraft. An item is considered properly payable if it is authorized by the customer and complies with any agreement between the customer and the bank. However, a customer is not liable for an overdraft if they did not sign the item or benefit from its proceeds. Additionally, a bank can charge a customer’s account for 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 to the bank. If a bank charges against the account before the date stated in the notice, the bank may be liable for damages. Furthermore, a bank that makes payment to a holder in good faith can charge the customer’s account according to the original or completed terms of the item, unless the bank has notice of improper completion. It is important for banks and customers to adhere to these provisions to avoid penalties, including damages for dishonor of subsequent items.
Whom does it apply to?
Customers and banks
What does it govern?
Relationship between Payor Bank and Its Customer
What are exemptions?
No exemptions are mentioned.
What are the Penalties?
Damages for dishonor of subsequent items pursuant to 30-4-402
Jurisdiction
Montana