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Can you summarize NCGS 25-4-406?
Relationship Between Payor Bank and Its Customer. > Customer's duty to discover and report unauthorized signature or alteration.
Short Summary
This legal document, part of the North Carolina General Statutes Uniform Commercial Code, specifically addresses the relationship between a payor bank and its customer in the context of bank deposits and collections. The document outlines the duties and responsibilities of the bank and the customer regarding the handling of items and statements of account. It requires the bank to either return the paid items or provide sufficient information in the statement of account for the customer to identify the items. The customer is expected to promptly examine the statement or items and notify the bank if any unauthorized payment is discovered. 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 in case of failure to exercise ordinary care. Additionally, it sets a one-year time limit for the discovery and reporting of unauthorized signatures or alterations. Overall, this document establishes the obligations and rights of both the bank and the customer in relation to unauthorized transactions and provides guidelines for their interactions.
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?
No specific penalties are mentioned.
Jurisdiction
North Carolina