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Can you summarize NERS Uniform Commercial Code 4-406?
Customer's duty to discover and report unauthorized signature or alteration.
Short Summary
This legal document, part of the Nebraska Uniform Commercial Code, outlines the duty of customers to discover and report unauthorized signatures or alterations on their bank statements. It requires banks to either return the paid items or provide sufficient information for customers to identify them. If the items are not returned, the bank must retain them or maintain legible copies for seven years. Customers are expected to promptly examine the statement or items and notify the bank if they discover any unauthorized payments. Failure to comply with this duty may preclude the customer from asserting unauthorized signatures or alterations against the bank. However, if the bank failed to exercise ordinary care in paying the item, the loss may be allocated between the customer and the bank. Additionally, if the customer does not discover and report unauthorized signatures or alterations within one year, they are precluded from asserting them against the bank. Breach of warranty claims related to unauthorized signatures or alterations are also affected by this preclusion.
Whom does it apply to?
Customers of banks
What does it govern?
Customer's 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
Nebraska