Ask Reggi Your Question Now
Can you summarize NJST 12A:4-406?
Customer's duty to discover and report unauthorized signature or alteration
Short Summary
This legal document governs the duty of customers to discover and report unauthorized signatures or alterations in banking transactions. It applies to both customers and banks. According to the document, if a bank sends a statement of account or items to a customer, the customer must promptly examine them to determine if any payment was unauthorized due to alteration or unauthorized signature. If the customer should have reasonably discovered the unauthorized payment based on the provided statement or items, they must promptly notify the bank. Failure to comply with these duties 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 and the failure contributed to the loss, the loss is allocated between the customer and the bank. If the customer does not discover and report unauthorized signatures or alterations within one year, they are precluded from asserting them against the bank. The document does not specify any specific penalties for non-compliance or violation of its provisions.
Whom does it apply to?
Customers and 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?
No specific penalties are mentioned.
Jurisdiction
New Jersey