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Can you summarize NYCL UCC 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 governs the duty of customers to discover and report unauthorized signatures or alterations on bank statements and items. It applies to customers of banks in the context of their account statements and accompanying items. The document imposes a duty on customers to exercise reasonable care and promptness in examining the statement and items to identify any unauthorized signature or alteration. Customers must notify the bank promptly after discovering such unauthorized signature or alteration. Failure to comply with these duties may preclude the customer from asserting the unauthorized signature or alteration against the bank. The preclusion also extends to unauthorized signatures or alterations by the same wrongdoer on subsequent items paid in good faith by the bank within a reasonable period, not exceeding fourteen calendar days, before the bank receives notification from the customer. However, the preclusion does not apply if the customer can establish lack of ordinary care on the part of the bank. Additionally, the customer must discover and report unauthorized signatures, alterations, or indorsements within specific timeframes to assert them against the bank. The document also addresses the bank’s defenses against customer claims and the impact of waiving or failing to assert those defenses. Overall, this document outlines the responsibilities and consequences related to discovering and reporting unauthorized signatures or alterations by bank customers.
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 against the bank
Jurisdiction
New York