Ask Reggi Your Question Now
Can you summarize RIGL 6A-4-401?
Bank Deposits and Collections > When bank may charge customer's account.
Short Summary
This section of the State of Rhode Island General Laws, specifically the Uniform Commercial Code, Bank Deposits and Collections, governs the relationship between a payor bank and its customer. According to this section, a bank has the authority to charge a customer’s account for an item that is properly payable, 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 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 is 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. The section does not mention any specific exemptions. Non-compliance with the provisions may result in damages for dishonor of subsequent items under 6A-4-402.
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 under 6A-4-402
Jurisdiction
Rhode Island