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Can you summarize SDCL 57A-4-401?
RELATIONSHIP BETWEEN PAYOR BANK AND ITS CUSTOMER. > When bank may charge customer's account.
Short Summary
This legal document, found in the South Dakota Codified Laws, specifically in the Uniform Commercial Code section, governs the relationship between a payor bank and its customer regarding bank deposits and collections. According to this document, 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. The document also states that a bank can charge a check against a customer’s account, 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 a check before the date stated in the notice, the bank may be held liable for damages. Additionally, the document outlines the bank’s rights and responsibilities when dealing with altered or completed items. It is important for banks and customers to understand and comply with the provisions outlined in this document to ensure a proper banking relationship.
Whom does it apply to?
Customers and banks
What does it govern?
Bank Deposits And Collections
What are exemptions?
No exemptions are mentioned.
What are the Penalties?
The bank may be liable for damages for charging a check before the date stated in the notice of postdating.
Jurisdiction
South Dakota