Ask Reggi Your Question Now
Can you summarize TNCO 47-4-401?
Relationship Between Payor Bank and Its Customer > When bank may charge customer's account.
Short Summary
This legal document governs the circumstances under which a bank may charge a customer’s account. According to the document, a bank is allowed to charge against the customer’s account for an item that is properly payable, authorized by the customer, and in accordance with any agreement between the customer and the bank. The customer is not liable for an overdraft if they neither signed the item nor benefited from its proceeds. The bank may charge a check from the customer’s account even if payment was made before the date of the check, unless the customer has given notice of postdating. If the bank charges a check before the date stated in the notice of postdating, it may be liable for damages. The document also states that a bank that makes payment to a holder in good faith may charge the customer’s account according to the original terms of the altered item or the terms of the completed item, unless the bank has notice of improper completion. Overall, this document provides guidelines for banks and their customers regarding the charging of customer accounts.
Whom does it apply to?
Banks and their customers
What does it govern?
Charging a customer's account by a bank
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
Tennessee