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Can you summarize UTCO 70A-4-401?
Relationship Between Payor Bank and Its Customer > When bank may charge customer's account.
Short Summary
This legal document, found in the Utah Code under the Uniform Commercial Code - Bank Deposits and Collections, governs the relationship between a payor bank and its customer. According to this document, a bank has the authority to charge a customer’s account for an item that is properly payable from that account, 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, the bank may charge a check against the 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 the bank charges the account before the stated date, it is liable for damages. Furthermore, if a bank makes payment to a holder in good faith, it can charge the customer’s account according to the original or completed terms of the item, unless it has notice of improper completion. It is important to note that this summary includes all the extracted information from the document.
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 Section 70A-4-402
Jurisdiction
Utah