Ask Reggi Your Question Now
Can you summarize UTCO 70A-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, found in the Utah Code under the Uniform Commercial Code - Bank Deposits and Collections, specifically addresses the relationship between a payor bank and its customer. It outlines the duties and responsibilities of both parties regarding the discovery and reporting of unauthorized signatures or alterations on items. The document states that a bank must either return the paid items to the customer or provide sufficient information in the statement of account for the customer to identify the items. If the items are not returned, the person retaining them must maintain the capacity to furnish legible copies for seven years. The customer is required to exercise reasonable promptness in examining the statement or items and promptly notify the bank if any unauthorized payment is discovered. Failure to comply with these duties may preclude the customer from asserting against the bank the unauthorized signature or alteration. However, if the bank failed to exercise ordinary care or did not pay the item in good faith, the preclusion may not apply. Additionally, if the customer does not discover and report the unauthorized signature or alteration within one year, they are precluded from asserting it against the bank. The document does not mention specific penalties for non-compliance.
Whom does it apply to?
Customers and 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?
No specific penalties are mentioned.
Jurisdiction
Utah