This legal document pertains to the variation by agreement, measure of damages, and action constituting ordinary care in trade regulations and consumer protection under the Uniform Commercial Code in Minnesota. It states that while the effect of the provisions in this article can be varied by agreement, a bank’s responsibility for lack of good faith or failure to exercise ordinary care cannot be disclaimed or the measure of damages limited. However, the parties can agree on standards to measure the bank’s responsibility if those standards are not manifestly unreasonable.

This article of the Uniform Commercial Code (UCC) provides definitions for various terms used in banking and financial transactions. It covers terms such as ‘account’, ‘afternoon’, ‘banking day’, ‘clearinghouse’, ‘customer’, ‘documentary draft’, ‘draft’, ‘drawee’, ‘item’, ‘midnight deadline’, ‘settle’, and ‘suspends payments’. The article also references other definitions from different sections of the UCC that are applicable to this article. It is important for parties involved in banking transactions to understand these definitions to ensure clarity and consistency in their dealings.

In this article: (1) ‘Bank’ means a person engaged in the business of banking, including a savings bank, savings association, credit union, or trust company. (2) ‘Depositary bank’ means the first bank to take an item even though it is also the payor bank, unless the item is presented for immediate payment over the counter. (3) ‘Payor bank’ means a bank that is the drawee of a draft. (4) ‘Intermediary bank’ means a bank to which an item is transferred in course of collection except the depositary or payor bank.

336.4-106 MS 1990 [Renumbered 336.4-107 ] 336.4-106 PAYABLE THROUGH OR PAYABLE AT BANK; COLLECTING BANK. (a) If an item states that it is ‘payable through’ a bank identified in the item, (i) the item designates the bank as a collecting bank and does not by itself authorize the bank to pay the item, and (ii) the item may be presented for payment only by or through the bank. (b) If an item states that it is ‘payable at’ a bank identified in the item, (i) the item designates the bank as a collecting bank and does not by itself authorize the bank to pay the item, and (ii) the item may be presented for payment only by or through the bank.

336.4-107 MS 1990 [Renumbered 336.4-108 ] 336.4-107 SEPARATE OFFICE OF BANK. A branch or separate office of a bank is a separate bank for the purpose of computing the time within which and determining the place at or to which action may be taken or notice or orders must be given under this article and under article 3. History: 1965 c 811 s 336.4-106; 1992 c 565 s 78

336.4-108 MS 1990 [Renumbered 336.4-109 ] 336.4-108 TIME OF RECEIPT OF ITEMS. (a) For the purpose of allowing time to process items, prove balances, and make the necessary entries on its books to determine its position for the day, a bank may fix an afternoon hour of 2:00 p.m. or later as a cutoff hour for the handling of money and items and the making of entries on its books. (b) An item or deposit of money received on any day after a cutoff hour so fixed or after the close of the banking day may be treated as being received at the opening of the next banking day.

336.4-109 MS 1990 [Repealed, 1992 c 565 s 114] 336.4-109 DELAYS. (a) Unless otherwise instructed, a collecting bank in a good faith effort to secure payment of a specific item drawn on a payor other than a bank, and with or without the approval of any person involved, may waive, modify, or extend time limits imposed or permitted by this chapter for a period not exceeding two additional banking days without discharge of drawers or endorsers or liability to its transferor or a prior party.

(a) ‘Agreement for electronic presentment’ means an agreement, clearinghouse rule, or Federal Reserve regulation or operating circular, providing that presentment of an item may be made by transmission of an image of an item or information describing the item (‘presentment notice’) rather than delivery of the item itself. The agreement may provide for procedures governing retention, presentment, payment, dishonor, and other matters concerning items subject to the agreement. (b) Presentment of an item pursuant to an agreement for presentment is made when the presentment notice is received.

An action to enforce an obligation, duty, or right arising under this article must be commenced within three years after the cause of action accrues. History: 1992 c 565 s 82

This provision under the Minnesota Statutes governs the status of a collecting bank as an agent and the provisional status of credits. It establishes that unless a contrary intent is clearly stated, a collecting bank is considered an agent or subagent of the owner of an item, and any settlement given for the item is provisional. This applies regardless of the form of endorsement or lack thereof, and even if credit for the item can be immediately withdrawn.