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Texas Business & Commerce Code - Section 4.202. Responsibility For Collection Or Return; When Action Timely

Legal Research Home > Texas Lawyer > Business & Commerce Code > Texas Business & Commerce Code - Section 4.202. Responsibility For Collection Or Return; When Action Timely

§ 4.202. RESPONSIBILITY FOR COLLECTION OR RETURN;  WHEN 
ACTION TIMELY.  (a) A collecting bank must exercise ordinary care 
in:
		(1)  presenting an item or sending it for presentment;                        
		(2)  sending notice of dishonor or non-payment or 
returning an item other than a documentary draft to the bank's 
transferor after learning that the item has not been paid or 
accepted, as the case may be;  
		(3)  settling for an item when the bank receives final 
settlement;  and     
		(4)  notifying its transferor of any loss or delay in 
transit within a reasonable time after discovery thereof.
	(b)  A collecting bank exercises ordinary care under 
Subsection (a) by taking proper action before its midnight deadline 
following receipt of an item, notice, or settlement.  Taking proper 
action within a reasonably longer time may constitute the exercise 
of ordinary care, but the bank has the burden of establishing 
timeliness.
	(c)  Subject to Subsection (a)(1), a bank is not liable for 
the insolvency, neglect, misconduct, mistake, or default of another 
bank or person or for loss or destruction of an item in the 
possession of others or in transit.

Acts 1967, 60th Leg., p. 2343, ch. 785, § 1, eff. Sept. 1, 1967.  
Amended by Acts 1995, 74th Leg., ch. 921, § 4, eff. Jan. 1, 1996.

Last modified: August 10, 2007