Court Opinions

State Laws

US Code

US Constitution

Texas Business & Commerce Code - Section 4.214. Right Of Charge-Back Or Refund; Liability Of Collecting Bank; Return Of Item

Legal Research Home > Texas Lawyer > Business & Commerce Code > Texas Business & Commerce Code - Section 4.214. Right Of Charge-Back Or Refund; Liability Of Collecting Bank; Return Of Item

§ 4.214. RIGHT OF CHARGE-BACK OR REFUND;  LIABILITY OF 
COLLECTING BANK;  RETURN OF ITEM.  (a) If a collecting bank has made 
provisional settlement with its customer for an item and fails by 
reason of dishonor, suspension of payments by a bank, or otherwise 
to receive settlement for the item that is or becomes final, the 
bank may revoke the settlement given by it, charge back the amount 
of any credit given for the item to its customer's account, or 
obtain refund from its customer, whether or not it is able to return 
the item, if by its midnight deadline or within a longer reasonable 
time after it learns the facts it returns the item or sends 
notification of the facts.  If the return or notice is delayed 
beyond the bank's midnight deadline or a longer reasonable time 
after it learns the facts, the bank may revoke the settlement, 
charge back the credit, or obtain refund from its customers, but it 
is liable for any loss resulting from the delay.  These rights to 
revoke, charge-back, and obtain refund terminate if and when a 
settlement for the item received by the bank is or becomes final.
	(b)  A collecting bank returns an item when it is sent or 
delivered to the bank's customer or transferor or pursuant to its 
instructions. 
	(c)  A depositary bank that is also the payor may charge-back 
the amount of an item to its customer's account or obtain refund in 
accordance with the section governing return of an item received by 
a payor bank for credit on its books (Section 4.301).
	(d)  The right to charge-back is not affected by:                              
		(1)  previous use of a credit given for the item;  or                         
		(2)  failure by any bank to exercise ordinary care with 
respect to the item, but a bank so failing remains liable.
	(e)  A failure to charge-back or claim refund does not affect 
other rights of the bank against the customer or any other party.
	(f)  If credit is given in dollars as the equivalent of the 
value of an item payable in foreign money, the dollar amount of any 
charge-back or refund must be calculated on the basis of the 
bank-offered spot rate for the foreign money prevailing on the day 
when the person entitled to the charge-back or refund learns that it 
will not receive payment in ordinary course.

Acts 1967, 60th Leg., p. 2343, ch. 785, § 1, eff. Sept. 1, 1967.  
Renumbered from § 4.212 and amended by Acts 1995, 74th Leg., ch. 
921, § 4, eff. Jan. 1, 1996.

Last modified: August 10, 2007