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Texas Business & Commerce Code - Section 4.401. When Bank May Charge Customer's Account

Legal Research Home > Texas Lawyer > Business & Commerce Code > Texas Business & Commerce Code - Section 4.401. When Bank May Charge Customer's Account

§ 4.401. WHEN BANK MAY CHARGE CUSTOMER'S ACCOUNT.  (a) A 
bank may charge against the account of a customer an item that is 
properly payable from that account even though the charge creates 
an overdraft.  An item is properly payable if it is authorized by 
the customer and is in accordance with any agreement between the 
customer and the bank.
	(b)  A customer is not liable for the amount of an overdraft 
if the customer neither signed the item nor benefited from the 
proceeds of the item.
	(c)  A bank may charge against the account of a customer a 
check that is otherwise properly payable from the account, even 
though payment was made before the date of the check, unless the 
customer has given notice to the bank of the postdating describing 
the check with reasonable certainty.  The notice is effective for 
the period stated in Section 4.403(b) for stop-payment orders and 
must be received at such time and in such manner as to afford the 
bank a reasonable opportunity to act on it before the bank takes any 
action with respect to the check described in Section 4.303.  If a 
bank charges against the account of a customer a check before the 
date stated in the notice of postdating, the bank is liable for 
damages for the loss resulting from its act.  The loss may include 
damages for dishonor of subsequent items under Section 4.402.
	(d)  A bank that in good faith makes payment to a holder may 
charge the indicated account of its customer according to:
		(1)  the original terms of the altered item;  or                              
		(2)  the terms of the completed item, even though the 
bank knows the item has been completed, unless the bank has notice 
that the completion was improper.

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