Code of Alabama - Title 7: Commercial Code - Article 4 - Bank Deposits and Collections

• Part 1 General Provisions and Definitions.
• Section 7-4-101 Short title
  This article may be cited as Uniform Commercial Code - Bank Deposits and Collections.
• Section 7-4-102 Applicability
  (a) To the extent that items within this article are also within Articles 3 and 8, they are subject to those articles. If there is...
• Section 7-4-103 Variation by agreement; measure of damages; action constituting ordinary care
  (a) The effect of the provisions of this article may be varied by agreement, but the parties to the agreement cannot disclaim a bank's responsibility...
• Section 7-4-104 Definitions and index of definitions
  (a) In this article, unless the context otherwise requires: (1) "Account" means any deposit or credit account with a bank, including a demand, time, savings,...
• Section 7-4-105 "Bank"; "depositary bank"; "payor bank"; "intermediary bank"; "collecting bank"; "presenting bank."
  In this article: (1) "Bank" means a person engaged in the business of banking, including a savings bank, savings and loan association, credit union, or...
• Section 7-4-106 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...
• Section 7-4-107 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...
• Section 7-4-108 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...
• Section 7-4-109 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...
• Section 7-4-110 Electronic presentment
  (a) "Agreement for electronic presentment" means an agreement, clearing-house rule, or Federal Reserve regulation or operating circular, providing that presentment of an item may be...
• Section 7-4-111 Statute of limitations; accrual of action
  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....
• Part 2 Collection of Items: Depositary and Collecting Banks.
• Section 7-4-201 Status of collecting bank as agent and provisional status of credits, applicability of article; item indorsed "pay any bank."
  (a) Unless a contrary intent clearly appears and before the time that a settlement given by a collecting bank for an item is or becomes...
• Section 7-4-202 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 nonpayment...
• Section 7-4-203 Effect of instructions
  Subject to Article 3 concerning conversion of instruments (Section 7-3-420) and restrictive indorsements (Section 7-3-206), only a collecting bank's transferor can give instructions that affect...
• Section 7-4-204 Methods of sending and presenting; sending directly to payor bank
  (a) A collecting bank shall send items by a reasonably prompt method, taking into consideration relevant instructions, the nature of the item, the number of...
• Section 7-4-205 Depositary bank holder of unindorsed item
  If a customer delivers an item to a depositary bank for collection: (1) The depositary bank becomes a holder of the item at the time...
• Section 7-4-206 Transfer between banks
  Any agreed method that identifies the transferor bank is sufficient for the item's further transfer to another bank.
• Section 7-4-208 Presentment warranties
  (a) If an unaccepted draft is presented to the drawee for payment or acceptance and the drawee pays or accepts the draft, (i) the person...
• Section 7-4-207 Transfer warranties
  (a) A customer or collecting bank that transfers an item and receives a settlement or other consideration warrants to the transferee and to any subsequent...
• Section 7-4-209 Encoding and retention warranties
  (a) A person who encodes information on or with respect to an item after issue warrants to any subsequent collecting bank and to the payor...
• Section 7-4-210 Security interest of collecting bank in items, accompanying documents, and proceeds
  (a) A collecting bank has a security interest in an item and any accompanying documents or the proceeds of either: (1) In case of an...
• Section 7-4-211 When bank gives value for purposes of holder in due course
  For purposes of determining its status as a holder in due course, a bank has given value to the extent it has a security interest...
• Section 7-4-212 Presentment by notice of item not payable by, through, or at bank; liability of drawer or indorser
  (a) Unless otherwise instructed, a collecting bank may present an item not payable by, through, or at a bank by sending to the party to...
• Section 7-4-213 Medium and time of settlement by bank
  (a) With respect to settlement by a bank, the medium and time of settlement may be prescribed by Federal Reserve regulations or circulars, clearing-house rules,...
• Section 7-4-214 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...
• Section 7-4-215 Final payment of item by payor bank; when provisional debits and credits become final; when certain credits become available for withdrawal
  (a) An item is finally paid by a payor bank when the bank has first done any of the following: (1) Paid the item in...
• Section 7-4-216 Insolvency and preference
  (a) If an item is in or comes into the possession of a payor or collecting bank that suspends payment and the item has not...
• Part 3 Collection of Items: Payor Banks.
• Section 7-4-301 Deferred posting; recovery of payment by return of items; time of dishonor; return of items by payor bank
  (a) If a payor bank settles for a demand item other than a documentary draft presented otherwise than for immediate payment over the counter before...
• Section 7-4-302 Payor bank's responsibility for late return of item
  (a) If an item is presented to and received by a payor bank, the bank is accountable for the amount of: (1) A demand item,...
• Section 7-4-303 When items subject to notice, stop-payment order, legal process, or setoff; order in which items may be charged or certified
  (a) Any knowledge, notice, or stop-payment order received by, legal process served upon, or setoff exercised by a payor bank comes too late to terminate,...
• Part 4 Relationship Between Payor Bank and Its Customer.
• Section 7-4-401 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...
• Section 7-4-402 Bank's liability to customer for wrongful dishonor; time of determining insufficiency of account
  (a) Except as otherwise provided in this article, a payor bank wrongfully dishonors an item if it dishonors an item that is properly payable, but...
• Section 7-4-403 Customer's right to stop payment; burden of proof of loss
  (a) A customer or any person authorized to draw on the account if there is more than one person may stop payment of any item...
• Section 7-4-404 Bank not obligated to pay check more than six months old
  A bank is under no obligation to a customer having a checking account to pay a check, other than a certified check, which is presented...
• Section 7-4-405 Death or incompetence of customer
  (a) A payor or collecting bank's authority to accept, pay, or collect an item or to account for proceeds of its collection, if otherwise effective,...
• Section 7-4-406 Customer's duty to discover and report unauthorized signature or alteration
  (a) A bank that sends or makes available to a customer a statement of account showing payment of items for the account shall either return...
• Section 7-4-407 Payor bank's right to subrogation on improper payment
  If a payor bank has paid an item over the order of the drawer or maker to stop payment, or after an account has been...
• Part 5 Collection of Documentary Drafts.
• Section 7-4-501 Handling of documentary drafts; duty to send for presentment and to notify customer of dishonor
  A bank that takes a documentary draft for collection shall present or send the draft and accompanying documents for presentment and, upon learning that the...
• Section 7-4-502 Presentment of "on arrival" drafts
  If a draft or the relevant instructions require presentment "on arrival", "when goods arrive" or the like, the collecting bank need not present until in...
• Section 7-4-503 Responsibility of presenting bank for documents and goods; report of reasons for dishonor; referee in case of need
  Unless otherwise instructed and except as provided in Article 5, a bank presenting a documentary draft: (1) Must deliver the documents to the drawee on...
• Section 7-4-504 Privilege of presenting bank to deal with goods; security interest for expenses
  (a) A presenting bank that, following the dishonor of a documentary draft, has seasonably requested instructions but does not receive them within a reasonable time...

Last modified: May 3, 2021