2021 Colorado Code
Title 4 - Uniform Commercial Code
Article 4 - Bank Deposits and Collections
Part 1 - General Provisions and Definitions
§ 4-4-105. “Bank” - “Depositary Bank” - “Intermediary Bank” - “Collecting Bank” - “Payor 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 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;
5. “Collecting bank” means a bank handling an item for collection except the payor bank;
6. “Presenting bank” means a bank presenting an item except a payor bank.

History. Source: L. 94: Entire article amended with relocations, p. 883, § 2, effective January 1, 1995.

1. The definitions in general exclude a bank to which an item is issued, as this bank does not take by transfer except in the particular case covered in which the item is issued to a payee for collection, as in the case in which a corporation is transferring balances from one account to another. Thus, the definition of “depositary bank” does not include the bank to which a check is made payable if a check is given in payment of a mortgage. This bank has the status of a payee under Article 3 on Negotiable Instruments and not that of a collecting bank.

2. Paragraph (1): “Bank” is defined in Section 1-201(4) as meaning “any person engaged in the business of banking.” The definition in paragraph (1) makes clear that “bank” includes savings banks, savings and loan associations, credit unions and trust companies, in addition to the commercial banks commonly denoted by use of the term “bank.”

3. Paragraph (2): A bank that takes an “on us” item for collection, for application to a customer's loan, or first handles the item for other reasons is a depositary bank even though it is also the payor bank. However, if the holder presents the item for immediate payment over the counter, the payor bank is not a depositary bank.

4. Paragraph (3): The definition of “payor bank” is clarified by use of the term “drawee.” That term is defined in Section 4-104 as meaning “a person ordered in a draft to make payment.” An “order” is defined in Section 3-103 as meaning “a written instruction to pay money ... . An authorization to pay is not an order unless the person authorized to pay is also instructed to pay.” The definition of order is incorporated into Article 4 by Section 4-104(c). Thus a payor bank is one instructed to pay in the item. A bank does not become a payor bank by being merely authorized to pay or by being given an instruction to pay not contained in the item.

5. Paragraph (4): The term “intermediary bank” includes the last bank in the collection process if the drawee is not a bank. Usually the last bank is also a presenting bank.

Law reviews. For article, “Payee v. Depository Bank: What is the UCC Defense to Handling Checks Bearing Forged Indorsements?”, see 45 U. Colo. L. Rev. 281 . For article, “Let the Payor Beware: Dishonoring Documentary Drafts”, see 20 Colo. Law. 2263 (1991).

Language of an instrument determines whether a bank is a “collecting bank” or a “payor bank”. Accordingly where the language of a sight draft designated a bank as a “collecting bank”, its liability for mishandling of the draft was limited to the face value of the draft under § 4-4-103 . Shelby Res., LLC v. Wells Fargo Bank, 160 P.3d 387 (Colo. App. 2007).