2006 New York Code - Depositary And Collecting Banks

 
  Section 4--212. Right of Charge-Back or Refund.
    (1)  If  a  collecting  bank  has made provisional settlement with its
  customer for an item and itself fails by reason of dishonor,  suspension
  of  payments by a bank or otherwise to receive a settlement for the item
  which 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  items 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. 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 (subsection (3) of  Section  4--211  and
  subsections (2) and (3) of Section 4--213).
    (2)  Within the time and manner prescribed by this section and Section
  4--301, an intermediary or payor bank, as the case may be, may return an
  unpaid item directly to the depositary bank and may send for  collection
  a  draft  on the depositary bank and obtain reimbursement. In such case,
  if the depositary bank has received provisional settlement for the item,
  it must reimburse the bank drawing the draft and any provisional credits
  for the item between banks shall become and remain final.
    (3) A depositary bank which 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).
    (4) The right to charge-back is not affected by
         (a) prior use of the credit given for the item; or
         (b) failure by any bank to exercise ordinary care with respect to
             the item but any bank so failing remains liable.
    (5)  A  failure  to  charge-back or claim refund does not affect other
  rights of the bank against the customer or any other party.
    (6) If credit is given in dollars as the equivalent of the value of an
  item payable in a foreign currency the dollar amount of any  charge-back
  or  refund shall be calculated on the basis of the buying sight rate for
  the foreign currency prevailing on the day when the person  entitled  to
  the  charge-back  or  refund  learns that it will not receive payment in
  ordinary course.