2007 Oregon Code - Chapter 74 :: Chapter 74 - Bank Deposits and Collections
Chapter 74 Bank
Deposits and Collections
2007 EDITION
BANK DEPOSITS AND COLLECTIONS
COMMERCIAL TRANSACTIONS
GENERAL PROVISIONS
74.1010 Short
title
74.1020 Applicability
74.1030 Variation
by agreement; measure of damages; action constituting ordinary care
74.1040 Definitions
and index of definitions
74.1050 Bank;
depositary bank; intermediary bank; collecting bank; payor bank; presenting
bank
74.1060 Payable
through or payable at bank; collecting bank
74.1070 Separate
office of bank for computing time for actions, notices and orders
74.1080 Time
of receipt of items
74.1090 Waiver
of time limits; when delay excused
74.1110 Statute
of limitations
74.1120 Electronic
presentment
COLLECTION OF ITEMS
(Depositary and Collecting Banks)
74.2010 Status
of collecting bank as agent and provisional status of credits; applicability of
chapter; item indorsed pay any bank
74.2020 Responsibility
for collection; when action timely
74.2030 Effect
of instructions
74.2040 Methods
of sending and presenting; presentment
74.2050 Depositary
bank as holder of unindorsed item
74.2060 Transfer
between banks
74.2070 Warranties
of customer and collecting bank on transfer of item; dishonor of item;
remedies; when claim accrues
74.2080 Presentment
warranties; remedies; defenses; payment of dishonored draft; warranty
disclaimer not applicable to checks; when warranty claim accrues
74.2090 Encoding
and retention warranties; remedies
74.2100 Security
interest of collecting bank in items; priority
74.2110 Bank
as holder in due course
74.2120 Presentment
by notice of item not payable by, through or at bank; liability of drawer or
indorser
74.2130 Medium
and time of settlement by bank
74.2140 Right
of charge-back or refund; liability of collecting bank; return of item
74.2150 Final
payment of item by payor bank; when provisional debits and credits become
final; when certain credits become available for withdrawal
74.2160 Insolvency
and preference
(Payor Banks)
74.3010 Deferred
posting; recovery of payment by return of items; time of dishonor; return of
items by payor bank
74.3020 Payor
banks responsibility for late return of item; defenses to liability of payor
bank
74.3030 When
items subject to notice, stop payment order, legal process or setoff; order in
which items may be charged or certified; cutoff hour for checks
RELATIONSHIP BETWEEN PAYOR BANK AND ITS
CUSTOMER
74.4010 When
bank may charge customers account
74.4020 Banks
liability to customer for wrongful dishonor; time of determining insufficiency
of account
74.4030 Customers
right to stop payment; duration of stop payment order; burden of proof of loss
74.4040 Bank
not obligated to pay check more than six months old
74.4050 Death
or incompetence of customer
74.4060 Statements
to customer; requirements; retaining copies of items; duty of customer to
determine unauthorized payment; allocation of loss
74.4070 Payor
banks right to subrogation on improper payment
COLLECTION OF DOCUMENTARY DRAFTS
74.5010 Handling
of documentary drafts; duty to send for presentment and to notify customer of
dishonor
74.5020 Presentment
of on arrival drafts
74.5030 Responsibility
of presenting bank for documents and goods; report of reasons for dishonor;
referee in case of need
74.5040 Privilege
of presenting bank to deal with goods; security interest for expenses
74.010, 74.020, 74.030, 74.040,
74.050, 74.060, 74.070, 74.080, 74.090, 74.100, 74.110, 74.120, 74.130, 74.140,
74.150, 74.160, 74.170, 74.180, 74.190, 74.200, 74.210, 74.220, 74.230, 74.240,
74.250, 74.260, 74.270, 74.280, 74.290, 74.300, 74.310, 74.320, 74.330, 74.340,
74.350, 74.360, 74.370, 74.380, 74.390, 74.400, 74.410, 74.420, 74.430, 74.440,
74.450, 74.460, 74.470, 74.480, 74.490 [Repealed by 1961 c.726 §427]
74.500 [Renumbered 165.655]
74.510 [Renumbered 165.660]
74.520 [Renumbered 165.665]
74.530 [Renumbered 165.670]
74.540 [Renumbered 165.675]
74.550 [Renumbered 165.680]
74.560,
74.570, 74.580, 74.590
[Repealed by 1961 c.726 §427]
GENERAL
PROVISIONS
74.1010
Short title. This chapter
may be cited as Uniform Commercial CodeBank Deposits and Collections. [1961
c.726 §74.1010]
74.1020
Applicability. (1) To the
extent that items within this chapter are also within ORS chapters 73 and 78,
they are subject to those chapters. If there is conflict, this chapter and ORS
chapter 78 govern ORS chapter 73.
(2) The liability of a bank for action or
nonaction with respect to an item handled by it for purposes of presentment,
payment or collection is governed by the law of the place where the bank is
located. In the case of action or nonaction by or at a branch or separate
office of a bank, its liability is governed by the law of the place where the
branch or separate office is located. [1961 c.726 §74.1020; 1993 c.545 §73;
1995 c.79 §25]
74.1030
Variation by agreement; measure of damages; action constituting ordinary care. (1) The effect of the provisions of this
chapter may be varied by agreement, but the parties to the agreement cannot
disclaim a banks responsibility for its lack of good faith or failure to
exercise ordinary care or limit the measure of damages for the lack or failure.
However, the parties may determine by agreement the standards by which the banks
responsibility is to be measured if those standards are not manifestly
unreasonable.
(2) Federal reserve regulations and
operating circulars, clearing house rules, and the like have the effect of
agreements under subsection (1) of this section whether or not specifically
assented to by all parties interested in items handled.
(3) Action or nonaction approved by this
chapter or pursuant to Federal Reserve regulations or operating circulars is
the exercise of ordinary care and, in the absence of special instructions,
action or nonaction consistent with clearing house rules and the like or with a
general banking usage not disapproved by this chapter, is prima facie the
exercise of ordinary care.
(4) The specification or approval of
certain procedures by this chapter is not disapproval of other procedures that
may be reasonable under the circumstances.
(5) The measure of damages for failure to
exercise ordinary care in handling an item is the amount of the item reduced by
an amount that could not have been realized by the exercise of ordinary care.
If there is bad faith it includes any other damages the party suffered as a
proximate consequence. [1961 c.726 §74.1030; 1993 c.545 §74]
74.1040
Definitions and index of definitions. (1) In this chapter, unless the context otherwise requires:
(a) Account means any deposit or credit
account with a bank, including a demand, time, savings, passbook, share draft
or like account, other than an account evidenced by a certificate of deposit.
(b) Afternoon means the period of a day
between noon and midnight.
(c) Banking day has the meaning given
that term in ORS 708A.650.
(d) Clearing house means an association
of banks or other payors regularly clearing items.
(e) Customer means a person having an
account with a bank or for whom a bank has agreed to collect items, including a
bank that maintains an account at another bank.
(f) Documentary draft means a draft to
be presented for acceptance or payment if specified documents, certificated
securities defined in ORS 78.1020 or instructions for uncertificated securities
described in ORS 78.1020, or other certificates, statements or the like are to
be received by the drawee or other payor before acceptance or payment of the
draft.
(g) Draft means a draft as defined in
ORS 73.0104 or an item, other than an instrument, that is an order.
(h) Drawee means a person ordered in a
draft to make payment.
(i) Item means an instrument or a
promise or order to pay money handled by a bank for collection or payment. The
term does not include a payment order governed by ORS chapter 74A or a credit
or debit card slip.
(j) Midnight deadline with respect to a
bank is midnight on its next banking day following the banking day on which it
receives the relevant item or notice or from which the time for taking action
commences to run, whichever is later.
(k) Settle means to pay in cash, by
clearing house settlement, in a charge or credit or by remittance, or otherwise
as agreed. A settlement may be either provisional or final.
(L) Suspends payments with respect to a
bank means that it has been closed by order of the supervisory authorities,
that a public officer has been appointed to take it over, or that it ceases or
refuses to make payments in the ordinary course of business.
(2) Other definitions applying to this
chapter and the sections in which they appear are:
(a) Agreement for electronic presentment,
as defined in ORS 74.1100.
(b) Bank, as defined in ORS 74.1050.
(c) Collecting bank, as defined in ORS
74.1050.
(d) Depositary bank, as defined in ORS
74.1050.
(e) Intermediary bank, as defined in ORS
74.1050.
(f) Payor bank, as defined in ORS
74.1050.
(g) Presenting bank, as defined in ORS
74.1050.
(h) Presentment notice, as defined in
ORS 74.1100.
(3) The following definitions in other
sections apply to this chapter:
(a) Acceptance, as defined in ORS
73.0409.
(b) Alteration, as defined in ORS
73.0407.
(c) Cashiers check, as defined in ORS
73.0104.
(d) Certificate of deposit, as defined
in ORS 73.0104.
(e) Certified check, as defined in ORS
73.0409.
(f) Check, as defined in ORS 73.0104.
(g) Good faith, as defined in ORS
73.0103.
(h) Holder in due course, as defined in
ORS 73.0302.
(i) Instrument, as defined in ORS
73.0104.
(j) Notice of dishonor, as defined in
ORS 73.0503.
(k) Order, as defined in ORS 73.0103.
(L) Ordinary care, as defined in ORS
73.0103.
(m) Person entitled to enforce, as
defined in ORS 73.0301.
(n) Presentment, as defined in ORS
73.0501.
(o) Promise, as defined in ORS 73.0103.
(p) Prove, as defined in ORS 73.0103.
(q) Tellers check, as defined in ORS
73.0104.
(r) Unauthorized signature, as defined
in ORS 73.0403.
(4) In addition, ORS chapter 71 contains
general definitions and principles of construction and interpretation
applicable throughout this chapter. [1961 c.726 §74.1040; 1993 c.220 §1; 1993
c.545 §75; 1995 c.328 §67; 1997 c.631 §379]
74.1050
Bank; depositary bank; intermediary bank; collecting bank; payor bank;
presenting bank. In this
chapter:
(1) Bank means a financial institution,
as defined in ORS 706.008.
(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. [1961 c.726 §74.1050; 1993 c.545 §76;
1997 c.631 §380]
74.1060
Payable through or payable at bank; collecting bank. (1) If an item states that it is payable
through a bank identified in the item:
(a) The item designates the bank as a
collecting bank and does not by itself authorize the bank to pay the item; and
(b) The item may be presented for payment
only by or through the bank.
(2) If an item states that it is payable
at a bank identified in the item:
(a) The item designates the bank as a
collecting bank and does not by itself authorize the bank to pay the item; and
(b) The item may be presented for payment
only by or through the bank.
(3) If a draft names a nonbank drawee and
it is unclear whether a bank named in the draft is a co-drawee or a collecting
bank, the bank is a collecting bank. [1961 c.726 §74.1060; 1963 c.402 §2; 1993
c.545 §77]
74.1070
Separate office of bank for computing time for actions, notices and orders. A bank or separate office of a bank is a
separate bank for the purpose of computing the time within which and
determining the place at or to which action may be taken or notices or orders
must be given under this chapter and ORS chapter 73. [1961 c.726 §74.1070; 1993
c.545 §78]
74.1080
Time of receipt of items.
(1) For the purpose of allowing time to process items, prove balances and make
the necessary entries on its books to determine its position for a day, a bank
may fix an afternoon hour of 2 p.m. or later as a cut-off hour for
the handling of money and items and the making of entries on its books.
(2) An item or deposit of money received
on any day after a cut-off hour so fixed or after the close of the banking day
may be treated as being received at the opening of the next banking day. [1961
c.726 §74.1080; 1993 c.545 §79]
74.1090
Waiver of time limits; when delay excused. (1) Unless otherwise instructed, a collecting bank in a good faith
effort to secure payment of a specific item drawn on a payor other than a bank,
and with or without the approval of any person involved, may waive, modify or
extend time limits imposed or permitted by the Uniform Commercial Code for a
period not exceeding two additional banking days without discharge of drawers or
indorsers or liability to its transferor or a prior party.
(2) Delay by a collecting bank or payor
bank beyond time limits prescribed or permitted by the Uniform Commercial Code
or by instructions is excused if:
(a) The delay is caused by interruption of
communication or computer facilities, suspension of payments by another bank,
war, emergency conditions, failure of equipment or other circumstances beyond
the control of the bank; and
(b) The bank exercises such diligence as
the circumstances require. [1993 c.545 §81]
74.1110
Statute of limitations. An
action to enforce an obligation, duty or right arising under this chapter must
be commenced within three years after the claim for relief accrues. [1993 c.545
§83]
74.1120
Electronic presentment. (1) 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 made by transmission of an image of an item or information describing
the item (presentment notice) rather than delivery of the item itself. The
agreement may provide for procedures governing retention, presentment, payment,
dishonor and other matters concerning items subject to the agreement.
(2) Presentment of an item pursuant to an
agreement for presentment is made when the presentment notice is received.
(3) If presentment is made by presentment
notice, a reference to item or check in this chapter means the presentment
notice unless the context otherwise indicates. [1993 c.545 §82]
COLLECTION OF
ITEMS
(Depositary
and Collecting Banks)
74.2010
Status of collecting bank as agent and provisional status of credits;
applicability of chapter; item indorsed pay any bank. (1) Unless a contrary intent clearly appears
and before the time that a settlement given by a collecting bank for an item is
or becomes final the bank, with respect to the item, is an agent or subagent of
the owner of the item and any settlement given for the item is provisional.
This provision applies regardless of the form of indorsement or lack of
indorsement and even though credit given for the item is subject to immediate
withdrawal as of right or is in fact withdrawn; but the continuance of
ownership of an item by its owner and any rights of the owner to proceeds of
the item are subject to rights of a collecting bank, such as those resulting
from outstanding advances on the item and rights of recoupment or setoff. If an
item is handled by banks for purposes of presentment, payment, collection or
return, the relevant provisions of this chapter apply even though action of the
parties clearly establishes that a particular bank has purchased the item and
is the owner of it.
(2) After an item has been indorsed with
the words pay any bank or the like, only a bank may acquire the rights of a
holder until the item has been:
(a) Returned to the customer initiating
collection; or
(b) Specially indorsed by a bank to a
person who is not a bank. [1961 c.726 §74.2010; 1993 c.545 §84]
74.2020
Responsibility for collection; when action timely. (1) A collecting bank must exercise ordinary
care in:
(a) Presenting an item or sending it for
presentment;
(b) Sending notice of dishonor or
nonpayment or returning an item other than a documentary draft to the banks
transferor after learning that the item has not been paid or accepted, as the
case may be;
(c) Settling for an item when the bank
receives final settlement; and
(d) Notifying its transferor of any loss
or delay in transit within a reasonable time after discovery thereof.
(2) A collecting bank exercises ordinary
care under subsection (1) of this section by taking proper action before its
midnight deadline following receipt of an item, notice or settlement. Taking
proper action within a reasonably longer time may constitute the exercise of
ordinary care, but the bank has the burden of establishing timeliness.
(3) Subject to subsection (1)(a) of this
section, a bank is not liable for the insolvency, neglect, misconduct, mistake
or default of another bank or person or for loss or destruction of an item in
the possession of others or in transit. [1961 c.726 §74.2020; 1993 c.545 §85]
74.2030
Effect of instructions.
Subject to ORS 73.0420 concerning conversion of instruments and ORS chapter 73
and this chapter concerning restrictive indorsements, only a collecting banks
transferor can give instructions that affect the bank or constitute notice to
it, and a collecting bank is not liable to prior parties for any action taken
pursuant to the instructions or in accordance with any agreement with its
transferor. [1961 c.726 §74.2030; 1993 c.545 §86]
74.2040
Methods of sending and presenting; presentment. (1) A collecting bank shall send items by a
reasonably prompt method, taking into consideration relevant instructions, the
nature of the item, the number of those items on hand, the cost of collection
involved, and the method generally used by it or others to present those items.
(2) A collecting bank may send:
(a) An item directly to the payor bank;
(b) An item to a nonbank payor if
authorized by its transferor; and
(c) An item other than documentary drafts
to a nonbank payor, if authorized by Federal Reserve regulation or operating
circular, clearing house rule or the like.
(3) Presentment may be made by a presenting
bank at a place where the payor bank or other payor has requested that
presentment be made. [1961 c.726 §74.2040; 1963 c.402 §3; 1993 c.545 §87]
74.2050
Depositary bank as 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 it receives the item for collection if the customer at
the time of delivery was a holder of the item, whether or not the customer
indorses the item, and, if the bank satisfies the other requirements of ORS
73.0302, it is a holder in due course; and
(2) The depositary bank warrants to
collecting banks, the payor bank or other payor, and the drawer that the amount
of the item was paid to the customer or deposited to the customers account. [1961
c.726 §74.2050; 1993 c.545 §88]
74.2060
Transfer between banks. Any
agreed method that identifies the transferor bank is sufficient for the items
further transfer to another bank. [1961 c.726 §74.2060; 1993 c.545 §89]
74.2070
Warranties of customer and collecting bank on transfer of item; dishonor of
item; remedies; when claim accrues. (1) A customer or collecting bank that transfers an item and receives
a settlement or other consideration warrants to the transferee and to any
subsequent collecting bank that:
(a) The warrantor is a person entitled to
enforce the item;
(b) All signatures on the item are
authentic and authorized;
(c) The item has not been altered;
(d) The item is not subject to a defense
or claim in recoupment under ORS 73.0305 (1) of any party that can be asserted
against the warrantor;
(e) The warrantor has no knowledge of any
insolvency proceeding commenced with respect to the maker or acceptor or, in
the case of an unaccepted draft, the drawer; and
(f) If the item is a demand draft,
creation of the item according to the terms on its face was authorized by the
person identified as drawer.
(2) If an item is dishonored, a customer
or collecting bank transferring the item and receiving settlement or other
consideration is obliged to pay the amount due on the item according to the
terms of the item at the time it was transferred, or if the transfer was of an
incomplete item, according to its terms when completed as stated in ORS 73.0115
and 73.0407. The obligation of a transferor is owed to the transferee and to
any subsequent collecting bank that takes the item in good faith. A transferor
cannot disclaim its obligation under this subsection by an indorsement stating
that it is made without recourse or otherwise disclaiming liability.
(3) A person to whom the warranties under
subsection (1) of this section are made and who took the item in good faith may
recover from the warrantor as damages for breach of warranty an amount equal to
the loss suffered as a result of the breach, but not more than the amount of
the item plus expenses and loss of interest incurred as a result of the breach.
(4) The warranties stated in subsection
(1) of this section cannot be disclaimed with respect to checks. Unless notice
of a claim for breach of warranty is given to the warrantor within 30 days
after the claimant has reason to know of the breach and the identity of the
warrantor, the warrantor is discharged to the extent of any loss caused by the
delay in giving notice of the claim.
(5) A claim for relief for breach of
warranty under this section accrues when the claimant has reason to know of the
breach.
(6) If the warranty in subsection (1)(f)
of this section is not given by a transferor under applicable conflict of law
rules, then the warranty is not given to that transferor when that transferor
is a transferee. [1961 c.726 §74.2070; 1993 c.545 §90; 1997 c.822 §5]
74.2080
Presentment warranties; remedies; defenses; payment of dishonored draft;
warranty disclaimer not applicable to checks; when warranty claim accrues. (1) If an unaccepted draft is presented to
the drawee for payment or acceptance and the drawee pays or accepts the draft,
the person obtaining payment or acceptance, at the time of presentment, and a
previous transferor of the draft, at the time of transfer, warrant to the
drawee that pays or accepts the draft in good faith that:
(a) The warrantor is, or was, at the time
the warrantor transferred the draft, a person entitled to enforce the draft or
authorized to obtain payment or acceptance of the draft on behalf of a person
entitled to enforce the draft;
(b) The draft has not been altered;
(c) The warrantor has no knowledge that
the signature of the purported drawer of the draft is unauthorized; and
(d) If the draft is a demand draft,
creation of the draft according to the terms on its face was authorized by the
person identified as drawer.
(2) A drawee making payment may recover
from a warrantor damages for breach of warranty equal to the amount paid by the
drawee less the amount the drawee received or is entitled to receive from the
drawer because of the payment. In addition, the drawee is entitled to
compensation for expenses and loss of interest resulting from the breach. The
right of the drawee to recover damages under this subsection is not affected by
any failure of the drawee to exercise ordinary care in making payment. If the
drawee accepts the draft:
(a) Breach of warranty is a defense to the
obligation of the acceptor; and
(b) If the acceptor makes payment with
respect to the draft, the acceptor is entitled to recover from a warrantor for
breach of warranty the amounts stated in this subsection.
(3) If a drawee asserts a claim for breach
of warranty under subsection (1) of this section based on an unauthorized
indorsement of the draft or an alteration of the draft, the warrantor may
defend by proving that the indorsement is effective under ORS 73.0404 or
73.0405 or the drawer is precluded under ORS 73.0405 or 74.4060 from asserting
against the drawee the unauthorized indorsement or alteration.
(4) If a dishonored draft is presented for
payment to the drawer or an indorser or any item is presented for payment to a
party obliged to pay the item, and the item is paid, the person obtaining
payment and a prior transferor of the item warrant to the person making payment
in good faith that the warrantor is, or was, at the time the warrantor
transferred the item, a person entitled to enforce the item or authorized to
obtain payment on behalf of a person entitled to enforce the item. The person
making payment may recover from any warrantor for breach of warranty an amount
equal to the amount paid plus expenses and loss of interest resulting from the
breach.
(5) The warranties stated in subsections
(1) and (4) of this section cannot be disclaimed with respect to checks. Unless
notice of a claim for breach of warranty is given to the warrantor within 30
days after the claimant has reason to know of the breach and the identity of
the warrantor, the warrantor is discharged to the extent of any loss caused by
the delay in giving notice of the claim.
(6) A claim for relief for breach of
warranty under this section accrues when the claimant has reason to know of the
breach.
(7) A demand draft is a check, as defined
in ORS 73.0104 (6).
(8) If the warranty in subsection (1)(d)
of this section is not given by a transferor under applicable conflict of law
rules, then the warranty is not given to that transferor when that transferor
is a transferee. [1961 c.726 §74.2080; 1993 c.545 §91; 1997 c.822 §6]
74.2090
Encoding and retention warranties; remedies. (1) A person who encodes information on or with respect to an item
after issue warrants to any subsequent collecting bank and to the payor bank or
other payor that the information is correctly encoded. If the customer of a
depositary bank encodes, that bank also makes the warranty.
(2) A person who undertakes to retain an
item pursuant to an agreement for electronic presentment warrants to any
subsequent collecting bank and to the payor bank or other payor that retention
and presentment of the item comply with the agreement. If the customer of a
depositary bank undertakes to retain an item, that bank also makes this
warranty.
(3) A person to whom warranties are made
under this section and who took the item in good faith may recover from the
warrantor as damages for breach of warranty an amount equal to the loss
suffered as a result of the breach, plus expenses and loss of interest incurred
as a result of the breach. [1961 c.726 §74.2090; 1993 c.545 §92]
74.2100
Security interest of collecting bank in items; priority. (1) A collecting bank has a security
interest in an item and in any accompanying documents or in the proceeds of
either:
(a) In case of an item deposited in an account,
to the extent to which credit given for the item has been withdrawn or applied;
(b) In case of an item for which it has
given credit available for withdrawal as of right, to the extent of the credit
given, whether or not the credit is drawn upon or there is a right of
charge-back; or
(c) If it makes an advance on or against
the item.
(2) If credit given for several items
received at one time or pursuant to a single agreement is withdrawn or applied
in part, the security interest remains upon all the items, any accompanying
documents or the proceeds of either. For the purpose of this action, credits
first given are first withdrawn.
(3) Receipt by a collecting bank of a
final settlement for an item is a realization on its security interest in the item,
accompanying documents and proceeds. So long as the bank does not receive final
settlement for the item or give up possession of the item or accompanying
documents for purposes other than collection, the security interest continues
to that extent and is subject to ORS chapter 79, but:
(a) No security agreements are necessary
to make the security interest enforceable under ORS 79.0203 (2)(c)(A);
(b) No filing is required to perfect the
security interest; and
(c) The security interest has priority over
conflicting perfected security interests in the item, accompanying documents or
proceeds. [1961 c.726 §74.2100; 1993 c.545 §93; 2001 c.445 §146]
74.2110
Bank as 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 in an item, if the bank
otherwise complies with the requirements of ORS 73.0302 on what constitutes a
holder in due course. [1961 c.726 §74.2110; 1993 c.545 §94]
74.2120
Presentment by notice of item not payable by, through or at bank; liability of
drawer or indorser. (1)
Unless otherwise instructed, a collecting bank may present an item not payable
by, through or at a bank by sending to the party to accept or pay a written
notice that the bank holds the item for acceptance or payment. The notice must
be sent in time to be received on or before the day when presentment is due and
the bank must meet any requirement of the party to accept or pay under ORS
73.0501 by the close of the banks next banking day after it knows of the
requirement.
(2) If presentment is made by notice, and
payment, acceptance or request for compliance with a requirement under ORS
73.0501 is not received by the close of business on the day after maturity or,
in the case of demand items, by the close of business on the third banking day
after notice was sent, the presenting bank may treat the item as dishonored and
charge any drawer or indorser by sending it notice of the facts. [1961 c.726 §74.2120;
1985 c.436 §1; 1993 c.545 §95; 1995 c.79 §26]
74.2130
Medium and time of settlement by bank. (1) 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 and the like, or agreement. In the absence of such
prescription:
(a) The medium of settlement is cash or
credit to an account in a Federal Reserve Bank of or specified by the person to
receive settlement; and
(b) The time of settlement is:
(A) With respect to tender of settlement
by cash, a cashiers check or tellers check, when the cash or check is sent or
delivered;
(B) With respect to tender of settlement
by credit in an account in a Federal Reserve Bank, when the credit is made;
(C) With respect to tender of settlement
by a credit or debit to an account in a bank, when the credit or debit is made
or, in the case of tender of settlement by authority to charge an account, when
the authority is sent or delivered; or
(D) With respect to tender of settlement
by a funds transfer, when payment is made pursuant to subsection (1) of this
section or ORS 74A.4060 to the person receiving settlement.
(2) If the tender of settlement is not by
a medium authorized by subsection (1) of this section or the time of settlement
is not fixed by subsection (1) of this section, no settlement occurs until the
tender of settlement is accepted by the person receiving settlement.
(3) If settlement for an item is made by
cashiers check or tellers check and the person receiving settlement, before
its midnight deadline:
(a) Presents or forwards the check for
collection, settlement is final when the check is finally paid; or
(b) Fails to present or forward the check
for collection, settlement is final at the midnight deadline of the person
receiving settlement.
(4) If settlement for an item is made by
giving authority to charge the account of the bank giving settlement in the
bank receiving settlement, settlement is final when the charge is made by the
bank receiving settlement if there are funds available in the account for the
amount of the item. [1961 c.726 §74.2130; 1993 c.545 §96]
74.2140
Right of charge-back or refund; liability of collecting bank; return of item. (1) 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 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
customers 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 banks
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 customer, but it is liable for any loss resulting from the delay. The
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.
(2) A collecting bank returns an item when
it is sent or delivered to the banks customer or transferor or pursuant to its
instructions.
(3) A depositary bank that is also the
payor may charge back the amount of an item to its customers account or obtain
refund in accordance with the provision governing return of an item received by
a payor bank for credit on its books as provided in ORS 74.3010.
(4) The right to charge back is not
affected by:
(a) Previous use of a credit given for the
item; or
(b) Failure by any bank to exercise
ordinary care with respect to the item, but a 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 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. [1961 c.726 §74.2140; 1993 c.545 §97]
74.2150
Final payment of item by payor bank; when provisional debits and credits become
final; when certain credits become available for withdrawal. (1) An item is finally paid by a payor bank
when the bank has first done any of the following:
(a) Paid the item in cash;
(b) Settled for the item without having a
right to revoke the settlement under statute, clearing house rule or agreement;
or
(c) Made a provisional settlement for the
item and failed to revoke the settlement in the time and manner permitted by
statute, clearing house rule or agreement.
(2) If provisional settlement for an item
does not become final, the item is not finally paid.
(3) If provisional settlement for an item
between the presenting and payor banks is made through a clearing house or by
debits or credits in an account between them, then to the extent that
provisional debits or credits for the item are entered in accounts between the
presenting and payor banks or between the presenting and successive prior
collecting banks seriatim, they become final upon final payment of the items by
the payor bank.
(4) If a collecting bank receives a
settlement for an item which is or becomes final, the bank is accountable to
its customer for the amount of the item and any provisional credit given for
the item in an account with its customer becomes final.
(5) Subject to applicable law stating a
time for availability of funds and any right of the bank to apply the credit to
an obligation of the customer, credit given by a bank for an item in a customers
account becomes available for withdrawal as of right:
(a) If the bank has received a provisional
settlement for the item, when the settlement becomes final and the bank has had
a reasonable time to receive return of the item and the item has not been
received within that time; or
(b) If the bank is both the depositary
bank and the payor bank, and the item is finally paid, at the opening of the
banks second banking day following receipt of the item.
(6) Subject to applicable law stating a
time for availability of funds and any right of a bank to apply a deposit to an
obligation of the depositor, a deposit of money becomes available for
withdrawal as of right at the opening of the banks next banking day after
receipt of the deposit. [1993 c.545 §99]
74.2160
Insolvency and preference.
(1) If an item is in or comes into the possession of a payor or collecting bank
that suspends payment and the item has not been finally paid, the item must be
returned by the receiver, trustee or agent in charge of the closed bank to the
presenting bank or the closed banks customer.
(2) If a payor bank finally pays an item
and suspends payments without making a settlement for the item with its
customer or the presenting bank which settlement is or becomes final, the owner
of the item has a preferred claim against the payor bank.
(3) If a payor bank gives or a collecting
bank gives or receives a provisional settlement for an item and thereafter
suspends payments, the suspension does not prevent or interfere with the
settlements becoming final if the finality occurs automatically upon the lapse
of certain time or the happening of certain events.
(4) If a collecting bank receives from
subsequent parties settlement for an item, which settlement is or becomes final
and the bank suspends payments without making a settlement for the item with
its customer which settlement is or becomes final, the owner of the item has a
preferred claim against the collecting bank. [1993 c.545 §100]
(Payor Banks)
74.3010
Deferred posting; recovery of payment by return of items; time of dishonor;
return of items by payor bank.
(1) If a payor bank settles for a demand item other than a documentary draft
presented otherwise than for immediate payment over the counter before midnight
of the banking day of receipt, the payor bank may revoke the settlement and
recover the settlement if, before it has made final payment and before its
midnight deadline, it:
(a) Returns the item; or
(b) Sends written notice of dishonor or
nonpayment if the item is unavailable for return.
(2) If a demand item is received by a
payor bank for credit on its books it may return the item or send notice of
dishonor and may revoke any credit given or recover the amount thereof withdrawn
by its customer, if it acts within the time limit and in the manner specified
in subsection (1) of this section.
(3) Unless previous notice of dishonor has
been sent, an item is dishonored at the time when for purposes of dishonor it
is returned or notice sent in accordance with this section.
(4) An item is returned:
(a) As to an item presented through a
clearing house, when it is delivered to the presenting or last collecting bank
or to the clearing house or is sent or delivered in accordance with clearing
house rules; or
(b) In all other cases, when it is sent or
delivered to the banks customer or transferor or pursuant to instructions of
the customer or transferor. [1961 c.726 §74.3010; 1993 c.545 §101]
74.3020
Payor banks responsibility for late return of item; defenses to liability of
payor bank. (1) Pursuant to
ORS 74.2070 (1), if an item is presented to and received by a payor bank, the
bank is accountable for the amount of:
(a) A demand item, other than a
documentary draft, whether properly payable or not, if the bank, in any case in
which it is not also the depositary bank, retains the item beyond midnight of
the banking day of receipt without settling for it or, whether or not it is
also the depositary bank, does not pay or return the item or send notice of
dishonor until after its midnight deadline; or
(b) Any other properly payable item unless
within the time allowed for acceptance or payment of that item the bank either
accepts or pays the item or returns it and accompanying documents.
(2) The liability of a payor bank to pay
an item pursuant to subsection (1) of this section is subject to defenses based
on breach of a presentment warranty under ORS 74.2080 or proof that the person
seeking enforcement of the liability presented or transferred the item for the
purpose of defrauding the payor bank. [1961 c.726 §74.3020; 1993 c.545 §102]
74.3030
When items subject to notice, stop payment order, legal process or setoff;
order in which items may be charged or certified; cutoff hour for checks. (1) 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, suspend or modify the banks right or duty to
pay an item or to charge its customers account for the item if the knowledge,
notice, stop payment order or legal process is received or served and a
reasonable time for the bank to act thereon expires or the setoff is exercised
after the earliest of the following:
(a) The bank accepts or certifies the
item;
(b) The bank pays the item in cash;
(c) The bank settles for the item without
having a right to revoke the settlement under statute, clearing house rule or
agreement;
(d) The bank becomes accountable for the
amount of the item under ORS 74.3020 dealing with the payor banks
responsibility for late return of items; or
(e) With respect to checks, a cut-off hour
no earlier than one hour after the opening of the next banking day after the
banking day on which the bank received the check and no later than the close of
that next banking day or, if no cut-off hour is fixed, the close of the next
banking day after the banking day on which the bank received the check.
(2) Subject to subsection (1) of this
section items may be accepted, paid, certified or charged to the indicated
account of its customer in any order. [1961 c.726 §74.3030; 1993 c.545 §103]
RELATIONSHIP
BETWEEN PAYOR BANK AND ITS CUSTOMER
74.4010
When bank may charge customers account. (1) 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 bank.
(2) A customer is not liable for the
amount of an overdraft if the customer neither signed the item nor benefits
from the proceeds of the item.
(3) 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 ORS 74.4030 (2) 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 ORS 74.3030. 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 ORS
74.4020.
(4) A bank that in good faith makes
payment to a holder may charge the indicated account of its customer according
to:
(a) The original terms of the altered
item; or
(b) 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. [1961 c.726 §74.4010; 1993 c.545 §104]
74.4020
Banks liability to customer for wrongful dishonor; time of determining
insufficiency of account.
(1) Except as otherwise provided in this chapter, a payor bank wrongfully
dishonors an item if it dishonors an item that is properly payable. However, a
bank may dishonor an item that would create an overdraft unless it has agreed
to pay the overdraft.
(2) A payor bank is liable to its customer
for damages proximately caused by the wrongful dishonor of an item. Liability
is limited to actual damages proved and may include damages for an arrest or
prosecution of the customer or other consequential damages. Whether any
consequential damages are proximately caused by the wrongful dishonor is a
question of fact to be determined in each case.
(3) A payor banks determination of the
customers account balance on which a decision to dishonor for insufficiency of
available funds is based may be made at a time between the time the item is
received by the payor bank and the time that the payor bank returns the item or
gives notice in lieu of return, and no more than one determination need be
made. If, at the election of the payor bank, a subsequent balance determination
is made for the purpose of reevaluating the banks decision to dishonor the
item, the account balance at that time is determinative of whether a dishonor
for insufficiency of availability funds is wrongful. [1961 c.726 §74.4020; 1993
c.545 §105]
74.4030
Customers right to stop payment; duration of stop payment order; burden of
proof of loss. (1) A
customer or any person authorized to draw on the account if there is more than
one person may stop payment of any item drawn on the customers account or
close the account by an order to the bank describing the item or account with
reasonable certainty received at a time and in a manner that affords the bank a
reasonable opportunity to act on it before any action by the bank with respect
to the item described in ORS 74.3030. If the signature of more than one person
is required to draw on an account, any of these persons may stop payment or
close the account.
(2) A stop payment order is effective for
six months, but it lapses after 14 calendar days if the original order was oral
and was not confirmed in writing within that period. A stop payment order may
be renewed for additional six-month periods by a writing given to the bank
within a period during which the stop payment order is effective.
(3) The burden of establishing the fact
and amount of loss resulting from the payment of an item contrary to a stop
payment order or order to close an account is on the customer. The loss from
payment of an item contrary to a stop payment order may include damages for
dishonor of subsequent items under ORS 74.4020. [1961 c.726 §74.4030; 1993
c.545 §106]
74.4040
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 more than six months after its date, but it may charge its
customers account for a payment made thereafter in good faith. [1961 c.726 §74.4040]
74.4050
Death or incompetence of customer. (1) A payor or collecting banks authority to accept, pay or collect
an item or to account for proceeds of its collection, if otherwise effective,
is not rendered ineffective by incompetence of a customer of either bank
existing at the time the item is issued or its collection is undertaken if the
bank does not know of an adjudication of incompetence. Neither death nor
incompetence of a customer revokes the authority to accept, pay, collect or
account until the bank knows of the fact of death or of an adjudication of
incompetence and has reasonable opportunity to act on it.
(2) Even with knowledge, a bank may for 10
days after the date of death pay or certify checks drawn on or before that date
unless ordered to stop payment by a person claiming an interest in the account.
[1961 c.726 §74.4050; 1993 c.545 §107]
74.4060
Statements to customer; requirements; retaining copies of items; duty of
customer to determine unauthorized payment; allocation of loss. (1) A bank that sends or makes available to
a customer a statement of account showing payment of items for the account
shall either return or make available to the customer the items paid or provide
information in the statement of account sufficient to allow the customer
reasonably to identify the items paid. The statement of account provides
sufficient information if the item is described by item number, amount and date
of payment.
(2) If the items are not returned to the
customer, the person retaining the items shall either retain the items or, if
the items are destroyed, maintain the capacity to furnish legible copies of the
items until the expiration of seven years after receipt of the items. A
customer may request an item from the bank that paid the item, and the bank
must provide in a reasonable time either the item or, if the item has been
destroyed or is not otherwise obtainable, a legible copy of the item.
(3) If a bank sends or makes available a
statement of account or items pursuant to subsection (1) of this section, the
customer must exercise reasonable promptness in examining the statement or the
items to determine whether any payment was not authorized because an alteration
of an item or because a purported signature by or on behalf of the customer was
not authorized. If, based on the statement or items provided, the customer
should reasonably have discovered the unauthorized payment, the customer must
promptly notify the bank of the relevant facts.
(4) If the bank proves that the customer
failed, with respect to an item, to comply with the duties imposed on the
customer by subsection (3) of this section the customer is precluded from
asserting against the bank:
(a) The customers unauthorized signature
or any alteration on the item, if the bank also proves that it suffered a loss
by reason of the failure; and
(b) The customers unauthorized signature
or alteration by the same wrongdoer on any other item paid in good faith by the
bank if the payment was made before the bank received notice from the customer
of the unauthorized signature or alteration and after the customer had been
afforded a reasonable period of time, not exceeding 30 days, in which to
examine the item or statement of account and notify the bank.
(5) If subsection (4) of this section
applies and the customer proves that the bank failed to exercise ordinary care
in paying the item and that the failure substantially contributed to loss, the
loss is allocated between the customer precluded and the bank asserting the
preclusion according to the extent to which the failure of the customer to
comply with subsection (3) of this section and the failure of the bank to exercise
ordinary care contributed to the loss. If the customer proves that the bank did
not pay the item in good faith, the preclusion under subsection (4) of this
section does not apply.
(6) Without regard to care or lack of care
of either the customer or the bank, a customer who does not within 180 days
after the statement or items are made available to the customer as provided in
subsection (1) of this section discover and report the customers unauthorized
signature on or any alteration on the face or back of the item or does not
within 18 months from that time discover and report any unauthorized
indorsement on the item is precluded from asserting against the bank the
unauthorized signature or indorsement or alteration. If there is a preclusion
under this subsection, the payor bank may not recover for breach of warranty
under ORS 74.2080 with respect to the unauthorized signature or indorsement or
alteration to which the preclusion applies. [1961 c.726 §74.4060; 1989 c.604 §1;
1993 c.545 §108]
74.4070
Payor banks 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
closed, or otherwise under circumstances giving a basis for objection by the
drawer or maker, to prevent unjust enrichment and only to the extent necessary
to prevent loss to the bank by reason of its payment of the item, the payor
bank shall be subrogated to the rights:
(1) Of any holder in due course on the
item against the drawer or maker; and
(2) Of the payee or any other holder of
the item against the drawer or maker either on the item or under the
transaction out of which the item arose; and
(3) Of the drawer or maker against the
payee or any other holder of the item with respect to the transaction out of
which the item arose. [1961 c.726 §74.4070; 1993 c.545 §109]
COLLECTION OF
DOCUMENTARY DRAFTS
74.5010
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 draft has
not been paid or accepted in due course, shall seasonably notify its customer
of the fact even though it may have discounted or bought the draft or extended
credit available for withdrawal as of right. [1961 c.726 §74.5010; 1993 c.545 §110]
74.5020
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 its judgment a reasonable time for arrival of the goods has expired.
Refusal to pay or accept because the goods have not arrived is not dishonor;
the bank must notify its transferor of the refusal but need not present the
draft again until it is instructed to do so or learns of the arrival of the
goods. [1961 c.726 §74.5020; 1993 c.545 §111]
74.5030
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 ORS chapter 75,
a bank presenting a documentary draft:
(1) Must deliver the documents to the
drawee on acceptance of the draft if it is payable more than three days after
presentment; otherwise, only on payment; and
(2) Upon dishonor, either in the case of
presentment for acceptance or presentment for payment, may seek and follow
instructions from any referee in case of need designated in the draft or if the
presenting bank does not choose to utilize the referees services, it must use
diligence and good faith to ascertain the reason for dishonor, must notify its
transferor of the dishonor and of the results of its effort to ascertain the
reasons therefor and must request instructions.
However, the
presenting bank is under no obligation with respect to goods represented by the
documents except to follow any reasonable instructions seasonably received; it
has a right to reimbursement for any expense incurred in following instructions
and to prepayment of or indemnity for those expenses. [1961 c.726 §74.5030;
1993 c.545 §112]
74.5040
Privilege of presenting bank to deal with goods; security interest for
expenses. (1) A presenting
bank that, following the dishonor of a documentary draft, has seasonably
requested instructions but does not receive them within a reasonable time may
store, sell, or otherwise deal with the goods in any reasonable manner.
(2) For its reasonable expenses incurred
by action under subsection (1) of this section the presenting bank has a lien
upon the goods or their proceeds, which may be foreclosed in the same manner as
an unpaid sellers lien. [1961 c.726 §74.5040; 1993 c.545 §113]
_______________
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