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| Home > Statutes > Usa Oregon |
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USA Statutes : oregon
Title : TITLE 08 COMMERCIAL TRANSACTIONS
Chapter : Chapter 74 Bank Deposits and Collections
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This chapter may be cited as Uniform
Commercial Code–Bank Deposits and Collections. [1961 c.726 §74.1010] (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](1) The effect of the provisions of this
chapter may be varied by agreement, but the parties to the agreement
cannot disclaim a bank’s 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 bank’s 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] (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) “Cashier’s 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) “Teller’s 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] 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] (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]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] (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] (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] 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] (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)
(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] (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 bank’s 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]Subject to ORS 73.0420 concerning
conversion of instruments and ORS chapter 73 and this chapter concerning
restrictive indorsements, only a collecting bank’s 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] (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] 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 customer’s account. [1961 c.726
§74.2050; 1993 c.545 §88] Any agreed method that identifies
the transferor bank is sufficient for the item’s further transfer to
another bank. [1961 c.726 §74.2060; 1993 c.545 §89](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](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] (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]
(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]Note: For transition provisions regarding secured transactions, see
notes under 79.0628. 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](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 bank’s 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] (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 cashier’s check
or teller’s 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 cashier’s check or
teller’s 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](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 customer’s 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 bank’s 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 bank’s 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 customer’s 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](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 customer’s 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 bank’s 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 bank’s next banking day after receipt of the
deposit. [1993 c.545 §99] (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 bank’s 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 settlement’s 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)(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 bank’s
customer or transferor or pursuant to instructions of the customer or
transferor. [1961 c.726 §74.3010; 1993 c.545 §101](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](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 bank’s right or
duty to pay an item or to charge its customer’s 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 bank’s 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 (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](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 bank’s determination of the customer’s 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 bank’s 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](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 customer’s 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] 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 customer’s account for a
payment made thereafter in good faith. [1961 c.726 §74.4040] (1) 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, 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](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 customer’s 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 customer’s 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 customer’s 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] 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 DRAFTSA 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] 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]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 referee’s 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](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
seller’s lien. [1961 c.726 §74.5040; 1993 c.545 §113]
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