47-4214. Right of charge-back or refund;
liability of collecting bank; return of item
A. If a collecting bank has made provisional settlement with its customer for an
item and fails by reason of dishonor, suspension of payments by a bank or otherwise to
receive 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. These rights to revoke, charge back and obtain refund terminate if and when a
settlement for the item received by the bank is or becomes final.
B. A collecting bank returns an item when it is sent or delivered to the bank's
customer or transferor or pursuant to its instructions.
C. 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 section governing
return of an item received by a payor bank for credit on its books (section 47-4301).
D. The right to charge back is not affected by:
1. Previous use of a credit given for the item; or
2. Failure by any bank to exercise ordinary care with respect to the item, but a
bank so failing remains liable.
E. A failure to charge back or claim refund does not affect other rights of the
bank against the customer or any other party.
F. If credit is given in dollars as the equivalent of the value of an item payable
in 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.
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