47-4402. Bank's liability to customer for
wrongful dishonor; time of determining insufficiency of
amount
A. Except as otherwise provided in this chapter, a payor bank wrongfully dishonors
an item if it dishonors an item that is properly payable, but a bank may dishonor an item
that would create an overdraft unless it has agreed to pay the overdraft.
B. 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.
C. 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 any
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 available funds is wrongful.
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