§490:4-406  Customer's duty to discover and
report unauthorized signature or alteration.  (a)  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.



(b)  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 that 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.



(c)  If a bank sends or makes available a
statement of account or items pursuant to subsection (a), the customer must
exercise reasonable promptness in examining the statement or the items to
determine whether any payment was not authorized because of 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.



(d)  If the bank proves that the customer
failed, with respect to an item, to comply with the duties imposed on the
customer by subsection (c), the customer is precluded from asserting against
the bank:



(1)  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



(2)  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 thirty days, in which to
examine the item or statement of account and notify the bank.



(e)  If subsection (d) 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
(c) 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 (d) does not apply.



(f)  Without regard to care or lack of care of
either the customer or the bank, a customer who does not within one year after
the statement or items are made available to the customer (subsection (a))
discover and report the customer's unauthorized signature on or any alteration
on the item is precluded from asserting against the bank the unauthorized
signature or alteration.  If there is a preclusion under this subsection, the
payor bank may not recover for breach of warranty under section 490:4-208 with
respect to the unauthorized signature or alteration to which the preclusion
applies. [L 1965, c 208, §4-406; HRS §490:4-406; am L 1991, c 118, pt of §4]