(a) Except as otherwise provided in this article, 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.
(1959, P.A. 133, S. 4-402; P.A. 91-304, S. 99.)
History: P.A. 91-304 added Subsec. (a) re when a payor bank bank wrongfully dishonors an item, designated former provisions of section as Subsec. (b) and amended said Subsec. to delete provision that limited liability to actual damages proved “when the dishonor occurs through mistake” and added Subsec. (c) re a payor bank's determination of a customer's account balance.
Cited. 217 C. 205.
Cited. 5 Conn. Cir. Ct. 395.
Structure Connecticut General Statutes
Title 42a - Uniform Commercial Code
Article 4 - Bank Deposits and Collections
Section 42a-4-101. - Short title: Uniform Commercial Code–Bank Deposits and Collections.
Section 42a-4-102. - Applicability.
Section 42a-4-103. - Variation by agreement. Measure of damages. Action constituting ordinary care.
Section 42a-4-104. - Definitions and index of definitions.
Section 42a-4-106. - Payable through or payable at bank. Collecting bank.
Section 42a-4-107. - Separate office of bank.
Section 42a-4-108. - Time of receipt of items.
Section 42a-4-110. - Electronic presentment.
Section 42a-4-111. - Statute of limitations.
Section 42a-4-202. - Responsibility for collection or return. When action timely.
Section 42a-4-203. - Effect of instructions.
Section 42a-4-204. - Methods of sending and presenting. Sending directly to payor bank.
Section 42a-4-205. - Depositary bank holder of unendorsed item.
Section 42a-4-206. - Transfer between banks.
Section 42a-4-207. - Transfer warranties.
Section 42a-4-208. - Presentment warranties.
Section 42a-4-209. - Encoding and retention warranties.
Section 42a-4-211. - When bank gives value for purposes of holder in due course.
Section 42a-4-213. - Medium and time of settlement by bank.
Section 42a-4-214. - Right of charge-back or refund. Liability of collecting bank. Return of item.
Section 42a-4-216. - Insolvency and preference.
Section 42a-4-302. - Payor bank's responsibility for late return of item.
Section 42a-4-401. - When bank may charge customer's account.
Section 42a-4-403. - Customer's right to stop payment. Burden of proof of loss.
Section 42a-4-404. - Bank not obligated to pay check more than six months old.
Section 42a-4-405. - Death or incompetence of customer.
Section 42a-4-406. - Customer's duty to discover and report unauthorized signature or alteration.
Section 42a-4-407. - Payor bank's right to subrogation on improper payment.