Section 4–402. (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.
Structure Massachusetts General Laws
Part I - Administration of the Government
Title XV - Regulation of Trade
Chapter 106 - Uniform Commercial Code
Article 4 - Bank Deposits and Collections
Section 4-213 - Medium and Time of Settlement by Bank
Section 4-214 - Right of Charge–back or Refund; Liability of Collecting Bank; Return of Item
Section 4-211 - When Bank Gives Value for Purposes of Holder in Due Course
Section 4-216 - Insolvency and Preference
Section 4-302 - Payor Bank's Responsibility for Late Return of Item
Section 4-407 - Payor Bank's Right to Subrogation on Improper Payment
Section 4-401 - When Bank May Charge Customer's Account
Section 4-404 - Bank Not Obliged to Pay Check More Than Six Months Old
Section 4-405 - Death or Incompetence of Customer
Section 4-406 - Customer's Duty to Discover and Report Unauthorized Signature or Alteration
Section 4-210 - Security Interest of Collecting Bank in Items, Accompanying Documents and Proceeds
Section 4-502 - Presentment of ''on Arrival'' Drafts
Section 4-209 - Encoding and Retention Warranties
Section 4-104 - Definitions and Index of Definitions
Section 4-207 - Transfer Warranties
Section 4-103 - Variation by Agreement; Measure of Damages; Action Constituting Ordinary Care
Section 4-106 - Payable Through or Payable at Bank; Collecting Bank
Section 4-107 - Separate Office of Bank
Section 4-108 - Time of Receipt of Items
Section 4-110 - Electronic Presentment
Section 4-111 - Statute of Limitations
Section 4-202 - Responsibility for Collection or Return; When Action Timely
Section 4-203 - Effect of Instructions
Section 4-204 - Methods of Sending and Presenting; Sending Direct to Payor Bank
Section 4-205 - Depositary Bank Holder of Unindorsed Item
Section 4-206 - Transfer Between Banks
Section 4-208 - Presentment Warranties
Section 4-504 - Privilege of Presenting Bank to Deal With Goods; Security Interest for Expenses
Section 4-403 - Customer's Right to Stop Payment; Burden of Proof of Loss