New York Laws
Part 2 - Collection of Items: Depositary and Collecting Banks
4-212 - Right of Charge-Back or Refund.

(1) If a collecting bank has made provisional settlement with its
customer for an item and itself fails by reason of dishonor, suspension
of payments by a bank or otherwise to receive a 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 items 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. 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 (subsection (3) of Section 4--211 and
subsections (2) and (3) of Section 4--213).
(2) Within the time and manner prescribed by this section and Section
4--301, an intermediary or payor bank, as the case may be, may return an
unpaid item directly to the depositary bank and may send for collection
a draft on the depositary bank and obtain reimbursement. In such case,
if the depositary bank has received provisional settlement for the item,
it must reimburse the bank drawing the draft and any provisional credits
for the item between banks shall become and remain final.
(3) A depositary bank which 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 4--301).
(4) The right to charge-back is not affected by
(a) prior use of the credit given for the item; or
(b) failure by any bank to exercise ordinary care with respect to
the item but any bank so failing remains liable.
(5) A failure to charge-back or claim refund does not affect other
rights of the bank against the customer or any other party.
(6) If credit is given in dollars as the equivalent of the value of an
item payable in a foreign currency the dollar amount of any charge-back
or refund shall be calculated on the basis of the buying sight rate for
the foreign currency prevailing on the day when the person entitled to
the charge-back or refund learns that it will not receive payment in
ordinary course.