A payor bank is liable to its customer for damages proximately caused
by the wrongful dishonor of an item. When the dishonor occurs through
mistake liability is limited to actual damages proved. If so proximately
caused and proved damages 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.
Structure New York Laws
Article 4 - Bank Deposits and Collections
Part 4 - Relationship Between Payor Bank and Its Customer
4-401 - When Bank May Charge Customer's Account.
4-402 - Bank's Liability to Customer for Wrongful Dishonor.
4-403 - Customer's Right to Stop Payment; Burden of Proof of Loss.
4-404 - Bank Not Obligated to Pay Check More Than Six Months Old.
4-405 - Death or Incompetence of Customer.
4-406 - Customer's Duty to Discover and Report Unauthorized Signature or Alteration.
4-407 - Payor Bank's Right to Subrogation on Improper Payment.