SECTIONS 4101-4111 - California Statutes

COMMERCIAL CODE

SECTION 4101-4111

4101. This division may be cited as Uniform Commercial Code--Bank
Deposits and Collections.

4102. (a) To the extent that items within this division are also
within Divisions 3 (commencing with Section 3101) and 8 (commencing
with Section 8101), they are subject to those divisions. If there is
conflict, this division governs Division 3 (commencing with Section
3101), but Division 8 (commencing with Section 8101) governs this
division.
(b) The liability of a bank for action or nonaction with respect
to an item handled by it for purposes of presentment, payment, or
collection is governed by the law of the place where the bank is
located. In the case of action or nonaction by or at a branch or
separate office of a bank, its liability is governed by the law of
the place where the branch or separate office is located.

4103. (a) The effect of the provisions of this division may be
varied by agreement, but the parties to the agreement cannot disclaim
a bank's responsibility for its lack of good faith or failure to
exercise ordinary care or limit the measure of damages for the lack
or failure. However, the parties may determine by agreement the
standards by which the bank's responsibility is to be measured if
those standards are not manifestly unreasonable.
(b) Federal Reserve regulations and operating circulars, clearing
house rules, and the like have the effect of agreements under
subdivision (a), whether or not specifically assented to by all
parties interested in items handled.
(c) Action or nonaction approved by this division or pursuant to
Federal Reserve regulations or operating circulars is the exercise of
ordinary care and, in the absence of special instructions, action or
nonaction consistent with clearing house rules and the like or with
a general banking usage not disapproved by this division, is prima
facie the exercise of ordinary care.
(d) The specification or approval of certain procedures by this
division is not disapproval of other procedures that may be
reasonable under the circumstances.
(e) The measure of damages for failure to exercise ordinary care
in handling an item is the amount of the item reduced by an amount
that could not have been realized by the exercise of ordinary care.
If there is also bad faith it includes any other damages the party
suffered as a proximate consequence.

4104. (a) In this division unless the context otherwise requires:
(1) "Account" means any deposit or credit account with a bank,
including a demand, time, savings, passbook, share draft, or like
account, other than an account evidenced by a certificate of deposit.
(2) "Afternoon" means the period of a day between noon and
midnight.
(3) "Banking day" means the part of a day on which a bank is open
to the public for carrying on substantially all of its banking
functions.
(4) "Clearinghouse" means an association of banks or other payors
regularly clearing items.
(5) "Customer" means a person having an account with a bank or for
whom a bank has agreed to collect items, including a bank that
maintains an account at another bank.
(6) "Documentary draft" means a draft to be presented for
acceptance or payment if specified documents, certificated securities
(Section 8102) or instructions for uncertificated securities
(Section 8102), or other certificates, statements, or the like are to
be received by the drawee or other payor before acceptance or
payment of the draft.
(7) "Draft" means a draft as defined in Section 3104 or an item,
other than an instrument, that is an order.
(8) "Drawee" means a person ordered in a draft to make payment.
(9) "Item" means an instrument or a promise or order to pay money
handled by a bank for collection or payment. The term does not
include a payment order governed by Division 11 (commencing with
Section 11101) or a credit or debit card slip.
(10) "Midnight deadline" with respect to a bank is midnight on its
next banking day following the banking day on which it receives the
relevant item or notice or from which the time for taking action
commences to run, whichever is later.
(11) "Settle" means to pay in cash, by clearinghouse settlement,
in a charge or credit or by remittance, or otherwise as agreed. A
settlement may be either provisional or final.
(12) "Suspends payments" with respect to a bank means that it has
been closed by order of the supervisory authorities, that a public
officer has been appointed to take it over or that it ceases or
refuses to make payments in the ordinary course of business.
(b) Other definitions applying to this division and the sections
in which they appear are:

"Agreement for electronic Section 4110
presentment"
"Bank" Section 4105
"Collecting bank" Section 4105
"Depositary bank" Section 4105
"Intermediary bank" Section 4105
"Payor bank" Section 4105
"Presenting bank" Section 4105
"Presentment notice" Section 4110

(c) The following definitions in other divisions apply to this
division:

"Acceptance" Section 3409
"Alteration" Section 3407
"Cashier's check" Section 3104
"Certificate of deposit" Section 3104
"Certified check" Section 3409
"Check" Section 3104
"Control" Section 7106
"Holder in due course" Section 3302
"Instrument" Section 3104
"Notice of dishonor" Section 3503
"Order" Section 3103
"Ordinary care" Section 3103
"Person entitled to enforce" Section 3301
"Presentment" Section 3501
"Promise" Section 3103
"Prove" Section 3103
"Teller's check" Section 3104
"Unauthorized signature" Section 3403

(d) In addition, Division 1 (commencing with Section 1101)
contains general definitions and principles of construction and
interpretation applicable throughout this division.

4105. In this division:
(1) "Bank" means a person engaged in the business of banking,
including a savings bank, savings and loan association, credit union,
or trust company.
(2) "Depositary bank" means the first bank to take an item even
though it is also the payor bank, unless the item is presented for
immediate payment over the counter.
(3) "Payor bank" means a bank that is the drawee of a draft.
(4) "Intermediary bank" means a bank to which an item is
transferred in course of collection except the depositary or payor
bank.
(5) "Collecting bank" means a bank handling an item for collection
except the payor bank.
(6) "Presenting bank" means a bank presenting an item except a
payor bank.

4106. (a) If an item states that it is "payable through" a bank
identified in the item, (1) the item designates the bank as a
collecting bank and does not by itself authorize the bank to pay the
item, and (2) the item may be presented for payment only by or
through the bank.
(b) If an item states that it is "payable at" a bank identified in
the item, (1) the item designates the bank as a collecting bank and
does not by itself authorize the bank to pay the item, and (2) the
item may be presented for payment only by or through the bank.
(c) If a draft names a nonbank drawee and it is unclear whether a
bank named in the draft is a co-drawee or a collecting bank, the bank
is a collecting bank.

4107. A branch or separate office of a bank is a separate bank for
the purpose of computing the time within which and determining the
place at or to which action may be taken or notice or orders shall be
given under this division and under Division 3 (commencing with
Section 3101).

4108. (a) For the purpose of allowing time to process items, prove
balances, and make the necessary entries on its books to determine
its position for the day, a bank may fix an afternoon hour of 2 p.m.
or later as a cutoff hour for the handling of money and items and the
making of entries on its books.
(b) An item or deposit of money received on any day after a cutoff
hour so fixed or after the close of the banking day may be treated
as being received at the opening of the next banking day.

4109. (a) Unless otherwise instructed, a collecting bank in a good
faith effort to secure payment of a specific item drawn on a payor
other than a bank, and with or without the approval of any person
involved, may waive, modify, or extend time limits imposed or
permitted by this code for a period not exceeding two additional
banking days without discharge of drawers or indorsers or liability
to its transferor or a prior party.
(b) Delay by a collecting bank or payor bank beyond time limits
prescribed or permitted by this code or by instructions is excused if
(1) the delay is caused by interruption of communication or computer
facilities, suspension of payments by another bank, war, emergency
conditions, failure of equipment, or other circumstances beyond the
control of the bank, and (2) the bank exercises such diligence as the
circumstances require.

4110. (a) "Agreement for electronic presentment" means an
agreement, clearing house rule, or Federal Reserve regulation or
operating circular, providing that presentment of an item may be made
by transmission of an image of an item or information describing the
item ("presentment notice") rather than delivery of the item itself.
The agreement may provide for procedures governing retention,
presentment, payment, dishonor, and other matters concerning items
subject to the agreement.
(b) Presentment of an item pursuant to an agreement for
presentment is made when the presentment notice is received.
(c) If presentment is made by presentment notice, a reference to
"item" or "check" in this division means the presentment notice
unless the context otherwise indicates.

4111. An action to enforce an obligation, duty, or right arising
under this division shall be commenced within three years after the
cause of action accrues.