400.4-402. Bank's liability to customer for wrongful dishonor--time of determining insufficiency of account. - Missouri Statutes

Bank's liability to customer for wrongful dishonor--time ofdetermining insufficiency of account.

400.4-402. (a) Except as otherwise provided in thisArticle, a payor bank wrongfully dishonors an item if itdishonors an item that is properly payable, but a bank maydishonor an item that would create an overdraft unless it hasagreed to pay the overdraft.

(b) A payor bank is liable to its customer for damagesproximately caused by the wrongful dishonor of an item.Liability is limited to actual damages proved and may includedamages for an arrest or prosecution of the customer or otherconsequential damages. Whether any consequential damages areproximately caused by the wrongful dishonor is a question of factto be determined in each case.

(c) A payor bank's determination of the customer's accountbalance on which a decision to dishonor for insufficiency ofavailable funds is based may be made at any time between the timethe item is received by the payor bank and the time that thepayor bank returns the item or gives notice in lieu of return,and no more than one determination need be made. If, at theelection of the payor bank, a subsequent balance determination ismade for the purpose of reevaluating the bank's decision todishonor the item, the account balance at that time isdeterminative of whether a dishonor for insufficiency ofavailable funds is wrongful.

(L. 1963 p. 503 § 4-402, A.L. 1992 S.B. 448)

(1976) Held, refusal of a bank officer to countersign a check without cause constitutes "wrongful dishonor" but punitive damages will not be allowed without proof of an independent tort. Wallick v. First State Bank of Farmington (A.), 532 S.W.2d 520.