§ 25-4-402. Bank's liability to customer for wrongful dishonor; time of determining insufficiency of account. - North Carolina Statutes

§25‑4‑402.  Bank's liability to customer for wrongful dishonor; timeof determining insufficiency of account.

(a)        Except as otherwiseprovided in this Article, a payor bank wrongfully dishonors an item if itdishonors an item that is properly payable, but a bank may dishonor an itemthat would create an overdraft unless it has agreed to pay the overdraft.

(b)        A payor bank isliable to its customer for damages proximately caused by the wrongful dishonorof an item. Liability is limited to actual damages proved and may includedamages for an arrest or prosecution of the customer or other consequentialdamages. Whether any consequential damages are proximately caused by thewrongful dishonor is a question of fact to be determined in each case. Thissubsection does not preclude noncompensatory damages.

(c)        A payor bank'sdetermination of the customer's account balance on which a decision to dishonorfor insufficiency of available funds is based may be made at any time betweenthe time the item is received by the payor bank and the time that the payorbank returns the item or gives notice in lieu of return, and no more than onedetermination need be made. If, at the election of the payor bank, a subsequentbalance determination is made for the purpose of reevaluating the bank'sdecision to dishonor the item, the account balance at that time isdeterminative of whether a dishonor for insufficiency of available funds iswrongful. (1921, c. 4, s. 38; C.S., s. 220(m); 1965, c. 700, s.1; 1995, c. 232, s. 2.)