reglab/statecodes huggingface dataset:
2023 California Code › Commercial Code - COM › DIVISION 3 - NEGOTIABLE INSTRUMENTS › CHAPTER 4 - Liability of Parties › Section 3419.

3419. (a) If an instrument is issued for value given for the benefit of a party to the instrument (“accommodated party”) and another party to the instrument (“accommodation party”) signs the instrument for the purpose of incurring liability on the instrument without being a direct beneficiary of the value given for the instrument, the instrument is signed by the accommodation party “for accommodation.”
(b) An accommodation party may sign the instrument as maker, drawer, acceptor, or indorser and, subject to subdivision (d), is obliged to pay the instrument in the capacity in which the accommodation party signs. The obligation of an accommodation party may be enforced notwithstanding any statute of frauds and whether or not the accommodation party receives consideration for the accommodation.
(c) A person signing an instrument is presumed to be an accommodation party and there is notice that the instrument is signed for accommodation if the signature is an anomalous indorsement or is accompanied by words indicating that the signer is acting as surety or guarantor with respect to the obligation of another party to the instrument. Except as provided in Section 3605, the obligation of an accommodation party to pay the instrument is not affected by the fact that the person enforcing the obligation had notice when the instrument was taken by that person that the accommodation party signed the instrument for accommodation.
(d) If the signature of a party to an instrument is accompanied by words indicating unambiguously that the party is guaranteeing collection rather than payment of the obligation of another party to the instrument, the signer is obliged to pay the amount due on the instrument to a person entitled to enforce the instrument only if (1) execution of judgment against the other party has been returned unsatisfied, (2) the other party is insolvent or in an insolvency proceeding, (3) the other party cannot be served with process, or (4) it is otherwise apparent that payment cannot be obtained from the other party.
(e) An accommodation party who pays the instrument is entitled to reimbursement from the accommodated party and is entitled to enforce the instrument against the accommodated party. An accommodated party who pays the instrument has no right of recourse against, and is not entitled to contribution from, an accommodation party.
(Repealed and added by Stats. 1992, Ch. 914, Sec. 6. Effective January 1, 1993.)
2023 California Code › Commercial Code - COM › DIVISION 3 - NEGOTIABLE INSTRUMENTS › CHAPTER 4 - Liability of Parties › Section 3420.

3420. (a) The law applicable to conversion of personal property applies to instruments. An instrument is also converted if it is taken by transfer, other than a negotiation, from a person not entitled to enforce the instrument or a bank makes or obtains payment with respect to the instrument for a person not entitled to enforce the instrument or receive payment. An action for conversion of an instrument may not be brought by (1) the issuer or acceptor of the instrument or (2) a payee or indorsee who did not receive delivery of the instrument either directly or through delivery to an agent or a copayee.
(b) In an action under subdivision (a), the measure of liability is presumed to be the amount payable on the instrument, but recovery may not exceed the amount of the plaintiff’s interest in the instrument.
(c) A representative, other than a depositary bank, who has in good faith dealt with an instrument or its proceeds on behalf of one who was not the person entitled to enforce the instrument is not liable in conversion to that person beyond the amount of any proceeds that it has not paid out.
(Added by Stats. 1992, Ch. 914, Sec. 6. Effective January 1, 1993.)
2023 California Code › Commercial Code - COM › DIVISION 3 - NEGOTIABLE INSTRUMENTS › CHAPTER 5 - Dishonor › Section 3501.

3501. (a) “Presentment” means a demand made by or on behalf of a person entitled to enforce an instrument (1) to pay the instrument made to the drawee or a party obliged to pay the instrument or, in the case of a note or accepted draft payable at a bank, to the bank, or (2) to accept a draft made to the drawee.
(b) The following rules are subject to Division 4 (commencing with Section 4101), agreement of the parties, and clearinghouse rules and the like:
(1) Presentment may be made at the place of payment of the instrument and shall be made at the place of payment if the instrument is payable at a bank in the United States; may be made by any commercially reasonable means, including an oral, written, or electronic communication; is effective when the demand for payment or acceptance is received by the person to whom presentment is made; and is effective if made to any one of two or more makers, acceptors, drawees, or other payors.
(2) Upon demand of the person to whom presentment is made, the person making presentment shall (A) exhibit the instrument, (B) give reasonable identification and, if presentment is made on behalf of another person, reasonable evidence of authority to do so, and (C) sign a receipt on the instrument for any payment made or surrender the instrument if full payment is made.
(3) Without dishonoring the instrument, the party to whom presentment is made may (A) return the instrument for lack of a necessary indorsement, or (B) refuse payment or acceptance for failure of the presentment to comply with the terms of the instrument, an agreement of the parties, or other applicable law or rule.
(4) The party to whom presentment is made may treat presentment as occurring on the next business day after the day of presentment if the party to whom presentment is made has established a cutoff hour not earlier than 2 p.m. for the receipt and processing of instruments presented for payment or acceptance and presentment is made after the cutoff hour.
(Repealed and added by Stats. 1992, Ch. 914, Sec. 6. Effective January 1, 1993.)
2023 California Code › Commercial Code - COM › DIVISION 3 - NEGOTIABLE INSTRUMENTS › CHAPTER 5 - Dishonor › Section 3503.

3503. (a) The obligation of an indorser stated in subdivision (a) of Section 3415 and the obligation of a drawer stated in subdivision (d) of Section 3414 may not be enforced unless (1) the indorser or drawer is given notice of dishonor of the instrument complying with this section or (2) notice of dishonor is excused under subdivision (b) of Section 3504.
(b) Notice of dishonor may be given by any person; may be given by any commercially reasonable means, including an oral, written, or electronic communication; and is sufficient if it reasonably identifies the instrument and indicates that the instrument has been dishonored or has not been paid or accepted. Return of an instrument given to a bank for collection is sufficient notice of dishonor.
(c) Subject to subdivision (c) of Section 3504, with respect to an instrument taken for collection by a collecting bank, notice of dishonor shall be given (1) by the bank before midnight of the next banking day following the banking day on which the bank receives notice of dishonor of the instrument, or (2) by any other person within 30 days following the day on which the person receives notice of dishonor. With respect to any other instrument, notice of dishonor shall be given within 30 days following the day on which dishonor occurs.
(Repealed and added by Stats. 1992, Ch. 914, Sec. 6. Effective January 1, 1993.)
2023 California Code › Commercial Code - COM › DIVISION 3 - NEGOTIABLE INSTRUMENTS › CHAPTER 5 - Dishonor › Section 3504.

3504. (a) Presentment for payment or acceptance of an instrument is excused if (1) the person entitled to present the instrument cannot with reasonable diligence make presentment, (2) the maker or acceptor has repudiated an obligation to pay the instrument or is dead or in insolvency proceedings, (3) by the terms of the instrument presentment is not necessary to enforce the obligation of indorsers or the drawer, (4) the drawer or indorser whose obligation is being enforced has waived presentment or otherwise has no reason to expect or right to require that the instrument be paid or accepted, or (5) the drawer instructed the drawee not to pay or accept the draft or the drawee was not obligated to the drawer to pay the draft.
(b) Notice of dishonor is excused if (1) by the terms of the instrument notice of dishonor is not necessary to enforce the obligation of a party to pay the instrument, or (2) the party whose obligation is being enforced waived notice of dishonor. A waiver of presentment is also a waiver of notice of dishonor.
(c) Delay in giving notice of dishonor is excused if the delay was caused by circumstances beyond the control of the person giving the notice and the person giving the notice exercised reasonable diligence after the cause of the delay ceased to operate.
(Repealed and added by Stats. 1992, Ch. 914, Sec. 6. Effective January 1, 1993.)
2023 California Code › Commercial Code - COM › DIVISION 3 - NEGOTIABLE INSTRUMENTS › CHAPTER 5 - Dishonor › Section 3505.

3505. (a) The following are admissible as evidence and create a presumption of dishonor and of any notice of dishonor stated:
(1) A document regular in form as provided in subdivision (b) which purports to be a protest.
(2) A purported stamp or writing of the drawee, payor bank, or presenting bank on or accompanying the instrument stating that acceptance or payment has been refused unless reasons for the refusal are stated and the reasons are not consistent with dishonor.
(3) A book or record of the drawee, payor bank, or collecting bank, kept in the usual course of business that shows dishonor, even if there is no evidence of who made the entry.
(b) A protest is a certificate of dishonor made by a United States consul or vice consul, or a notary public during the course and scope of employment with a financial institution or other person authorized to administer oaths by the laws of any other state, government, or country in the place where dishonor occurs. It may be made upon information satisfactory to that person. The protest shall identify the instrument and certify either that presentment has been made or, if not made, the reason why it was not made, and that the instrument has been dishonored by nonacceptance or nonpayment. The protest may also certify that notice of dishonor has been given to some or all parties.
(Amended by Stats. 2011, Ch. 269, Sec. 4. (AB 75) Effective January 1, 2012.)
2023 California Code › Commercial Code - COM › DIVISION 3 - NEGOTIABLE INSTRUMENTS › CHAPTER 6 - Discharge and Payment › Section 3601.

3601. (a) The obligation of a party to pay the instrument is discharged as stated in this division or by an act or agreement with the party which would discharge an obligation to pay money under a simple contract.
(b) Discharge of the obligation of a party is not effective against a person acquiring rights of a holder in due course of the instrument without notice of the discharge.
(Repealed and added by Stats. 1992, Ch. 914, Sec. 6. Effective January 1, 1993.)
2023 California Code › Commercial Code - COM › DIVISION 3 - NEGOTIABLE INSTRUMENTS › CHAPTER 6 - Discharge and Payment › Section 3602.

3602. (a) Subject to subdivision (b), an instrument is paid to the extent payment is made (1) by or on behalf of a party obliged to pay the instrument, and (2) to a person entitled to enforce the instrument. To the extent of the payment, the obligation of the party obliged to pay the instrument is discharged even though payment is made with knowledge of a claim to the instrument under Section 3306 by another person.
(b) The obligation of a party to pay the instrument is not discharged under subdivision (a) if either of the following applies:
(1) A claim to the instrument under Section 3306 is enforceable against the party receiving payment and (A) payment is made with knowledge by the payor that payment is prohibited by injunction or similar process of a court of competent jurisdiction, or (B) in the case of an instrument other than a cashier’s check, teller’s check, or certified check, the party making payment accepted, from the person having a claim to the instrument, indemnity against loss resulting from refusal to pay the person entitled to enforce the instrument.
(2) The person making payment knows that the instrument is a stolen instrument and pays a person it knows is in wrongful possession of the instrument.
(Repealed and added by Stats. 1992, Ch. 914, Sec. 6. Effective January 1, 1993.)
2023 California Code › Commercial Code - COM › DIVISION 3 - NEGOTIABLE INSTRUMENTS › CHAPTER 6 - Discharge and Payment › Section 3603.

3603. (a) If tender of payment of an obligation to pay an instrument is made to a person entitled to enforce the instrument, the effect of tender is governed by principles of law applicable to tender of payment under a simple contract.
(b) If tender of payment of an obligation to pay an instrument is made to a person entitled to enforce the instrument and the tender is refused, there is discharge, to the extent of the amount of the tender, of the obligation of an indorser or accommodation party having a right of recourse with respect to the obligation to which the tender relates.
(c) If tender of payment of an amount due on an instrument is made to a person entitled to enforce the instrument, the obligation of the obligor to pay interest after the due date on the amount tendered is discharged. If presentment is required with respect to an instrument and the obligor is able and ready to pay on the due date at every place of payment stated in the instrument, the obligor is deemed to have made tender of payment on the due date to the person entitled to enforce the instrument.
(Repealed and added by Stats. 1992, Ch. 914, Sec. 6. Effective January 1, 1993.)
2023 California Code › Commercial Code - COM › DIVISION 3 - NEGOTIABLE INSTRUMENTS › CHAPTER 6 - Discharge and Payment › Section 3604.

3604. (a) A person entitled to enforce an instrument, with or without consideration, may discharge the obligation of a party to pay the instrument (1) by an intentional voluntary act, such as surrender of the instrument to the party, destruction, mutilation, or cancellation of the instrument, cancellation or striking out of the party’s signature, or the addition of words to the instrument indicating discharge, or (2) by agreeing not to sue or otherwise renouncing rights against the party by a signed record. The obligation of a party to pay a check is not discharged solely by destruction of the check in connection with a process in which information is extracted from the check and an image of the check is made and, subsequently, the information and image are transmitted for payment.
(b) Cancellation or striking out of an indorsement pursuant to subdivision (a) does not affect the status and rights of a party derived from the indorsement.
(Amended by Stats. 2023, Ch. 210, Sec. 14. (SB 95) Effective January 1, 2024.)
2023 California Code › Commercial Code - COM › DIVISION 4 - BANK DEPOSITS AND COLLECTIONS › CHAPTER 1 - General Provisions and Definitions › Section 4102.

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.
(Amended by Stats. 1992, Ch. 914, Sec. 8. Effective January 1, 1993.)
2023 California Code › Commercial Code - COM › DIVISION 4 - BANK DEPOSITS AND COLLECTIONS › CHAPTER 1 - General Provisions and Definitions › Section 4103.

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.
(Amended by Stats. 1992, Ch. 914, Sec. 9. Effective January 1, 1993.)
2023 California Code › Commercial Code - COM › DIVISION 4 - BANK DEPOSITS AND COLLECTIONS › CHAPTER 1 - General Provisions and Definitions › Section 4105.

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.
(Amended by Stats. 1992, Ch. 914, Sec. 11. Effective January 1, 1993.)
2023 California Code › Commercial Code - COM › DIVISION 4 - BANK DEPOSITS AND COLLECTIONS › CHAPTER 1 - General Provisions and Definitions › Section 4106.

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.
(Added by Stats. 1992, Ch. 914, Sec. 12. Effective January 1, 1993.)
2023 California Code › Commercial Code - COM › DIVISION 4 - BANK DEPOSITS AND COLLECTIONS › CHAPTER 1 - General Provisions and Definitions › Section 4107.

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).
(Added by renumbering Section 4106 by Stats. 1992, Ch. 914, Sec. 13. Effective January 1, 1993.)
2023 California Code › Commercial Code - COM › DIVISION 4 - BANK DEPOSITS AND COLLECTIONS › CHAPTER 1 - General Provisions and Definitions › Section 4108.

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.
(Added by renumbering Section 4107 by Stats. 1992, Ch. 914, Sec. 14. Effective January 1, 1993.)
2023 California Code › Commercial Code - COM › DIVISION 4 - BANK DEPOSITS AND COLLECTIONS › CHAPTER 1 - General Provisions and Definitions › Section 4109.

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.
(Added by renumbering Section 4108 by Stats. 1992, Ch. 914, Sec. 15. Effective January 1, 1993.)
2023 California Code › Commercial Code - COM › DIVISION 4 - BANK DEPOSITS AND COLLECTIONS › CHAPTER 1 - General Provisions and Definitions › Section 4110.

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.
(Added by Stats. 1992, Ch. 914, Sec. 16. Effective January 1, 1993.)
2023 California Code › Commercial Code - COM › DIVISION 4 - BANK DEPOSITS AND COLLECTIONS › CHAPTER 1 - General Provisions and Definitions › Section 4111.

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.
(Added by Stats. 1992, Ch. 914, Sec. 17. Effective January 1, 1993.)
2023 California Code › Commercial Code - COM › DIVISION 4 - BANK DEPOSITS AND COLLECTIONS › CHAPTER 2 - Collection of Items: Depositary and Collecting Banks › Section 4201.

4201. (a) Unless a contrary intent clearly appears and before the time that a settlement given by a collecting bank for an item is or becomes final, the bank, with respect to the item, is an agent or subagent of the owner of the item and any settlement given for the item is provisional. This provision applies regardless of the form of indorsement or lack of indorsement and even though credit given for the item is subject to immediate withdrawal as of right or is in fact withdrawn; but the continuance of ownership of an item by its owner and any rights of the owner to proceeds of the item are subject to rights of a collecting bank, such as those resulting from outstanding advances on the item and rights of recoupment or setoff. If an item is handled by banks for purposes of presentment, payment, collection, or return, the relevant provisions of this division apply even though action of the parties clearly establishes that a particular bank has purchased the item and is the owner of it.
(b) After an item has been indorsed with the words “pay any bank” or the like, only a bank may acquire the rights of a holder until the item has been either of the following:
(1) Returned to the customer initiating collection.
(2) Specially indorsed by a bank to a person who is not a bank.
(Amended by Stats. 1992, Ch. 914, Sec. 18. Effective January 1, 1993.)
2023 California Code › Commercial Code - COM › DIVISION 4 - BANK DEPOSITS AND COLLECTIONS › CHAPTER 2 - Collection of Items: Depositary and Collecting Banks › Section 4202.

4202. (a) A collecting bank shall exercise ordinary care in all of the following:
(1) Presenting an item or sending it for presentment.
(2) Sending notice of dishonor or nonpayment or returning an item other than a documentary draft to the bank’s transferor after learning that the item has not been paid or accepted, as the case may be.
(3) Settling for an item when the bank receives final settlement.
(4) Notifying its transferor of any loss or delay in transit within a reasonable time after discovery thereof.
(b) A collecting bank exercises ordinary care under subdivision (a) by taking proper action before its midnight deadline following receipt of an item, notice, or settlement. Taking proper action within a reasonably longer time may constitute the exercise of ordinary care, but the bank has the burden of establishing timeliness.
(c) Subject to paragraph (1) of subdivision (a), a bank is not liable for the insolvency, neglect, misconduct, mistake, or default of another bank or person or for loss or destruction of an item in the possession of others or in transit.
(Amended by Stats. 1992, Ch. 914, Sec. 19. Effective January 1, 1993.)
2023 California Code › Commercial Code - COM › DIVISION 4 - BANK DEPOSITS AND COLLECTIONS › CHAPTER 2 - Collection of Items: Depositary and Collecting Banks › Section 4203.

4203. Subject to Division 3 (commencing with Section 3101) concerning conversion of instruments (Section 3420) and restrictive indorsements (Section 3206), only a collecting bank’s transferor can give instructions that affect the bank or constitute notice to it, and a collecting bank is not liable to prior parties for any action taken pursuant to the instructions or in accordance with any agreement with its transferor.
(Amended by Stats. 1992, Ch. 914, Sec. 20. Effective January 1, 1993.)
2023 California Code › Commercial Code - COM › DIVISION 4 - BANK DEPOSITS AND COLLECTIONS › CHAPTER 2 - Collection of Items: Depositary and Collecting Banks › Section 4204.

4204. (a) A collecting bank shall send items by reasonably prompt method, taking into consideration relevant instructions, the nature of the item, the number of those items on hand, the cost of collection involved, and the method generally used by it or others to present those items.
(b) A collecting bank may send:
(1) An item directly to the payor bank.
(2) An item to a nonbank payor if authorized by its transferor.
(3) An item other than documentary drafts to a nonbank payor, if authorized by Federal Reserve regulation or operating circular, clearing house rule, or the like.
(c) Presentment may be made by a presenting bank at a place where the payor bank or other payor has requested that presentment be made.
(Amended by Stats. 1992, Ch. 914, Sec. 21. Effective January 1, 1993.)
2023 California Code › Commercial Code - COM › DIVISION 4 - BANK DEPOSITS AND COLLECTIONS › CHAPTER 2 - Collection of Items: Depositary and Collecting Banks › Section 4205.

4205. If a customer delivers an item to a depositary bank for collection both of the following apply:
(a) The depositary bank becomes a holder of the item at the time it receives the item for collection if the customer at the time of delivery was a holder of the item, whether or not the customer indorses the item, and, if the bank satisfies the other requirements of Section 3302, it is a holder in due course.
(b) The depositary bank warrants to collecting banks, the payor bank or other payor, and the drawer that the amount of the item was paid to the customer or deposited to the customer’s account.
(Repealed and added by Stats. 1992, Ch. 914, Sec. 23. Effective January 1, 1993.)
2023 California Code › Commercial Code - COM › DIVISION 4 - BANK DEPOSITS AND COLLECTIONS › CHAPTER 2 - Collection of Items: Depositary and Collecting Banks › Section 4206.

4206. Any agreed method that identifies the transferor bank is sufficient for the item’s further transfer to another bank.
(Amended by Stats. 1992, Ch. 914, Sec. 24. Effective January 1, 1993.)
2023 California Code › Commercial Code - COM › DIVISION 4 - BANK DEPOSITS AND COLLECTIONS › CHAPTER 2 - Collection of Items: Depositary and Collecting Banks › Section 4207.

4207. (a) A customer or collecting bank that transfers an item and receives a settlement or other consideration warrants to the transferee and to any subsequent collecting bank that all of the following are applicable:
(1) The warrantor is a person entitled to enforce the item.
(2) All signatures on the item are authentic and authorized.
(3) The item has not been altered.
(4) The item is not subject to a defense or claim in recoupment (subdivision (a) of Section 3305) of any party that can be asserted against the warrantor.
(5) The warrantor has no knowledge of any insolvency proceeding commenced with respect to the maker or acceptor or, in the case of an unaccepted draft, the drawer.
(6) If the item is a demand draft, creation of the item according to the terms on its face was authorized by the person identified as drawer.
(b) If an item is dishonored, a customer or collecting bank transferring the item and receiving settlement or other consideration is obliged to pay the amount due on the item (1) according to the terms of the item at the time it was transferred, or (2) if the transfer was of an incomplete item, according to its terms when completed as stated in Sections 3115 and 3407. The obligation of a transferor is owed to the transferee and to any subsequent collecting bank that takes the item in good faith. A transferor cannot disclaim its obligation under this subdivision by an indorsement stating that it is made “without recourse” or otherwise disclaiming liability.
(c) A person to whom the warranties under subdivision (a) are made and who took the item in good faith may recover from the warrantor as damages for breach of warranty an amount equal to the loss suffered as a result of the breach, but not more than the amount of the item plus expenses and loss of interest incurred as a result of the breach.
(d) The warranties stated in subdivision (a) cannot be disclaimed with respect to checks. Unless notice of a claim for breach of warranty is given to the warrantor within 30 days after the claimant has reason to know of the breach and the identity of the warrantor, the warrantor is discharged to the extent of any loss caused by the delay in giving notice of the claim.
(e) A cause of action for breach of warranty under this section accrues when the claimant has reason to know of the breach.
(f) If the warranty in paragraph (6) of subdivision (a) is not given by a transferor or collecting bank under applicable conflict of law rules, then the warranty is not given to that transferor when that transferor is a transferee nor to any prior collecting bank of that transferee.
(Amended by Stats. 1996, Ch. 316, Sec. 5. Effective January 1, 1997.)
2023 California Code › Commercial Code - COM › DIVISION 4 - BANK DEPOSITS AND COLLECTIONS › CHAPTER 2 - Collection of Items: Depositary and Collecting Banks › Section 4209.

4209. (a) A person who encodes information on or with respect to an item after issue warrants to any subsequent collecting bank and to the payor bank or other payor that the information is correctly encoded. If the customer of a depositary bank encodes, that bank also makes the warranty.
(b) A person who undertakes to retain an item pursuant to an agreement for electronic presentment warrants to any subsequent collecting bank and to the payor bank or other payor that retention and presentment of the item comply with the agreement. If a customer of a depositary bank undertakes to retain an item, that bank also makes this warranty.
(c) A person to whom warranties are made under this section and who took the item in good faith may recover from the warrantor as damages for breach of warranty an amount equal to the loss suffered as a result of the breach, plus expenses and loss of interest incurred as a result of the breach.
(Added by Stats. 1992, Ch. 914, Sec. 29. Effective January 1, 1993.)
2023 California Code › Commercial Code - COM › DIVISION 4 - BANK DEPOSITS AND COLLECTIONS › CHAPTER 2 - Collection of Items: Depositary and Collecting Banks › Section 4210.

4210. (a) A collecting bank has a security interest in an item and any accompanying documents or the proceeds of either:
(1) In case of an item deposited in an account to the extent to which credit given for the item has been withdrawn or applied.
(2) In case of an item for which it has given credit available for withdrawal as of right, to the extent of the credit given, whether or not the credit is drawn upon or there is a right of chargeback.
(3) If it makes an advance on or against the item.
(b) If credit given for several items received at one time or pursuant to a single agreement is withdrawn or applied in part, the security interest remains upon all the items, any accompanying documents or the proceeds of either. For the purpose of this section, credits first given are first withdrawn.
(c) Receipt by a collecting bank of a final settlement for an item is a realization on its security interest in the item, accompanying documents, and proceeds. So long as the bank does not receive final settlement for the item or give up possession of the item or possession or control of the accompanying documents for purposes other than collection, the security interest continues to that extent and is subject to Division 9 (commencing with Section 9101), but all of the following are applicable:
(1) No security agreement is necessary to make the security interest enforceable (subparagraph (A) of paragraph (3) of subdivision (b) of Section 9203).
(2) No filing is required to perfect the security interest.
(3) The security interest has priority over conflicting perfected security interests in the item, accompanying documents, or proceeds.
(Amended by Stats. 2006, Ch. 254, Sec. 46. Effective January 1, 2007.)
2023 California Code › Commercial Code - COM › DIVISION 4 - BANK DEPOSITS AND COLLECTIONS › CHAPTER 2 - Collection of Items: Depositary and Collecting Banks › Section 4211.

4211. For purposes of determining its status as a holder in due course, a bank has given value to the extent it has a security interest in an item, if the bank otherwise complies with the requirements of Section 3302 on what constitutes a holder in due course.
(Added by renumbering Section 4209 by Stats. 1992, Ch. 914, Sec. 30. Effective January 1, 1993.)
2023 California Code › Commercial Code - COM › DIVISION 4 - BANK DEPOSITS AND COLLECTIONS › CHAPTER 2 - Collection of Items: Depositary and Collecting Banks › Section 4212.

4212. (a) Unless otherwise instructed, a collecting bank may present an item not payable by, through, or at a bank by sending to the party to accept or pay a written notice that the bank holds the item for acceptance or payment. The notice shall be sent in time to be received on or before the day when presentment is due and the bank shall meet any requirement of the party to accept or pay under Section 3501 by the close of the bank’s next banking day after it knows of the requirement.
(b) If presentment is made by notice and payment, acceptance, or request for compliance with a requirement under Section 3501 is not received by the close of business on the day after maturity or, in the case of demand items, by the close of business on the third banking day after notice was sent, the presenting bank may treat the item as dishonored and charge any drawer or indorser by sending it notice of the facts.
(Added by renumbering Section 4210 by Stats. 1992, Ch. 914, Sec. 31. Effective January 1, 1993.)
2023 California Code › Commercial Code - COM › DIVISION 4 - BANK DEPOSITS AND COLLECTIONS › CHAPTER 2 - Collection of Items: Depositary and Collecting Banks › Section 4213.

4213. (a) With respect to settlement by a bank, the medium and time of settlement may be prescribed by Federal Reserve regulations or circulars, clearing house rules, and the like, or agreement. In the absence of that prescription, the following are applicable:
(1) The medium of settlement is cash or credit to an account in a federal reserve bank of or specified by the person to receive settlement.
(2) The time of settlement is any of the following:
(A) With respect to tender of settlement by cash, a cashier’s check, or teller’s check, when the cash or check is sent or delivered.
(B) With respect to tender of settlement by credit in an account in a federal reserve bank, when the credit is made.
(C) With respect to tender of settlement by a credit or debit to an account in a bank, when the credit or debit is made or, in the case of tender of settlement by authority to charge an account, when the authority is sent or delivered.
(D) With respect to tender of settlement by a funds transfer, when payment is made pursuant to subdivision (a) of Section 11406 to the person receiving settlement.
(b) If the tender of settlement is not by a medium authorized by subdivision (a) or the time of settlement is not fixed by subdivision (a), no settlement occurs until the tender of settlement is accepted by the person receiving settlement.
(c) If settlement for an item is made by cashier’s check or teller’s check and the person receiving settlement, before its midnight deadline either:
(1) Presents or forwards the check for collection, settlement is final when the check is finally paid.
(2) Fails to present or forward the check for collection, settlement is final at the midnight deadline of the person receiving settlement.
(d) If settlement for an item is made by giving authority to charge the account of the bank giving settlement in the bank receiving settlement, settlement is final when the charge is made by the bank receiving settlement if there are funds available in the account for the amount of the item.
(Added by Stats. 1992, Ch. 914, Sec. 33. Effective January 1, 1993.)
2023 California Code › Commercial Code - COM › DIVISION 4 - BANK DEPOSITS AND COLLECTIONS › CHAPTER 2 - Collection of Items: Depositary and Collecting Banks › Section 4214.

4214. (a) If a collecting bank has made provisional settlement with its customer for an item and fails by reason of dishonor, suspension of payments by a bank, or otherwise to receive 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 item, 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. If the return or notice is delayed beyond the bank’s midnight deadline or a longer reasonable time after it learns the facts, the bank may revoke the settlement, charge back the credit, or obtain refund from its customer, but it is liable for any loss resulting from the delay. 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.
(b) A collecting bank returns an item when it is sent or delivered to the bank’s customer or transferor or pursuant to its instructions.
(c) A depositary bank that 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 4301).
(d) The right to charge back is not affected by either of the following:
(1) Previous use of a credit given for the item.
(2) Failure by any bank to exercise ordinary care with respect to the item, but a bank so failing remains liable.
(e) A failure to charge back or claim refund does not affect other rights of the bank against the customer or any other party.
(f) If credit is given in dollars as the equivalent of the value of an item payable in foreign money, the dollar amount of any charge-back or refund shall be calculated on the basis of the bank-offered spot rate for the foreign money prevailing on the day when the person entitled to the charge-back or refund learns that it will not receive payment in ordinary course.
(Added by renumbering Section 4212 by Stats. 1992, Ch. 914, Sec. 34. Effective January 1, 1993.)
2023 California Code › Commercial Code - COM › DIVISION 4 - BANK DEPOSITS AND COLLECTIONS › CHAPTER 2 - Collection of Items: Depositary and Collecting Banks › Section 4215.

4215. (a) An item is finally paid by a payor bank when the bank has first done any of the following:
(1) Paid the item in cash.
(2) Settled for the item without having a right to revoke the settlement under statute, clearing house rule, or agreement.
(3) Made a provisional settlement for the item and failed to revoke the settlement in the time and manner permitted by statute, clearing house rule, or agreement.
(b) If provisional settlement for an item does not become final, the item is not finally paid.
(c) If provisional settlement for an item between the presenting and payor banks is made through a clearing house or by debits or credits in an account between them, then to the extent that provisional debits or credits for the item are entered in accounts between the presenting and payor banks or between the presenting and successive prior collecting banks seriatim, they become final upon final payment of the items by the payor bank.
(d) If a collecting bank receives a settlement for an item which is or becomes final, the bank is accountable to its customer for the amount of the item and any provisional credit given for the item in an account with its customer becomes final.
(e) Subject to (i) applicable law stating a time for availability of funds and (ii) any right of the bank to apply the credit to an obligation of the customer, credit given by a bank for an item in a customer’s account becomes available for withdrawal as of right:
(1) If the bank has received a provisional settlement for the item, when the settlement becomes final and the bank has had a reasonable time to receive return of the item and the item has not been received within that time.
(2) If the bank is both the depositary bank and the payor bank, and the item is finally paid, the opening of the bank’s second banking day following receipt of the item.
(f) Subject to applicable law stating a time for availability of funds and any right of a bank to apply a deposit to an obligation of the depositor, a deposit of money becomes available for withdrawal as of right at the opening of the bank’s next banking day after receipt of the deposit.
(Added by renumbering Section 4213 by Stats. 1992, Ch. 914, Sec. 35. Effective January 1, 1993.)
2023 California Code › Commercial Code - COM › DIVISION 4 - BANK DEPOSITS AND COLLECTIONS › CHAPTER 2 - Collection of Items: Depositary and Collecting Banks › Section 4216.

4216. (a) If an item is in or comes into the possession of a payor or collecting bank that suspends payment and the item has not been finally paid, the item shall be returned by the receiver, trustee, or agent in charge of the closed bank to the presenting bank or the closed bank’s customer.
(b) If a payor bank finally pays an item and suspends payments without making a settlement for the item with its customer or the presenting bank which settlement is or becomes final, the owner of the item has a preferred claim against the payor bank.
(c) If a payor bank gives or a collecting bank gives or receives a provisional settlement for an item and thereafter suspends payments, the suspension does not prevent or interfere with the settlement’s becoming final if the finality occurs automatically upon the lapse of certain time or the happening of certain events.
(d) If a collecting bank receives from subsequent parties settlement for an item, which settlement is or becomes final and the bank suspends payments without making a settlement for the item with its customer which settlement is or becomes final, the owner of the item has a preferred claim against the collecting bank.
(Added by renumbering Section 4214 by Stats. 1992, Ch. 914, Sec. 36. Effective January 1, 1993.)
2023 California Code › Commercial Code - COM › DIVISION 4 - BANK DEPOSITS AND COLLECTIONS › CHAPTER 3 - Collection of Items: Payor Banks › Section 4301.

4301. (a) If a payor bank settles for a demand item other than a documentary draft presented otherwise than for immediate payment over the counter before midnight of the banking day of receipt, the payor bank may revoke the settlement and recover the settlement if, before it has made final payment and before its midnight deadline, it either:
(1) Returns the item.
(2) Sends written notice of dishonor or nonpayment if the item is unavailable for return.
(b) If a demand item is received by a payor bank for credit on its books, it may return the item or send notice of dishonor and may revoke any credit given or recover the amount thereof withdrawn by its customer, if it acts within the time limit and in the manner specified in subdivision (a).
(c) Unless previous notice of dishonor has been sent an item is dishonored at the time when for purposes of dishonor it is returned or notice sent in accordance with this section.
(d) An item is returned either:
(1) As to an item presented through a clearing house, when it is delivered to the presenting or last collecting bank or to the clearing house or is sent or delivered in accordance with clearing house rules.
(2) In all other cases, when it is sent or delivered to the bank’s customer or transferor or pursuant to his instructions.
(Amended by Stats. 1992, Ch. 914, Sec. 37. Effective January 1, 1993.)
2023 California Code › Commercial Code - COM › DIVISION 4 - BANK DEPOSITS AND COLLECTIONS › CHAPTER 3 - Collection of Items: Payor Banks › Section 4302.

4302. (a) If an item is presented to and received by a payor bank, the bank is accountable for the amount of either:
(1) A demand item, other than a documentary draft, whether properly payable or not, if the bank, in any case in which it is not also the depositary bank, retains the item beyond midnight of the banking day of receipt without settling for it or, whether or not it is also the depositary bank, does not pay or return the item or send notice of dishonor until after its midnight deadline.
(2) Any other properly payable item unless, within the time allowed for acceptance or payment of that item, the bank either accepts or pays the item or returns it and accompanying documents.
(b) The liability of a payor bank to pay an item pursuant to subdivision (a) is subject to defenses based on breach of a presentment warranty (Section 4208) or proof that the person seeking enforcement of the liability presented or transferred the item for the purpose of defrauding the payor bank.
(Amended by Stats. 1992, Ch. 914, Sec. 38. Effective January 1, 1993.)