Michigan Laws 440.4301 – Demand items; recovery of settlement; time of dishonor; return of items
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Terms Used In Michigan Laws 440.4301
- Bank: means a person engaged in the business of banking, including a saving bank, saving and loan association, credit union, or trust company. See Michigan Laws 440.4105
- 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. See Michigan Laws 440.4104
- Clearing-house: means an association of banks or other payors regularly clearing items. See Michigan Laws 440.4104
- Collecting bank: means a bank handling the item for collection except the payor bank. See Michigan Laws 440.4105
- Customer: means any 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. See Michigan Laws 440.4104
- Documentary draft: means a draft to be presented for acceptance or payment if specified documents, certificated securities as defined in section 8102 or instructions for uncertificated securities as defined in 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. See Michigan Laws 440.4104
- Item: means an instrument or a promise or order to pay money handled by a bank for collection or pay. See Michigan Laws 440.4104
- Payor bank: means a bank that is the drawee of a draft. See Michigan Laws 440.4105
- Record: means information that is inscribed on a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable form. See Michigan Laws 440.1201
- Settlement: Parties to a lawsuit resolve their difference without having a trial. Settlements often involve the payment of compensation by one party in satisfaction of the other party's claims.
(1) 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 does any of the following:
(a) Returns the item.
(b) Returns an image of the item, if the party to which the return is made has entered into an agreement to accept an image as a return of the item and the image is returned in accordance with that agreement.
(c) Sends a record providing notice of dishonor or nonpayment if the item is unavailable for return.
(2) 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 subsection (1).
(3) 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.
(4) An item is returned when 1 of the following occurs:
(a) 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 its rules.
(b) In all other cases, when it is sent or delivered to the bank’s customer or transferor or pursuant to his or her instructions.