N.Y. Uniform Commercial Code 4-212 – Right of Charge-Back or Refund
Section 4–212. Right of Charge-Back or Refund.
Terms Used In N.Y. Uniform Commercial Code 4-212
- Account: means any account with a bank and includes a
checking, time, interest or savings account;
(b) "Afternoon" means the period of a day between noon and
midnight;
(c) "Banking day" means that part of any day on which a bank is
open to the public for carrying on substantially all of its
banking functions;
(d) "Clearing house" means any association of banks or other
payors regularly clearing items;
(e) "Customer" means any person having an account with a bank or
for whom a bank has agreed to collect items and includes a
bank carrying an account with another bank;
(f) "Documentary draft" means any negotiable or non-negotiable
draft with accompanying documents, securities or other papers
to be delivered against honor of the draft;
(g) "Item" means any instrument for the payment of money even
though it is not negotiable but does not include money;
(h) "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;
(i) "Obligated bank" means the acceptor of a certified check, the
issuer of a cashier's check, or the drawer of a teller's
check;
(j) "Properly payable" includes the availability of funds for
payment at the time of decision to pay or dishonor;
(k) "Remitter" means the buyer from the obligated bank of a
cashier's check or a teller's check, and the drawer of a
certified check;
(l) "Settle" means to pay in cash, by clearing house settlement,
in a charge or credit or by remittance, or otherwise as
instructed. See N.Y. Uniform Commercial Code 4-104 - Depositary bank: means the first bank to which an item is transferred for collection even though it is also the payor bank;
(b) "Payor bank" means a bank by which an item is payable as drawn or accepted;
(c) "Intermediary bank" means any bank to which an item is transferred in course of collection except the depositary or payor bank;
(d) "Collecting bank" means any bank handling the item for collection except the payor bank;
(e) "Presenting bank" means any bank presenting an item except a payor bank;
(f) "Remitting bank" means any payor or intermediary bank remitting for an item. See N.Y. Uniform Commercial Code 4-105 - 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 collecting bank has made provisional settlement with its customer for an item and itself fails by reason of dishonor, suspension of payments by a bank or otherwise to receive a 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 items 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. 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 (subsection (3) of Section 4–211 and subsections (2) and (3) of Section 4–213).
(2) Within the time and manner prescribed by this section and Section 4–301, an intermediary or payor bank, as the case may be, may return an unpaid item directly to the depositary bank and may send for collection a draft on the depositary bank and obtain reimbursement. In such case, if the depositary bank has received provisional settlement for the item, it must reimburse the bank drawing the draft and any provisional credits for the item between banks shall become and remain final.
(3) A depositary bank which 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 4–301).
(4) The right to charge-back is not affected by
(a) prior use of the credit given for the item; or
(b) failure by any bank to exercise ordinary care with respect to
the item but any bank so failing remains liable.
(5) A failure to charge-back or claim refund does not affect other rights of the bank against the customer or any other party.
(6) If credit is given in dollars as the equivalent of the value of an item payable in a foreign currency the dollar amount of any charge-back or refund shall be calculated on the basis of the buying sight rate for the foreign currency prevailing on the day when the person entitled to the charge-back or refund learns that it will not receive payment in ordinary course.