Section 4–213. Final Payment of Item by Payor Bank; When Provisional

Terms Used In N.Y. Uniform Commercial Code 4-213

  • 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
  • Obligation: An order placed, contract awarded, service received, or similar transaction during a given period that will require payments during the same or a future period.
  • 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.
  • Statute: A law passed by a legislature.

Debits and Credits Become Final; When Certain Credits

Become Available for Withdrawal.

(1) An item is finally paid by a payor bank when the bank has done any of the following, whichever happens first:

(a) paid the item in cash; or

(b) settled for the item without reserving a right to revoke the

settlement and without having such right under statute,

clearing house rule or agreement; or

(c) completed the process of posting the item to the indicated

account of the drawer, maker or other person to be charged

therewith; or

(d) 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. Upon a final payment under subparagraphs (b), (c) or (d) the payor bank shall be accountable for the amount of the item.

(2) 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 item by the payor bank.

(3) If a collecting bank receives a settlement for an item which is or becomes final (subsection (3) of Section 4–211, subsection (2) of Section 4–213) 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.

(4) Subject to any right of the bank to apply the credit to an obligation of the customer, credit given by a bank for an item in an account with its customer becomes available for withdrawal as of right

(a) in any case where the bank has received a provisional

settlement for the item,–when such settlement becomes final

and the bank has had a reasonable time to learn that the

settlement is final;

(b) in any case where the bank is both a depositary bank and a

payor bank and the item is finally paid,–at the opening of

the bank's second banking day following receipt of the item.

(5) A deposit of money in a bank is final when made but, subject to any right of the bank to apply the deposit to an obligation of the customer, the deposit becomes available for withdrawal as of right at the opening of the bank's next banking day following receipt of the deposit.

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