Texas Business and Commerce Code 4.205 – Depository Bank Holder of Unindorsed Item
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Terms Used In Texas Business and Commerce Code 4.205
- Account: means any deposit or credit account with a bank, including a demand, time, savings, passbook, share draft, or like account, other than an account evidenced by a certificate of deposit. See Texas Business and Commerce Code 4.104
- Customer: means a 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 Texas Business and Commerce Code 4.104
- Item: means an instrument or a promise or order to pay money handled by a bank for collection or payment. See Texas Business and Commerce Code 4.104
If a customer delivers an item to a depositary bank for collection, the depositary bank:
(1) 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 3.302, the bank is a holder in due course; and
(2) 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.