A payor bank is liable to its customer for damages proximately caused by the wrongful dishonor of an item. When the dishonor occurs through mistake liability is limited to actual damages proved. If so proxi- mately caused and proved, damages may include damages for an arrest or prosecution of the customer or other consequential damages. Whether any consequential damages are proximately caused by the wrongful dishonor is a question of fact to be determined in each case.
COL120106
COMMENT: Section 4402 is identical to Section 4-402 of the 1972 Official Text of the Uniform Commercial Code. For purpose and effect, see Official Comment. The California version omitted the last two sentences of the section because they appeared to conflict with prior California case law (that an arrest resulted from the intervention of an independent cause) despite the characterization of this case law as Ahighly arbitrary@ and Aunrealistic.@