Title 41, Uniform Commercial Code

In this chapter, unless the context otherwise requires: 1. "Bank" means any person engaged in the business of banking, including a savings bank, savings and loan association, credit union, or trust company. 2. "Collecting bank" means a bank handling an item for collection except …

1. If an item states that it is "payable through" a bank identified in the item, the item designates the bank as a collecting bank and does not by itself authorize the bank to pay the item, and the item may be presented for payment only by or through the bank. 2. If an item state…

A branch or separate office of a bank is a separate bank for the purpose of computing the time within which and determining the place at or to which action may be taken or notice or orders must be given under this chapter and under chapter 41-03.

1. For the purpose of allowing time to process items, prove balances, and make the necessary entries on its books to determine its position for the day, a bank may fix an afternoon hour of two p.m. or later as a cutoff hour for the handling of money and items and the making of en…

1. Unless otherwise instructed, a collecting bank in a good-faith effort to secure payment of a specific item drawn on a payor other than a bank, and with or without the approval of any person involved, may waive, modify, or extend time limits imposed or permitted by this chapter…

1. "Electronic presentment agreement" means an agreement, clearinghouse rule, or federal reserve regulation or operating circular, providing that presentment of an item may be made by transmission of an image of an item or information describing the item ("presentment notice") ra…

An action to enforce an obligation, duty, or right arising under this chapter must be commenced within three years after the cause of action accrues.

This chapter may not be construed to permit branch banking.

1. Unless a contrary intent clearly appears and before the time that a settlement given by a collecting bank for an item is or becomes final, the bank with respect to the item is an agent or subagent of the owner of the item and any settlement given for the item is provisional. T…

1. A collecting bank must exercise ordinary care in the following matters: a. Presenting an item or sending it for presentment. b. Sending notice of dishonor or nonpayment or returning an item other than a documentary draft to the bank's transferor after learning that the item ha…

Subject to the provisions of chapter 41-03 concerning conversion of instruments (section 41-03-57) and restrictive endorsements (section 41-03-25), only a collecting bank's transferor may give instructions which affect the bank or constitute notice to it, and a collecting bank is…

1. A collecting bank shall send items by a reasonably prompt method taking into consideration any relevant instructions, the nature of the item, the number of those items on hand, the cost of collection involved, and the method generally used by it or others to present those item…

If a customer delivers an item to a depositary bank for collection: 1. The depositary bank 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 endorses, and, if …

Any agreed method that identifies the transferor bank is sufficient for further transfer of the item to another bank.

1. A customer or collecting bank that transfers an item and receives a settlement or other consideration warrants to the transferee and to any subsequent collecting bank that: a. The warrantor is a person entitled to enforce the item. b. All signatures on the item are authentic a…

1. If an unaccepted draft is presented to the drawee for payment or acceptance and the drawee pays or accepts the draft, the person obtaining payment or acceptance, at the time of presentment, and a previous transferor of the draft, at the time of transfer, warrant to the drawee …

1. A person that encodes information on or with respect to an item after issue warrants to any subsequent collecting bank and to the payor bank or other payor that the information is correctly encoded. If the customer of a depositary bank encodes, that bank also makes the warrant…

1. A collecting bank has a security interest in an item and any accompanying documents or the proceeds of either: a. In case of an item deposited in an account, to the extent to which credit given for the item has been withdrawn or applied. b. In case of an item for which it has …

For purposes of determining its status as a holder in due course, a bank has given value to the extent it has a security interest in an item, provided the bank otherwise complies with the requirements of section 41-03-28.

1. Unless otherwise instructed, a collecting bank may present an item not payable by, through, or at a bank by sending to the party to accept or pay a written notice that the bank holds the item for acceptance or payment. The notice must be sent in time to be received on or befor…

1. With respect to settlement by a bank, the medium and time of settlement may be prescribed by federal reserve regulations or circulars, clearinghouse rules, and the like, or agreement. In the absence of such prescription: a. The medium of settlement is cash or credit to an acco…

1. If a collecting bank has made provisional settlement with its customer for an item and fails by reason of dishonor, suspension of payments by a bank, or otherwise to receive settlement for the item which is or becomes final, the bank may revoke the settlement given by it, char…

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. b. Settled for the item without having a right to revoke the settlement under statute, clearinghouse rule, or agreement. c. Made a provisiona…

1. Any item in or coming into the possession of a payor or collecting bank that suspends payment and which item is not finally paid must be returned by the receiver, trustee, or agent in charge of the closed bank to the presenting bank or the closed bank's customer. 2. If a payor…

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 any settlement if before it has made fin…

1. If an item is presented to and received by a payor bank, the bank is accountable for the amount of: a. A demand item, other than a documentary draft, whether properly payable or not if the bank, in any case in which it is not also the depositary bank, retains the item beyond m…

1. Any knowledge, notice, or stop order received by, legal process served upon, or setoff exercised by a payor bank comes too late to terminate, suspend, or modify the bank's right or duty to pay an item or to charge its customer's account for the item if the knowledge, notice, s…

1. A bank may charge against the account of a customer an item which is properly payable from that account even though the charge creates an overdraft. An item is properly payable if it is authorized by the customer and complies with any agreement between the customer and bank. 2…

1. Except as otherwise provided in this chapter, a payor bank wrongfully dishonors an item if it dishonors an item that is properly payable, but a bank may dishonor an item that would create an overdraft unless it had agreed to pay the overdraft. 2. A payor bank is liable to its …

1. A customer or any other person authorized to draw on the account may stop payment of any item drawn on the customer's account or close the account by an order to the bank describing the item or account with reasonable certainty received at such time and in such manner as to af…

A bank is under no obligation to a customer having a checking account to pay a check, other than a certified check, which is presented more than six months after its date, but it may charge its customer's account for a payment made thereafter in good faith.

1. A payor or collecting bank's authority to accept, pay, or collect an item, or to account for proceeds of its collection if otherwise effective is not rendered ineffective by incompetence of a customer of either bank existing at the time the item is issued or its collection is …

1. A bank that sends or makes available to a customer a statement of account showing payment of items for the account shall either return or make available to the customer the items paid or provide information in the statement of account sufficient to allow the customer to identi…

If a payor bank has paid an item over the stop payment order of the drawer or maker, or after an account has been closed, or otherwise under circumstances giving a basis for objection by the drawer or maker, to prevent unjust enrichment and only to the extent necessary to prevent…

A bank that takes a documentary draft for collection must present or send the draft and accompanying documents for presentment and upon learning that the draft has not been paid or accepted in due course must seasonably notify its customer of that fact even though it may have dis…

When a draft or the relevant instructions require presentment "on arrival", "when goods arrive", or the like, the collecting bank need not present until in its judgment a reasonable time for arrival of the goods has expired. Refusal to pay or accept because the goods have not arr…

Unless otherwise instructed and except as provided in chapter 41-05, a bank presenting a documentary draft: 1. Must deliver the documents to the drawee either on payment or on acceptance of the draft if it is payable more than three days after presentment. 2. Upon dishonor, eithe…

1. A presenting bank that, following the dishonor of a documentary draft, has seasonably requested instructions but does not receive them within a reasonable time may store, sell, or otherwise deal with the goods in any reasonable manner. 2. For its reasonable expenses incurred b…