§ 26-1-4-302 — Payor bank's responsibility for late return of item

(a) If an item is presented to and received
by a payor bank, the bank is accountable for the amount of:
(1) 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 midnight of the
banking day of receipt without settling for it or, whether or not it
is also the depositary bank, does not pay or return the item or send
notice of dishonor until after its midnight deadline; or
(2) any other properly payable item unless, within the time
allowed for acceptance or payment of that item, the bank either
accepts or pays the item or returns it and accompanying
documents.
(b) The liability of a payor bank to pay an item under subsection (a)
is subject to defenses based on breach of a presentment warranty (IC 26-1-4-208) or proof that the person seeking enforcement of the
liability presented or transferred the item for the purpose of defrauding
the payor bank.
Formerly: Acts 1963, c.317, s.4-302. As amended by
P.L.152-1986, SEC.223; P.L.222-1993, SEC.34.