§ 26-1-4-401 — When bank may charge customer's account

(a) A bank may charge against the account
of a customer an item that 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 is in accordance with any
agreement between the customer and the bank.
(b) A customer is not liable for the amount of an overdraft if the
customer neither signed the item nor benefited from the proceeds of the
item.
(c) A bank may charge against the account of a customer a check
that is otherwise properly payable from the account, even though
payment was made before the date of the check, unless the customer
has given notice to the bank of the postdating describing the check with
reasonable certainty. The notice is effective for the period stated in IC 26-1-4-403(b) for stop-payment orders, and must be received at such
time and in such manner as to afford the bank a reasonable opportunity
to act on it before the bank takes any action with respect to the check
described in IC 26-1-4-303. If a bank charges against the account of a
customer a check before the date stated in the notice of postdating, the
bank is liable for damages for the loss resulting from its act. The loss
may include damages for dishonor of subsequent items under IC 26-1-4-402.
(d) A bank that in good faith makes payment to a holder may charge
the indicated account of its customer according to:
(1) the original terms of the altered item; or
(2) the terms of the completed item, even though the bank knows
the item has been completed unless the bank has notice that the
completion was improper.
Formerly: Acts 1963, c.317, s.4-401. As amended by
P.L.222-1993, SEC.36.