§ 26-1-4-402 — Bank's liability to customer for wrongful dishonor; time of determining insufficiency of account

(a) Except as otherwise provided in IC 26-1-4, 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 has agreed to pay the overdraft.
(b) A payor bank is liable to its customer for damages proximately
caused by the wrongful dishonor of an item. Liability is limited to
actual damages proved and 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.
(c) A payor bank's determination of the customer's account balance
on which a decision to dishonor for insufficiency of available funds is
based may be made at any time between the time the item is received
by the payor bank and the time that the payor bank returns the item or
gives notice in lieu of return, and no more than one (1) determination
need be made. If, at the election of the payor bank, a subsequent
balance determination is made for the purpose of reevaluating the
bank's decision to dishonor the item, the account balance at that time
is determinative of whether a dishonor for insufficiency of available
funds is wrongful.
Formerly: Acts 1963, c.317, s.4-402. As amended by
P.L.222-1993, SEC.37.