§ 26-1-4.1-204 — Refund of payment and duty of customer to report with respect to unauthorized payment order

Indiana § 26-1-4.1-204

• Jurisdiction: Indiana
• Title 26: COMMERCIAL LAW
• Art. 1: UNIFORM COMMERCIAL CODE
• Ch. 4.1: Fund Transfers

Text

(a) If a receiving bank accepts a payment
order issued in the name of its customer as sender which is (i) not
authorized and not effective as the order of the customer under IC 26-1-2.1-202, or (ii) not enforceable, in whole or in part, against the
customer under IC 26-1-4.1-203, the bank shall refund any payment of
the payment order received from the customer to the extent the bank is
not entitled to enforce payment and shall pay interest on the refundable
amount calculated from the date the bank received payment to the date
of the refund. However, the customer is not entitled to interest from the
bank on the amount to be refunded if the customer fails to exercise
ordinary care to determine that the order was not authorized by the
customer and to notify the bank of the relevant facts within a
reasonable time not exceeding ninety (90) days after the date the
customer received notification from the bank that the order was
accepted or that the customer's account was debited with respect to the
order. The bank is not entitled to any recovery from the customer on
account of a failure by the customer to give notification as stated in this
section.
(b) Reasonable time under subsection (a) may be fixed by
agreement as stated in IC 26-1-1-204(1), but the obligation of a
receiving bank to refund payment as stated in subsection (a) may not
otherwise be varied by agreement.

Legislative History

As added by P.L.189-1991, SEC.4. Amended by P.L.1-1992, SEC.138.