§ 41-04-26 — (4-214) Right of chargeback or refund - Liability of collecting bank - Return of item

of item.
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, charge back the amount of any credit given for the item to its customer's
account, or obtain refund from its customer, whether or not it is able to return the items
if by its midnight deadline or within a longer reasonable time after it learns the facts it
returns the item or sends notification of the facts. If the return or notice is delayed
beyond the bank's midnight deadline or a longer reasonable time after it learns the
facts, the bank may revoke the settlement, charge back the credit, or obtain refund
from its customer but is liable for any loss resulting from the delay. These rights to
revoke, charge back, and obtain refund terminate if and when a settlement for the item
received by the bank is or becomes final.
2. A collecting bank returns an item when it is sent or delivered to the bank's customer or
transferor or under its instructions.

3. A depositary bank which is also the payor may charge back the amount of an item to
its customer's account or obtain refund under the section governing return of an item
received by a payor bank for credit on its books (section 41-04-29).
4. The right to charge back is not affected by:
a. Previous use of a credit given for the item.
b. Failure by any bank to exercise ordinary care with respect to the item, but any
bank so failing remains liable.
5. A failure to charge back or claim refund does not affect other rights of the bank against
the customer of any other party.
6. If credit is given in dollars as the equivalent of the value of an item payable in foreign
money, the dollar amount of any chargeback or refund must be calculated on the basis
of the bank-offered spot rate for the foreign money prevailing on the day when the
person entitled to the chargeback or refund learns that it will not receive payment in
ordinary course.