Kentucky Statutes 355.4-401 – When bank may charge customer’s account
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(1) 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 bank.
(2) 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.
(3) 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 KRS § 355.4-403(2) 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 KRS § 355.4-
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 KRS § 355.4-402.
(4) A bank that in good faith makes payment to a holder may charge the indicated account of its customer according to:
(a) The original terms of the altered item; or
(b) 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.
Effective: January 1, 1997
History: Amended 1996 Ky. Acts ch. 130, sec. 102, effective January 1, 1997. — Created 1958 Ky. Acts ch. 77, sec. 4-401, effective July 1, 1960.
(2) 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.
Terms Used In Kentucky Statutes 355.4-401
- Action: includes all proceedings in any court of this state. See Kentucky Statutes 446.010
- Customer: means a person having an account with a bank or for whom a bank has agreed to collect items including a bank that maintains an account at another bank. See Kentucky Statutes 355.4-104
- Damages: Money paid by defendants to successful plaintiffs in civil cases to compensate the plaintiffs for their injuries.
- Item: means an instrument or a promise or order to pay money handled by a bank for collection or payment. See Kentucky Statutes 355.4-104
(3) 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 KRS § 355.4-403(2) 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 KRS § 355.4-
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 KRS § 355.4-402.
(4) A bank that in good faith makes payment to a holder may charge the indicated account of its customer according to:
(a) The original terms of the altered item; or
(b) 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.
Effective: January 1, 1997
History: Amended 1996 Ky. Acts ch. 130, sec. 102, effective January 1, 1997. — Created 1958 Ky. Acts ch. 77, sec. 4-401, effective July 1, 1960.