SF 2170 (LSB 5057SV (1) 87)

SENATE FILE 2170

BY  COMMITTEE ON COMMERCE

(SUCCESSOR TO SSB 3054)

(COMPANION TO HF 2171 BY COMMITTEE ON COMMERCE)

A BILL FOR

An Act relating to stopping payment on a negotiable instrument by using an electronic record in lieu of a writing.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  Section 554.4403, Code 2018, is amended by adding the following new subsection:
   NEW SUBSECTION.  2A.  In addition to a stop-payment order made or renewed in writing as described in subsection 2, an equivalent stop-payment order may also be made or renewed as part of a record that is stored in an electronic medium, and submitted to the bank, which may include delivery via electronic transmission. 
EXPLANATION
The inclusion of this explanation does not constitute agreement with
the explanation’s substance by the members of the general assembly.
   This bill amends a provision in Article 4, Part 4, of the uniform commercial code (“UCC”) regulating the relationship between banks and its customers. 
   Code section 554.4403 requires a customer or other authorized person to give the bank timely and adequate notice of stop-payment instructions (an “order”) either verbally or in writing. The order must be received by the bank in sufficient detail (describing the item or account) and within a reasonable time sufficient for it to act (some period between the time the item left the customer’s possession and before it is presented to the bank for payment from the customer’s account). A verbal stop-payment order lapses 14 days after it was given. A written stop-payment order lapses after six months following the date it was given. During the period that a verbal or written stop-payment order is effective, it may be renewed for any number of additional six-month periods but only if the order is given in writing during the effectiveness of the last order given. 
   The bill amends Code section 554.4403 by allowing a customer or other authorized person to contact the customer’s bank by using an electronic “record” and submitting that record (e.g., by electronic transmission such as email) to stop payment on an item on an equivalent basis to a written stop-payment order.