554.4202  Responsibility for collection or return--when action timely.

1.  A collecting bank must exercise ordinary care in:

a.  presenting an item or sending it for presentment;

b.  sending notice of dishonor or nonpayment or returning an item other than a documentary draft to the bank's transferor after learning that the item has not been paid or accepted, as the case may be;

c.  settling for an item when the bank receives final settlement; and

d.   notifying its transferor of any loss or delay in transit within a reasonable time after discovery thereof.

2.  A collecting bank exercises ordinary care under subsection 1 by taking proper action before its midnight deadline following receipt of an item, notice, or settlement. Taking proper action within a reasonably longer time may constitute the exercise of ordinary care, but the bank has the burden of establishing timeliness.

3.  Subject to subsection 1, paragraph "a", a bank is not liable for the insolvency, neglect, misconduct, mistake, or default of another bank or person or for loss or destruction of an item in the possession of others or in transit.

Section History: Early form

  [C66, 71, 73, 75, 77, 79, 81, § 554.4202]

Section History: Recent form

  94 Acts, ch 1167, §89, 122

Previous Section 554.4201

Next Section 554.4203

© 1999 Cornell College and League of Women Voters of Iowa

Comments about this site or page? webmaster@legis.iowa.gov.
Please remember that the person listed above does not vote on bills. Direct all comments concerning legislation to State Legislators.

Last update: Thu Mar 18 15:00:31 CST 1999
URL: /DOCS/IACODE/1999/554/4202.html
jhf