Senate Study Bill 3054 - Introduced SENATE FILE _____ BY (PROPOSED COMMITTEE ON COMMERCE BILL BY CHAIRPERSON CHAPMAN) A BILL FOR An Act relating to stopping payment on a negotiable instrument 1 by using an electronic record in lieu of a writing. 2 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 3 TLSB 5057XC (2) 87 da/rn
S.F. _____ Section 1. Section 554.4403, Code 2018, is amended by adding 1 the following new subsection: 2 NEW SUBSECTION . 2A. In addition to a stop-payment order 3 made or renewed in writing as described in subsection 2, an 4 equivalent stop-payment order may also be made or renewed 5 as part of a record that is stored in an electronic medium, 6 and submitted to the bank, which may include delivery via 7 electronic transmission. 8 EXPLANATION 9 The inclusion of this explanation does not constitute agreement with 10 the explanation’s substance by the members of the general assembly. 11 This bill amends a provision in Article 4, Part 4, of the 12 uniform commercial code (“UCC”) regulating the relationship 13 between banks and its customers. 14 Code section 554.4403 requires a customer or other 15 authorized person to give the bank timely and adequate notice 16 of stop-payment instructions (an “order”) either verbally or in 17 writing. The order must be received by the bank in sufficient 18 detail (describing the item or account) and within a reasonable 19 time sufficient for it to act (some period between the time the 20 item left the customer’s possession and before it is presented 21 to the bank for payment from the customer’s account). A verbal 22 stop-payment order lapses 14 days after it was given. A 23 written stop-payment order lapses after six months following 24 the date it was given. During the period that a verbal or 25 written stop-payment order is effective, it may be renewed for 26 any number of additional six-month periods but only if the 27 order is given in writing during the effectiveness of the last 28 order given. 29 The bill amends Code section 554.4403 by allowing a customer 30 or other authorized person to contact the customer’s bank by 31 using an electronic “record” and submitting that record (e.g., 32 by electronic transmission such as email) to stop payment on an 33 item on an equivalent basis to a written stop-payment order. 34 -1- LSB 5057XC (2) 87 da/rn 1/ 1