4401 - When bank may charge account of customer.
CHAPTER 44 RELATIONSHIP BETWEEN PAYOR BANK AND ITS CUSTOMER Sec. 4401. When bank may charge account of customer. 4402. Liability of bank to customer for wrongful dishonor; time of determining insufficiency of account. 4403. Right of customer to stop payment; burden of proof of loss. 4404. Bank not obligated to pay check more than six months old. 4405. Death or incapacity of customer. 4406. Duty of customer to discover and report unauthorized signature or alteration. 4407. Right of payor bank to subrogation on improper payment. Enactment. Chapter 44 was added November 1, 1979, P.L.255, No.86, effective January 1, 1980. § 4401. When bank may charge account of customer. (a) General rule.--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 the bank. (b) Limitation on customer liability.--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. (c) Postdated checks.--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 section 4403(b) (relating to right of customer to stop payment; burden of proof of loss) 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 section 4303 (relating to when items subject to notice, stop-payment order, legal process or set-off; order in which items may be charged or certified). 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 section 4402 (relating to liability of bank to customer for wrongful dishonor; time of determining insufficiency of account). (d) Payment to holder on altered or completed item.--A bank that in good faith makes payment to a holder may charge the indicated account of its customer according to: (1) the original terms of the altered item; or (2) 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. (July 9, 1992, P.L.507, No.97, eff. one year) Cross References. Section 4401 is referred to in section 3113 of this title.