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84-4-204. Methods of sending and presenting; sending directly to payor bank. (a) A collecting bank shall send items by a reasonably prompt method, taking into consideration relevant instructions, the nature of the item, the number of those items on hand, the cost of collection involved, and the method generally used by it or others to present those items.

(b) A collecting bank may send:

(1) An item directly to the payor bank;

(2) an item to a nonbank payor if authorized by its transferor; and

(3) an item other than documentary drafts to a nonbank payor, if authorized by federal reserve regulation or operating circular, clearing-house rule, or the like.

(c) Presentment may be made by a presenting bank at a place where the payor bank or other payor has requested that presentment be made.

History: L. 1965, ch. 564, § 213; L. 1991, ch. 296, § 85; February 1, 1992.


This section is identical to the 1995 Official Text. It is substantially the same as the former 84-4-204 except that subsection (C) (formerly (3)) has been amended to allow a payor other than payor banks to request a place of payment. The other amendments are stylistic and are not meant to change the substantive law.

This section makes it clear that an item must be forwarded by a reasonably prompt route, considering all relevant instructions, the number and nature of the items, the cost of collection and the commercial practice in forwarding items of that sort. See Gulf Coast State Bank v. Emenhiser, 562 S.W.2d 449 (Tex. 1978) (collecting bank given substantial flexibility in sending item for presentment). A collecting bank may send any item direct to the drawee bank, skipping intermediate links in the collection chain. Direct routing to nonbank payors is permitted if a collecting bank's transferor so authorizes, or, except for documentary drafts, if the practice is authorized by Federal Reserve regulation. The drawee of a documentary draft is normally the buyer in an underlying sales transaction and the direct interest in the documents obviously precludes sending the draft directly to the drawee. In short, blanket approval of direct sending is limited to situations, like the common check, where a bank is drawee.

Ordinary care could include presentment made by any of the methods expressly authorized by the UCC, including the mails, through the clearinghouse (see 84-3-501) or at a place where the payor, including non-bank payors since the 1991 amendments, has requested that presentment be made, such as an off-premises data processing center, under subsection (c). Subsection (3) is mandated by the substantial increase in recent years of the use of centralized bookkeeping centers and electronic processing centers.

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