KANSAS OFFICE of
  REVISOR of STATUTES

  

Home >> Statutes >> Back


Click to open printable format in new window.Printable Format
 | Next

84-4-214. Right of charge-back or refund; liability of collecting bank; return of item. (a) If a collecting bank has made provisional settlement with its customer for an item and fails by reason of dishonor, suspension of payments by a bank or otherwise to receive settlement for the item which is or becomes final, the bank may revoke the settlement given by it, charge back the amount of any credit given for the item to its customer's account, or obtain refund from its customer, whether or not it is able to return the item, if by its midnight deadline or within a longer reasonable time after it learns the facts it returns the item or sends notification of the facts. If the return or notice is delayed beyond the bank's midnight deadline or a longer reasonable time after it learns the facts, the bank may revoke the settlement, charge back the credit, or obtain refund from its customer, but it is liable for any loss resulting from the delay. These rights to revoke, charge-back, and obtain refund terminate if and when a settlement for the item received by the bank is or becomes final.

(b) A collecting bank returns an item when it is sent or delivered to the bank's customer or transferor or pursuant to its instructions.

(c) A depository bank that is also the payor may charge-back the amount of an item to its customer's account or obtain refund in accordance with the section governing return of an item received by a payor bank for credit on its books (K.S.A. 84-4-301).

(d) The right to charge-back is not affected by:

(1) Previous use of a credit given for the item; or

(2) failure by any bank to exercise ordinary care with respect to the item, but a bank so failing remains liable.

(e) A failure to charge-back or claim refund does not affect other rights of the bank against the customer or any other party.

(f) If credit is given in dollars as the equivalent of the value of an item payable in foreign money, the dollar amount of any charge-back or refund must be calculated on the basis of the bank-offered spot rate for the foreign money prevailing on the day when the person entitled to the charge-back or refund learns that it will not receive payment in ordinary course.

History: L. 1965, ch. 564, § 221; L. 1991, ch. 296, § 95; February 1, 1992.

KANSAS COMMENT, 1996

This section is identical to the 1995 Official Text. This section is derived from the former 84-4-212. It is similar to the former 84-4-212 except that subsection (a) has an added a sentence that adopts the view of Appliance Buyers Credit Corporation v. Prospect National Bank, 708 F.2d 290 (2d Cir. 1983) that a late return makes the collecting bank liable only for damages caused. The cross references to former 84-4-211 (now 84-4-213) and 84-4-213 (now 84-4-215) has been deleted because other sections can determine final settlement. Subsection (b), derived from the former 84-4-212(2) has been redrafted to restrict the right of direct return of noncheck items. Subsection (f) is conformed to 84-3-107. The other amendments are stylistic and are not meant to change the substantive law.

Subsection (a) codifies and clarifies the scope of the common-law right of charge-back. For a pre-UCC Kansas decision discussing the right, see Noble v. Doughten, 72 K. 336, 83 P. 1048 (1905). If the drawee bank dishonors an item and returns it to the presenting bank before the midnight deadline, the provisional credit is revoked. Conversely, failure by a collecting bank to send notice of dishonor or to return an item before the midnight deadline "or within a longer reasonable time" after the bank has itself learned of dishonor still permits a charge-back, but the collecting bank is liable for any loss caused by the delay. If the drawee bank revokes its provisional credit in time, the presenting bank and any other intermediary bank may in turn revoke the provisional settlement previously given by it to its transferor. Such revocation is effected by seeing that the item is returned along the links in the chain, or that notification of the facts is sent before each bank's successive midnight deadline. Finally, the depositary bank charges the item back against the account of its customer, who is left with a cause of action on the obligations of the drawer and indorsers. For a case defining a "longer reasonable time," see Lufthansa German Airlines v. Bank of America, N.T.S.A., 478 F.Supp. 1195 (N.D. Calif. 1979).

Subsection (b) allows returning the item as sending it to the customer, or the transferor from which it was received, or by following instructions.

Revisor's Note:

In 1991 former section 84-4-214 was transferred to 84-4-216 as a conforming amendment in the revision of article 3 of the code and the number reassigned to former section 84-4-212.


 | Next


LEGISLATIVE COORDINATING COUNCIL
  7/30/2024 Meeting Notice
  7/09/2024 Meeting Notice Agenda
  6/03/2024 Meeting Notice Agenda
  LCC Policies

REVISOR OF STATUTES
  Chapter 72 Statute Transfer List
  Kansas School Equity & Enhancement Act
  Gannon v. State
  A Summary of Special Sessions in Kansas
  Bill Brief for Senate Bill No. 1
  Bill Brief for House Bill No. 2001
  Information for Special Session 2021
  General Info., Legal Analysis & Research
  2023 Amended & Repealed Statutes
  2022 Amended & Repealed Statutes
  2021 Amended & Repealed Statutes
  2020 Amended & repealed Statutes
  2019 Amended & Repealed Statutes

USEFUL LINKS
Session Laws

OTHER LEGISLATIVE SITES
Kansas Legislature
Administrative Services
Division of Post Audit
Research Department