554.4402 Bank’s liability to customer for wrongful dishonor — time of determining insufficiency of account. 1. Except as otherwise provided in this Article, a payor bank wrongfully dishonors an item if it dishonors an item that is properly payable, but a bank may dishonor an item that wouldcreate an overdraft unless it has agreed to pay the overdraft. 2. A payor bank is liable to its customer for damages proximately caused by the wrongful dishonor of an item. Liability is limited to actual damages proved and may include damagesfor an arrest or prosecution of the customer or other consequential damages. Whether anyconsequential damages are proximately caused by the wrongful dishonor is a question of factto be determined in each case. 3. A payor bank’s determination of the customer’s account balance on which a decision to dishonor for insufficiency of available funds is based may be made at any time between thetime the item is received by the payor bank and the time that the payor bank returns the itemor gives notice in lieu of return, and no more than one determination need be made. If, atthe election of the payor bank, a subsequent balance determination is made for the purposesof returns the itemor gives notice in lieu of return, and no more than one determination need be made. If, atthe election of the payor bank, a subsequent balance determination is made for the purposesof reevaluating the bank’s decision to dishonor the item, the account balance at the time isdeterminative of whether a dishonor for insufficiency of available funds is wrongful. [C66, 71, 73, 75, 77, 79, 81, §554.4402]94 Acts, ch 1167, §108, 122Referred to in §554.4401, 554.4403 Sat Dec 23 01:57:29 2023 Iowa Code 2024, Section 554.4402 (24, 0)
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