Oregon Revised Statutes

Chapter 74 — Bank Deposits and Collections

47 sections

74.550 [Renumbered 165.680]

74.560, 74.570, 74.580, 74.590 GENERAL PROVISIONS

74.1010 Short title

This chapter may be cited as Uniform Commercial Code–Bank Deposits and Collections.

To the extent that items within this chapter are also within ORS chapters 73 and 78, they are subject to those chapters. If there is conflict, this chapter and ORS chapter 78 govern ORS chapter 73. The liability of a bank for action or nonaction with respect to an item handled by it for purposes of presentment, payment or collection is governed by the law o…

74.1030 Variation by agreement; measure of damages; action constituting ordinary care

The effect of the provisions of this chapter may be varied by agreement, but the parties to the agreement cannot disclaim a bank’s responsibility for its lack of good faith or failure to exercise ordinary care or limit the measure of damages for the lack or failure. However, the parties may determine by agreement the standards by which the bank’s responsibil…

74.1040 Definitions and index of definitions

In this chapter, unless the context otherwise requires: “Account” means any deposit or credit account with a bank, including a demand, time, savings, passbook, share draft or like account, other than an account evidenced by a certificate of deposit. “Afternoon” means the period of a day between noon and midnight. “Banking day” has the meaning given that t…

74.1050 “Bank”; “depositary bank”; “intermediary bank”; “collecting bank”; “payor bank”; “presenting bank.”

In this chapter: “Bank” means a financial institution, as defined in ORS 706.008. “Depositary bank” means the first bank to take an item even though it is also the payor bank unless the item is presented for immediate payment over the counter. “Payor bank” means a bank that is the drawee of a draft. “Intermediary bank” means a bank to which an item is tr…

74.1060 Payable through or payable at bank; collecting bank

If an item states that it is “payable through” a bank identified in the item: The item designates the bank as a collecting bank and does not by itself authorize the bank to pay the item; and The item may be presented for payment only by or through the bank. If an item states that it is “payable at” a bank identified in the item: The item designates the b…

74.1070 Separate office of bank for computing time for actions, notices and orders

A bank or separate office of a bank is a separate bank for the purpose of computing the time within which and determining the place at or to which action may be taken or notices or orders must be given under this chapter and ORS chapter 73.

74.1080 Time of receipt of items

For the purpose of allowing time to process items, prove balances and make the necessary entries on its books to determine its position for a day, a bank may fix an afternoon hour of 2 p.m. or later as a cutoff hour for the handling of money and items and the making of entries on its books. An item or deposit of money received on any day after a cutoff hour…

74.1090 Waiver of time limits; when delay excused

Unless otherwise instructed, a collecting bank in a good faith effort to secure payment of a specific item drawn on a payor other than a bank, and with or without the approval of any person involved, may waive, modify or extend time limits imposed or permitted by the Uniform Commercial Code for a period not exceeding two additional banking days without disch…

74.1110 Statute of limitations

An action to enforce an obligation, duty or right arising under this chapter must be commenced within three years after the claim for relief accrues.

74.1120 Electronic presentment

“Agreement for electronic presentment” means an agreement, clearing house rule, or Federal Reserve regulation or operating circular, providing that presentment of an item may be made by transmission of an image of an item or information describing the item (“presentment notice”) rather than delivery of the item itself. The agreement may provide for procedure…

74.2010 Status of collecting bank as agent and provisional status of credits; applicability of chapter; item indorsed “pay any bank.”

Unless a contrary intent clearly appears and before the time that a settlement given by a collecting bank for an item is or becomes final the bank, with respect to the item, is an agent or subagent of the owner of the item and any settlement given for the item is provisional. This provision applies regardless of the form of indorsement or lack of indorsement…

74.2020 Responsibility for collection; when action timely

A collecting bank must exercise ordinary care in: Presenting an item or sending it for presentment; Sending notice of dishonor or nonpayment or returning an item other than a documentary draft to the bank’s transferor after learning that the item has not been paid or accepted, as the case may be; Settling for an item when the bank receives final settlemen…

74.2030 Effect of instructions

Subject to ORS 73.0420 concerning conversion of instruments and ORS chapter 73 and this chapter concerning restrictive indorsements, only a collecting bank’s transferor can give instructions that affect the bank or constitute notice to it, and a collecting bank is not liable to prior parties for any action taken pursuant to the instructions or in accordance …

74.2040 Methods of sending and presenting; presentment

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. A collecting bank may send: An item directly to the payor bank; An item to a non…

74.2050 Depositary bank as holder of unindorsed item

If a customer delivers an item to a depositary bank for collection: The depositary bank becomes a holder of the item at the time it receives the item for collection if the customer at the time of delivery was a holder of the item, whether or not the customer indorses the item, and, if the bank satisfies the other requirements of ORS 73.0302, it is a holder …

74.2060 Transfer between banks

Any agreed method that identifies the transferor bank is sufficient for the item’s further transfer to another bank.

74.2070 Warranties of customer and collecting bank on transfer of item; dishonor of item; remedies; when claim accrues

A customer or collecting bank that transfers an item and receives a settlement or other consideration warrants to the transferee and to any subsequent collecting bank that: The warrantor is a person entitled to enforce the item; All signatures on the item are authentic and authorized; The item has not been altered; The item is not subject to a defense or…

74.2080 Presentment warranties; remedies; defenses; payment of dishonored draft; warranty disclaimer not applicable to checks; when warranty claim accrues

If an unaccepted draft is presented to the drawee for payment or acceptance and the drawee pays or accepts the draft, the person obtaining payment or acceptance, at the time of presentment, and a previous transferor of the draft, at the time of transfer, warrant to the drawee that pays or accepts the draft in good faith that: The warrantor is, or was, at th…

74.2090 Encoding and retention warranties; remedies

A person who encodes information on or with respect to an item after issue warrants to any subsequent collecting bank and to the payor bank or other payor that the information is correctly encoded. If the customer of a depositary bank encodes, that bank also makes the warranty. A person who undertakes to retain an item pursuant to an agreement for electroni…

74.2100 Security interest of collecting bank in items; priority

A collecting bank has a security interest in an item and in any accompanying documents or in the proceeds of either: In case of an item deposited in an account, to the extent to which credit given for the item has been withdrawn or applied; In case of an item for which it has given credit available for withdrawal as of right, to the extent of the credit gi…

74.2110 Bank as holder in due course

For purposes of determining its status as a holder in due course, a bank has given value to the extent it has a security interest in an item, if the bank otherwise complies with the requirements of ORS 73.0302 on what constitutes a holder in due course.

74.2120 Presentment by notice of item not payable by, through or at bank; liability of drawer or indorser

Unless otherwise instructed, a collecting bank may present an item not payable by, through or at a bank by sending to the party to accept or pay a written notice that the bank holds the item for acceptance or payment. The notice must be sent in time to be received on or before the day when presentment is due and the bank must meet any requirement of the part…

74.2130 Medium and time of settlement by bank

With respect to settlement by a bank, the medium and time of settlement may be prescribed by Federal Reserve regulations or circulars, clearing house rules and the like, or agreement. In the absence of such prescription: The medium of settlement is cash or credit to an account in a Federal Reserve Bank of or specified by the person to receive settlement; an…

74.2140 Right of charge-back or refund; liability of collecting bank; return of item

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 a 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 o…

74.2150 Final payment of item by payor bank; when provisional debits and credits become final; when certain credits become available for withdrawal

An item is finally paid by a payor bank when the bank has first done any of the following: Paid the item in cash; Settled for the item without having a right to revoke the settlement under statute, clearing house rule or agreement; or Made a provisional settlement for the item and failed to revoke the settlement in the time and manner permitted by statute…

74.2160 Insolvency and preference

If an item is in or comes into the possession of a payor or collecting bank that suspends payment and the item has not been finally paid, the item must be returned by the receiver, trustee or agent in charge of the closed bank to the presenting bank or the closed bank’s customer. If a payor bank finally pays an item and suspends payments without making a se…

74.3010 Deferred posting; recovery of payment by return of items; time of dishonor; return of items by payor bank

If a payor bank settles for a demand item other than a documentary draft presented otherwise than for immediate payment over the counter before midnight of the banking day of receipt, the payor bank may revoke the settlement and recover the settlement if, before it has made final payment and before its midnight deadline, it: Returns the item; or Sends writ…

74.3020 Payor bank’s responsibility for late return of item; defenses to liability of payor bank

Pursuant to ORS 74.2070 (1), if an item is presented to and received by a payor bank, the bank is accountable for the amount of: A demand item, other than a documentary draft, whether properly payable or not, if the bank, in any case in which it is not also the depositary bank, retains the item beyond midnight of the banking day of receipt without settling …

74.3030 When items subject to notice, stop payment order, legal process or setoff; order in which items may be charged or certified; cutoff hour for checks

Any knowledge, notice or stop payment order received by, legal process served upon, or setoff exercised by a payor bank comes too late to terminate, suspend or modify the bank’s right or duty to pay an item or to charge its customer’s account for the item if the knowledge, notice, stop payment order or legal process is received or served and a reasonable tim…

74.4010 When bank may charge customer’s account

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 bank. A customer is not liable for the amount of an overdraft if the customer neit…

74.4020 Bank’s liability to customer for wrongful dishonor; time of determining insufficiency of account

Except as otherwise provided in this chapter, a payor bank wrongfully dishonors an item if it dishonors an item that is properly payable. However, a bank may dishonor an item that would create an overdraft unless it has agreed to pay the overdraft. A payor bank is liable to its customer for damages proximately caused by the wrongful dishonor of an item. Lia…

74.4030 Customer’s right to stop payment; duration of stop payment order; burden of proof of loss

A customer or any person authorized to draw on the account if there is more than one person may stop payment of any item drawn on the customer’s account or close the account by an order to the bank describing the item or account with reasonable certainty received at a time and in a manner that affords the bank a reasonable opportunity to act on it before any…

74.4040 Bank not obligated to pay check more than six months old

A bank is under no obligation to a customer having a checking account to pay a check, other than a certified check, which is presented more than six months after its date, but it may charge its customer’s account for a payment made thereafter in good faith.

74.4050 Death or incompetence of customer

A payor or collecting bank’s authority to accept, pay or collect an item or to account for proceeds of its collection, if otherwise effective, is not rendered ineffective by incompetence of a customer of either bank existing at the time the item is issued or its collection is undertaken if the bank does not know of an adjudication of incompetence. Neither de…

74.4060 Statements to customer; requirements; retaining copies of items; duty of customer to determine unauthorized payment; allocation of loss

A bank that sends or makes available to a customer a statement of account showing payment of items for the account shall either return or make available to the customer the items paid or provide information in the statement of account sufficient to allow the customer reasonably to identify the items paid. The statement of account provides sufficient informat…

74.4070 Payor bank’s right to subrogation on improper payment

If a payor bank has paid an item over the order of the drawer or maker to stop payment, or after an account has been closed, or otherwise under circumstances giving a basis for objection by the drawer or maker, to prevent unjust enrichment and only to the extent necessary to prevent loss to the bank by reason of its payment of the item, the payor bank shall …

74.5010 Handling of documentary drafts; duty to send for presentment and to notify customer of dishonor

A bank that takes a documentary draft for collection shall present or send the draft and accompanying documents for presentment and upon learning that the draft has not been paid or accepted in due course, shall seasonably notify its customer of the fact even though it may have discounted or bought the draft or extended credit available for withdrawal as of …

74.5020 Presentment of “on arrival” drafts

If a draft or the relevant instructions require presentment “on arrival,” “when goods arrive” or the like, the collecting bank need not present until in its judgment a reasonable time for arrival of the goods has expired. Refusal to pay or accept because the goods have not arrived is not dishonor; the bank must notify its transferor of the refusal but need n…

74.5030 Responsibility of presenting bank for documents and goods; report of reasons for dishonor; referee in case of need

Unless otherwise instructed and except as provided in ORS chapter 75, a bank presenting a documentary draft: Must deliver the documents to the drawee on acceptance of the draft if it is payable more than three days after presentment; otherwise, only on payment; and Upon dishonor, either in the case of presentment for acceptance or presentment for payment, …

74.5040 Privilege of presenting bank to deal with goods; security interest for expenses

A presenting bank that, following the dishonor of a documentary draft, has seasonably requested instructions but does not receive them within a reasonable time may store, sell, or otherwise deal with the goods in any reasonable manner. For its reasonable expenses incurred by action under subsection (1) of this section the presenting bank has a lien upon the…