N.D. Cent. Code § 41-04-14
(4-202) Responsibility for collection or return - When action timely
Redline — December 1, 2021 → current.View current text →
Current — January 1, 2022
As of December 1, 2021
(1) A collecting bank must exercise ordinary care in the following matters: Presenting an item or sending it for presentment.
(1) A collecting bank must exercise ordinary care in the following matters: Presenting an item or sending it for presentment.
(2) 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.
(2) 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.
(3) Settling for an item when the bank receives final settlement.
(3) Settling for an item when the bank receives final settlement.
(4) Notifying its transferor of any loss or delay in transit within a reasonable time after discovery thereof.
(4) Notifying its transferor of any loss or delay in transit within a reasonable time after discovery thereof.
(5) A collecting bank exercises ordinary care under subsection 1 by taking proper action before its midnight deadline following receipt of an item, notice, or settlement. Taking proper action within a reasonably longer time may constitute the exercise of ordinary care but the bank has the burden of so establishing.
(5) A collecting bank exercises ordinary care under subsection 1 by taking proper action before its midnight deadline following receipt of an item, notice, or settlement. Taking proper action within a reasonably longer time may constitute the exercise of ordinary care but the bank has the burden of so establishing.
(6) Subject to subdivision a of subsection 1, a bank is not liable for the insolvency, neglect, misconduct, mistake, or default of another bank or person or for loss or destruction of an item in transit or in the possession of others.
(6) Subject to subdivision a of subsection 1, a bank is not liable for the insolvency, neglect, misconduct, mistake, or default of another bank or person or for loss or destruction of an item in transit or in the possession of others.
(7) At common law the so-called New York collection rule subjected the initial collecting bank to liability for the actions of subsequent banks in the collection chain; the so-called Massachusetts rule was that each bank, subject to the duty of selecting proper intermediaries, was liable only for its own negligence. Subsection (c) adopts the Massachusetts rule. But since this is stated to be subject to subsection (a)(1) a collecting bank remains responsible for using ordinary care in selecting properly qualified intermediary banks and agents and in giving proper instructions to them. Regulation CC Section 229.36(d) states the liability of a bank during the forward collection of checks.
Official source: North Dakota Legislative Branch. Reproduced from public-domain North Dakota statutes; confirm against the official source for the current text. Not legal advice.