93RD GENERAL ASSEMBLY
State of Illinois
2003 and 2004
HB5152


 
Introduced 02/05/04, by Karen May
 
SYNOPSIS AS INTRODUCED:
 		














810 ILCS 5/4-402
  from Ch. 26, par. 4-402







    Amends the Uniform Commercial Code. Provides that a payor bank may not impose a charge or fee more than once for each check returned due to insufficiency of available funds. Provides that a payor bank may impose a charge or fee only once per day regardless of the number of transactions resulting in insufficiency of available funds. Provides that a payor bank
must process checks drawn against an account in a manner that is based upon debiting the smallest checks first each day. Provides that a bank wrongfully dishonors an item if it dishonors a check solely because it did not process checks in this manner.
















LRB093 16011 SAS 41635 b

















 


 


A BILL FOR









 











HB5152

LRB093 16011 SAS 41635 b






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    AN ACT concerning financial regulation.

 
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    Be it enacted by the People of the State of Illinois,
 
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represented in the General Assembly:


 
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    Section 5. The Uniform Commercial Code is amended  by 
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changing Section 4-402 as follows:
 



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    (810 ILCS 5/4-402)  (from Ch. 26, par. 4-402)


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    Sec. 4-402. Bank's liability to customer for wrongful 
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dishonor; time
of determining insufficiency of account.

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    (a) Except as otherwise provided in this Article, a payor 
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bank
wrongfully dishonors an item if it dishonors an item that 
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is properly
payable, but a bank may dishonor an item that would 
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create an overdraft
unless it had agreed to pay the overdraft.

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    (b) A payor bank is liable to its customer for damages 
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proximately caused by
the wrongful dishonor of an item. 
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Liability is limited to actual damages
proved and may include 
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damages for an arrest or prosecution of the customer
or other 
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consequential damages. Whether any consequential damages are

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proximately caused by the wrongful dishonor is a question of 
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fact to be
determined in each case.

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    (c) A payor bank's determination of the customer's account 
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balance on
which a decision to dishonor for insufficiency of 
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available funds is based
may be made at any time between the 
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time the item is received by the payor
bank and the time that 
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the payor bank returns the item or gives notice in
lieu of 
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return, and no more than one determination need be made.  If,
at 
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the election of the payor bank, a subsequent balance 
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determination is
made for the purpose of reevaluating the 
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bank's decision to dishonor the
item, the account balance at 
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that time is determinative of whether a
dishonor for 
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insufficiency of available funds is wrongful. No charge or fee 
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may be imposed more than once for each check returned due to 
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insufficiency of available funds. A charge or fee may be 
 


 






HB5152
- 2 -
LRB093 16011 SAS 41635 b




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imposed only once per day regardless of the number of 
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transactions resulting in insufficiency of available funds.


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    (d) A payor bank
must process checks drawn against an 
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account in a manner that is based upon debiting the smallest 
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checks first each day. A bank wrongfully dishonors an item if 
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it dishonors a check solely because it did not process checks 
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in this manner.

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(Source: P.A. 87-582; 87-1135.)