NY UCC

Article 4,  PART 3
COLLECTION OF ITEMS: PAYOR BANKS

Section 4--301. Deferred Posting; Recovery of Payment by Return of
                  Items; Time of Dishonor.
  (1) Where an authorized settlement for a demand item (other than a
documentary draft) received by a payor bank otherwise than for immediate
payment over the counter has been made before midnight of the banking
day of receipt the payor bank may revoke the settlement and recover any
payment if before it has made final payment (subsection (1) of Section
4--213) and before its midnight deadline it
       (a) returns the item; or
       (b) sends written notice of dishonor or nonpayment if the item is
           held for protest or is otherwise unavailable for return.
  (2) If a demand item is received by a payor bank for credit on its
books it may return such item or send notice of dishonor and may revoke
any credit given or recover the amount thereof withdrawn by its
customer, if it acts within the time limit and in the manner specified
in the preceding subsection.
  (3) Unless previous notice of dishonor has been sent an item is
dishonored at the time when for purposes of dishonor it is returned or
notice sent in accordance with this section.
  (4) An item is returned:
       (a) as to an item received through a clearing house, when it is
           delivered to the presenting or last collecting bank or to the
           clearing house or is sent or delivered in accordance with its
           rules; or
       (b) in all other cases, when it is sent or delivered to the
           bank`s customer or transferor or pursuant to his
           instructions.

Section 4--302. Payor Bank`s Responsibility for Late Return of Item.
  In the absence of a valid defense such as breach of a presentment
warranty (subsection (1) of Section 4--207), settlement effected or the
like, if an item is presented on and received by a payor bank the bank
is accountable for the amount of
       (a) a demand item other than a documentary draft whether properly
           payable or not if the bank, in any case where it is not also
           the depositary bank, retains the item beyond midnight of the
           banking day of receipt without settling for it or, regardless
           of whether it is also the depositary bank, does not pay or
           return the item or send notice of dishonor until after its
           midnight deadline; or
       (b) any other properly payable item unless within the time
           allowed for acceptance or payment of that item the bank
           either accepts or pays the item or returns it and
           accompanying documents.
		   

Section 4--303. When Items Subject to Notice, Stop-Order, Legal Process
                  or Setoff; Order in Which Items May Be Charged or
                  Certified.
  (1) Any knowledge, notice or stop-order received by, legal process
served upon or setoff exercised by a payor bank, whether or not
effective under other rules of law 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, comes too late to so terminate, suspend or modify such
right or duty if the knowledge, notice, stop-order or legal process is
received or served and a reasonable time for the bank to act thereon
expires or the setoff is exercised after the bank has done any of the
following:
       (a) accepted or certified the item;
       (b) paid the item in cash;
       (c) settled for the item without reserving a right to revoke the
           settlement and without having such right under statute,
           clearing house rule or agreement;
       (d) completed the process of posting the item to the indicated
           account of the drawer, maker or other person to be charged
           therewith or otherwise has evidenced by examination of such
           indicated account and by action its decision to pay the item;
           or
       (e) become accountable for the amount of the item under
           subsection (1) (d) of Section 4--213 and Section 4--302
           dealing with the payor bank`s responsibility for late return
           of items.
  (2) Subject to the provisions of subsection (1) items may be accepted,
paid, certified or charged to the indicated account of its customer in
any order convenient to the bank.