This law section explains how banks handle items (like checks) during collection. Initially, when a bank collects an item, it acts as an agent for the item's owner, meaning the bank temporarily holds onto the item to process it. The deal is not final until the bank's settlement becomes permanent. Before that happens, even if the owner has access to the funds, ownership rights depend on any claims or debts the bank might have. If a bank has bought the item and owns it, other rules apply. Also, once an item is marked with "pay any bank," only banks can handle it until it's returned to the original sender or specially given to a non-bank by a bank.

This law outlines the responsibilities of a collecting bank when handling financial items like checks. The bank must act with ordinary care by promptly presenting items, notifying relevant parties if a payment fails, settling items upon final payment, and informing their clients of any loss or delay. The bank has until its next business day's midnight deadline to perform these actions unless it can prove a longer period was still reasonable. Importantly, the bank isn't held responsible if another bank or person mishandles an item or if an item is lost or destroyed while not in their possession.

This law says that when it comes to certain bank processes, only the person or entity from whom a collecting bank receives a check or financial instrument can give instructions that the bank must follow. The bank isn't responsible to anyone else who handled the check before it, as long as it's acting based on those instructions or an agreement with that transferor.

This law section outlines how a collecting bank should handle sending items for collection. The bank must act promptly, considering factors like instructions, item type, quantity, collection cost, and common practices. Banks can send items directly to the payor bank or, with permission, to nonbank payors. If allowed by certain rules or regulations, they can send non-documentary items to nonbank payors too. Additionally, banks can present items where the payor bank wants them to be presented.

When you give an item, like a check, to a bank to cash or deposit, this law says two main things: First, the bank becomes the official holder of that item as soon as they receive it from you, even if you didn't sign it over to them, and they can be considered a special type of holder if they meet certain conditions. Second, the bank guarantees to others involved in processing that check, like other banks or the person who wrote the check, that the amount will either be paid to you or put in your account.

This law section says that as long as there's an agreed-upon way to identify the bank that is sending money, it's enough to continue the process of sending that money to another bank.

This law involves the transfer of checks or similar financial items between banks and customers. It sets rules about the guarantees or "warranties" the sender of an item makes when transferring it. These include promises that the item is legitimate, hasn't been altered, and the signatures are real. If something goes wrong and the item cannot be paid, the sender may have to cover the amount. The law also outlines situations where these warranties cannot be disclaimed and when a customer can claim damages if these promises are broken.

This law deals with warranties related to drafts and checks. When a draft is presented for payment or acceptance, anyone seeking payment or past handlers of the draft guarantee to the paying party (known as the drawee) that they have the right to enforce the draft, the draft hasn’t been altered, and they don’t know of any unauthorized signatures. If the drawee pays or accepts a flawed draft, they can seek damages from the warrantor equal to what they paid, plus any other losses. Specific procedures apply if drafts are altered or have unauthorized endorsements. Certain warranties can’t be disclaimed for checks, and claims must be made within 30 days once a breach is known. A 'demand draft' is defined similarly to a check. Some cross-jurisdiction issues may change which warranties apply.

This law covers responsibilities related to the handling of checks and similar items. If a person or bank encodes information on a check or retains it for electronic processing, they guarantee the correctness of that information to other banks involved. If there's an agreement for electronic processing, the retention and processing should comply with it. If someone relied on these guarantees and there was an error, they can seek compensation for losses they experienced due to the wrong info.

This law explains that a bank that collects funds (a collecting bank) has a special right, called a 'security interest', in any item (like a check) and any connected documents or the money gained from them. This right exists if the bank has either given credit for the item that has been accessed or spent, made funds available by credit, or provided an advance on it. The bank's security interest continues unless the bank gets the final payment for the item, or gives up control of it. Importantly, the bank doesn't need a formal security agreement or special filings for this right, and it ranks above other claims on the item or related documents.

If a bank wants to be recognized as a "holder in due course" of a check or similar financial item, it counts as having given value if it has a security interest in that item, as long as it also meets other necessary legal requirements.

This law explains how a bank can present a check or similar item that isn't directly payable through another bank by sending a written notice to the person who must pay it. The notice should arrive in time for the payment due date, and the bank must follow any specific payment instructions quickly. If payment or acceptance isn't received by the next business day after it's due, the bank can mark the item as unpaid (or 'dishonored') and let the person who wrote or endorsed the check know what happened.

This law talks about how banks settle payments. It says that the way and timing of settlement can be decided by Federal Reserve rules or agreements. If not, usually settlements are done in cash or by adding money to an account at a Federal Reserve bank. Payments by cash or checks are considered settled once the money or check is sent. For account transfers or authorizations, it's when the transfer is made or when permission is given. If the settlement doesn’t follow these methods or timings, it’s not complete until the receiver accepts it. For cashier’s or teller’s checks, the settlement is final when the check is paid or by the next day if not processed. For account charges, the settlement is final once the bank charges the account, assuming there's enough money there.

This law explains what happens if a bank gives its customer money for a check, but later doesn't actually get paid for that check. If the bank finds out it won’t get paid, it can take back the money from the customer's account, but it needs to do so quickly, normally by the next day. If the bank delays too long, it might have to pay for any problems caused by the delay. A bank can take back the money even if the customer has already used it, and this decision doesn't rely on whether the bank was careful with handling the check. If the check is in foreign money, the refund amount is calculated using the exchange rate on the day they find out they won’t get paid.

This law explains when a bank has officially paid a check or item. A bank considers a payment final when it either pays in cash, settles without the option to cancel, or a temporary settlement becomes permanent because they didn't cancel in time. If the temporary settlement stays temporary, it's not considered a final payment. When banks exchange payments through accounts, these payments become final when the payor bank officially pays the item. If a bank gets final payment for a check, it's required to credit its customer for that amount. Money becomes available for customers to withdraw once a payment is finalized, unless some other rule applies. If the bank is both where you deposited and where the check is paid, the funds are available on the second banking day after the deposit.

This section deals with what happens when a bank that is holding or processing a payment goes out of business before or after payments are finalized. If a bank holding a payment stops operating before the payment is finalized, they must return the payment to the originator. If a bank finalized a payment but hasn't settled with its customer, the customer has priority in making a claim against the bank. Additionally, if a bank has provisionally settled a payment, the process should still complete if conditions for finalization are met. Lastly, if a collecting bank receives final payments from other parties and then stops operating, the payer has a priority claim too.