Nebraska Uniform Commercial Code 4-104

UCC 4-104

4-104.

Definitions and index of definitions.

(a) In this article, unless the context otherwise requires:

(1) "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;

(2) "Afternoon" means the period of a day between noon and midnight;

(3) "Banking day" means that part of any day on which a bank is open to the public for carrying on substantially all of its banking functions but, for purposes of a bank's midnight deadline, shall not include Saturday, Sunday, or any holiday when the federal reserve banks are not performing check clearing functions;

(4) "Clearinghouse" means an association of banks or other payors regularly clearing items;

(5) "Customer" means a person having an account with a bank or for whom a bank has agreed to collect items, including a bank that maintains an account at another bank;

(6) "Documentary draft" means a draft to be presented for acceptance or payment if specified documents, certificated securities (section 8-102) or instructions for uncertificated securities (section 8-102), or other certificates, statements, or the like are to be received by the drawee or other payor before acceptance or payment of the draft;

(7) "Draft" means a draft as defined in section 3-104 or an item, other than an instrument, that is an order;

(8) "Drawee" means a person ordered in a draft to make payment;

(9) "Item" means an instrument or a promise or order to pay money handled by a bank for collection or payment. The term does not include a payment order governed by article 4A or a credit or debit card slip;

(10) "Midnight deadline" with respect to a bank is midnight on its next banking day following the banking day on which it receives the relevant item or notice or from which the time for taking action commences to run, whichever is later;

(11) "Settle" means to pay in cash, by clearinghouse settlement, in a charge or credit or by remittance, or otherwise as agreed. A settlement may be either provisional or final;

(12) "Suspends payments" with respect to a bank means that it has been closed by order of the supervisory authorities, that a public officer has been appointed to take it over, or that it ceases or refuses to make payments in the ordinary course of business.

(b) Other definitions applying to this article and the sections in which they appear are:

"Agreement for electronic presentment". Section 4-110.
"Bank". Section 4-105.
"Collecting bank". Section 4-105.
"Depositary bank". Section 4-105.
"Intermediary bank". Section 4-105.
"Payor bank". Section 4-105.
"Presenting bank". Section 4-105.
"Presentment notice". Section 4-110.

(c) "Control" as provided in section 7-106 and the following definitions in other articles apply to this article:

"Acceptance". Section 3-409.
"Alteration". Section 3-407.
"Cashier's check". Section 3-104.
"Certificate of deposit". Section 3-104.
"Certified check". Section 3-409.
"Check". Section 3-104.
"Good faith". Section 3-103.
"Holder in due course". Section 3-302.
"Instrument". Section 3-104.
"Notice of dishonor". Section 3-503.
"Order". Section 3-103.
"Ordinary care". Section 3-103.
"Person entitled to enforce". Section 3-301.
"Presentment". Section 3-501.
"Promise". Section 3-103.
"Prove". Section 3-103.
"Teller's check". Section 3-104.
"Unauthorized signature". Section 3-403.

(d) In addition article 1 contains general definitions and principles of construction and interpretation applicable throughout this article.

Source

  • Laws 1963, c. 544, Art. IV, § 4-104, p. 1812;
  • Laws 1991, LB 161, § 75;
  • Laws 1994, LB 1015, § 1;
  • Laws 1995, LB 97, § 3;
  • Laws 2005, LB 570, § 51.

Annotations

  • Generally, under former subsection (1)(e) of this section, payees of a cashier's check are not "customers." Hecker v. Ravenna Bank, 237 Neb. 810, 468 N.W.2d 88 (1991).

  • COMMENT

  • 1. Paragraph (a)(1): "Account" is defined to include both asset accounts in which a customer has deposited money and accounts from which a customer may draw on a line of credit. The limiting factor is that the account must be in a bank.

  • 2. Paragraph (a)(3): "Banking day". Under this definition that part of a business day when a bank is open only for limited functions, e.g., to receive deposits and cash checks, but with loan, bookkeeping, and other departments closed, is not part of a banking day.

  • 3. Paragraph (a)(4): "Clearinghouse".

  • Occasionally express companies, governmental agencies, and other nonbanks deal directly with a clearinghouse; hence the definition does not limit the term to an association of banks.

  • 4. Paragraph (a)(5): "Customer". It is to be noted that this term includes a bank carrying an account with another bank as well as the more typical nonbank customer or depositor.

  • 5. Paragraph (a)(6): "Documentary draft" applies even though the documents do not accompany the draft but are to be received by the drawee or other payor before acceptance or payment of the draft. Documents may be either in electronic or tangible form. See article 5, section 5-102, comment 2 and article 1, section 1-201 (definition of "document of title").

  • 6. Paragraph (a)(7): "Draft" is defined in section 3-104 as a form of instrument. Since article 4 applies to items that may not fall within the definition of instrument, the term is defined here to include an item that is a written order to pay money, even though the item may not qualify as an instrument. The term "order" is defined in section 3-103.

  • 7. Paragraph (a)(8): "Drawee" is defined in section 3-103 in terms of an article 3 draft which is a form of instrument. Here "drawee" is defined in terms of an article 4 draft which includes items that may not be instruments.

  • 8. Paragraph (a)(9): "Item" is defined broadly to include an instrument, as defined in section 3-104, as well as promises or orders that may not be within the definition of "instrument". The terms "promise" and "order" are defined in section 3-103. A promise is a written undertaking to pay money. An order is a written instruction to pay money. But see section 4-110(c). Since bonds and other investment securities under article 8 may be within the term "instrument" or "promise", they are items and when handled by banks for collection are subject to this article. See comment 1 to section 4-102. The functional limitation on the meaning of this term is the willingness of the banking system to handle the instrument, undertaking, or instruction for collection or payment.

  • 9. Paragraph (a)(10): "Midnight deadline". The use of this phrase is an example of the more mechanical approach used in this article. Midnight is selected as a termination point or time limit to obtain greater uniformity and definiteness than would be possible from other possible terminating points, such as the close of the banking day or business day.

  • 10. Paragraph (a)(11): The term "settle" has substantial importance throughout article 4. In the American Bankers Association Bank Collection Code, in deferred posting statutes, in Federal Reserve regulations and operating circulars, in clearinghouse rules, in agreements between banks and customers, and in legends on deposit tickets and collection letters, there is repeated reference to "conditional" or "provisional" credits or payments. Tied in with this concept of credits or payments being in some way tentative, has been a related but somewhat different problem as to when an item is "paid" or "finally paid" either to determine the relative priority of the item as against attachments, stop-payment orders, and the like or in insolvency situations. There has been extensive litigation in the various states on these problems. To a substantial extent the confusion, the litigation, and even the resulting court decisions fail to take into account that in the collection process some debits or credits are provisional or tentative, and others are final and that very many debits or credits are provisional or tentative for awhile but later become final. Similarly, some cases fail to recognize that within a single bank, particularly a payor bank, each item goes through a series of processes and that in a payor bank most of these processes are preliminary to the basic act of payment or "final payment".

  • The term "settle" is used as a convenient term to characterize a broad variety of conditional, provisional, tentative, and also final payments of items. Such a comprehensive term is needed because it is frequently difficult or unnecessary to determine whether a particular action is tentative or final or when a particular credit shifts from the tentative class to the final class. Therefor, its use throughout the article indicates that in that particular context it is unnecessary or unwise to determine whether the debit or the credit or the payment is tentative or final. However, if qualified by the adjective "provisional" its tentative nature is intended, and if qualified by the adjective "final" its permanent nature is intended.

  • Examples of the various types of settlement contemplated by the term include payments in cash; the efficient but somewhat complicated process of payment through the adjustment and offsetting of balances through clearinghouses; debit or credit entries in accounts between banks; the forwarding of various types of remittance instruments, sometimes to cover a particular item but more frequently to cover an entire group of items received on a particular day.

  • 11. Paragraph (a)(12): "Suspends payments".

  • This term is designed to afford an objective test to determine when a bank is no longer operating as a part of the banking system.