This article may be cited as Uniform Commercial Code -
Bank Deposits and Collections.
Source:Laws 1963, c. 544, Art. IV, § 4-101, p. 1810; Laws 1991, LB 161, § 72.
1. The great number of checks handled by banks and the countrywide nature
of the bank collection process require uniformity in the law of bank collections.
There is needed a uniform statement of the principal rules of the bank collection
process with ample provision for flexibility to meet the needs of the large
volume handled and the changing needs and conditions that are bound to come
with the years. This article meets that need.
2. In 1950 at the time article 4 was drafted, 6.7 billion checks were
written annually. By the time of the 1990 revision of article 4 annual volume
was estimated by the American Bankers Association to be about 50 billion checks.
The banking system could not have coped with this increase in check volume
had it not developed in the late 1950's and early 1960's an automated system
for check collection based on encoding checks with machine-readable information
by Magnetic Ink Character Recognition (MICR). An important goal of the 1990
revision of article 4 is to promote the efficiency of the check collection
process by making the provisions of article 4 more compatible with the needs
of an automated system and, by doing so, increase the speed and lower the
cost of check collection for those who write and receive checks. An additional
goal of the 1990 revision of article 4 is to remove any statutory barriers
in the article to the ultimate adoption of programs allowing the presentment
of checks to payor banks by electronic transmission of information captured
from the MICR line on the checks. The potential of these programs for saving
the time and expense of transporting the huge volume of checks from depositary
to payor banks is evident.
3. Article 4 defines rights between parties with respect to bank deposits
and collections. It is not a regulatory statute. It does not regulate the
terms of the bank-customer agreement, nor does it prescribe what constraints
different jurisdictions may wish to impose on that relationship in the interest
of consumer protection. The revisions in article 4 are intended to create
a legal framework that accommodates automation and truncation for the benefit
of all bank customers. This may raise consumer problems which enacting jurisdictions
may wish to address in individual legislation. For example, with respect to
section 4-401(c), jurisdictions may wish to examine their unfair and deceptive
practices laws to determine whether they are adequate to protect drawers who
postdate checks from unscrupulous practices that may arise on the part of
persons who induce drawers to issue postdated checks in erroneous belief that
the checks will not be immediately payable. Another example arises from the
fact that under various truncation plans customers will no longer receive
their canceled checks and will no longer have the canceled check to prove
payment. Individual legislation might provide that a copy of a bank statement
along with a copy of the check is prima facie evidence of payment.