Code of Alabama

Ala. Code § 7-4-213 (2026)

Medium and Time of Settlement by Bank.

✓ official Alabama Legislature (ALISON) text, current July 2026

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(a) With respect to settlement by a bank, the medium and time of settlement may be prescribed by Federal Reserve regulations or circulars, clearing-house rules, and the like, or agreement. In the absence of such prescription:

(1) The medium of settlement is cash or credit to an account in a Federal Reserve bank of or specified by the person to receive settlement; and

(2) The time of settlement, is:

(i) With respect to tender of settlement by cash, a cashier’s check, or teller’s check, when the cash or check is sent or delivered;

(ii) With respect to tender of settlement by credit in an account in a Federal Reserve bank, when the credit is made;

(iii) With respect to tender of settlement by a credit or debit to an account in a bank, when the credit or debit is made or, in the case of tender of settlement by authority to charge an account, when the authority is sent or delivered; or

(iv) With respect to tender of settlement by a funds transfer, when payment is made pursuant to Section 7-4A-406(a) to the person receiving settlement.

(b) If the tender of settlement is not by a medium authorized by subsection (a) or the time of settlement is not fixed by subsection (a), no settlement occurs until the tender of settlement is accepted by the person receiving settlement.

(c) If settlement for an item is made by cashier’s check or teller’s check and the person receiving settlement, before its midnight deadline:

(1) Presents or forwards the check for collection, settlement is final when the check is finally paid; or

(2) Fails to present or forward the check for collection, settlement is final at the midnight deadline of the person receiving settlement.

(d) If settlement for an item is made by giving authority to charge the account of the bank giving settlement in the bank receiving settlement, settlement is final when the charge is made by the bank receiving settlement if there are funds available in the account for the amount of the item.

(Acts 1995, No. 95-668, p. 1381, §2.)

Notes of Decisions

Cited in 3 cases, 1981–2014 · leading case: Cent. Bank of Alabama, Na v. Peoples Nat. Bank Huntsville, 401 So. 2d 14 (Ala. 1981).

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Cent. Bank of Alabama, Na v. Peoples Nat. Bank Huntsville, 401 So. 2d 14 (Ala. 1981). “rovisions of Code 1975, § 7-4-301: (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 or receipt the payor bank may…”

Troy Bank & Trust Co. v. The Citizens Bank, 166 So. 3d 57 (Ala. 2014). · cites it 6× “…. Section § 7-4-215 encompasses, with some revisions, the final-payment rule previously set forth in the now repealed § 7-4-213 (Act No. 95-668, Ala. Acts 1995, repealed what had been § 7-4-213 and enacted a new § 7-4-213, moving the substance of former § 7-4-213 to §…”

First Alabama Bank v. Deupree Food Sys., Inc. (In re Deupree Food Sys., Inc.), 99 B.R. 83 (Bankr. N.D. Ala. 1988). · cites it 3× “Turning, however, to § 7-4-213(1), we find that “[u]pon a final payment under subparagraphs (b), (c) or (d) the payor bank shall be accountable for the amount of the item.”

— Ala. Code § 7-4-213(1) — 1 case

First Alabama Bank v. Deupree Food Sys., Inc. (In re Deupree Food Sys., Inc.), 99 B.R. 83 (Bankr. N.D. Ala. 1988). “Turning, however, to § 7-4-213(1), we find that “[u]pon a final payment under subparagraphs (b), (c) or (d) the payor bank shall be accountable for the amount of the item.”

— Ala. Code § 7-4-213(2) — 1 case

— Ala. Code § 7-4-213(3) — 1 case

Troy Bank & Trust Co. v. The Citizens Bank, 166 So. 3d 57 (Ala. 2014). “…. Section § 7-4-215 encompasses, with some revisions, the final-payment rule previously set forth in the now repealed § 7-4-213 (Act No. 95-668, Ala. Acts 1995, repealed what had been § 7-4-213 and enacted a new § 7-4-213, moving the substance of former § 7-4-213 to §…”

— Ala. Code § 7-4-213(l) — 1 case

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