Ark. Code Ann. § 4-4-402 (2026)
Bank's liability to customer for wrongful dishonor — Time of determining insufficiency of account
- Except as otherwise provided in this chapter, a payor bank wrongfully dishonors an item if it dishonors an item that is properly payable, but a bank may dishonor an item that would create an overdraft unless it has agreed to pay the overdraft.
- A payor bank is liable to its customer for damages proximately caused by the wrongful dishonor of an item. Liability is limited to actual damages proved and may include damages for an arrest or prosecution of the customer or other consequential damages. Whether any consequential damages are proximately caused by the wrongful dishonor is a question of fact to be determined in each case.
- A payor bank's determination of the customer's account balance on which a decision to dishonor for insufficiency of available funds is based may be made at any time between the time the item is received by the payor bank and the time that the payor bank returns the item or gives notice in lieu of return, and no more than one (1) determination need be made. If, at the election of the payor bank, a subsequent balance determination is made for the purpose of reevaluating the bank's decision to dishonor the item, the account balance at that time is determinative of whether a dishonor for insufficiency of available funds is wrongful.
History. Acts 1961, No. 185, § 4-402; A.S.A. 1947, § 85-4-402; Acts 1991, No. 572, § 6.
Research References
ALR.
What constitutes wrongful dishonor of check rendering payor bank liable to drawer under UCC § 4-402. 88 A.L.R.4th 568.
Who may recover for wrongful dishonor of check under UCC § 4-402. 88 A.L.R.4th 613.
Damages recoverable for wrongful dishonor of check under UCC § 4-402. 88 A.L.R.4th 644.
Ark. L. Rev.
Comment, Gordon v. Planters & Merchants Bancshares: Punitive Damages May Be Awarded For Bank's Wrongful Charge-Back, 51 Ark. L. Rev. 611.
U. Ark. Little Rock L.J.
Arkansas Law Survey, Looney, Business Law, 8 U. Ark. Little Rock L.J. 99.
Case Notes
Damages.
Although the general rule is that damages may not be allowed where they are speculative, resting only upon conjectural evidence, or the opinions of the parties or witnesses, there are instances where damages cannot be proven with exactness, and where the cause and existence of damages caused by a bank's wrongful dishonor have been established by the evidence, recovery will not be denied merely because the damages cannot be determined with exactness. Twin City Bank v. Isaacs, 283 Ark. 127, 672 S.W.2d 651 (1984).
Mental Suffering.
The language of this section impliedly recognizes mental suffering and other intangible injuries as recoverable. Twin City Bank v. Isaacs, 283 Ark. 127, 672 S.W.2d 651 (1984).
Cited: City Nat'l Bank v. Goodwin, 301 Ark. 182, 783 S.W.2d 335 (1990); Gordon v. Planters & Merchants Bankshares, Inc., 326 Ark. 1046, 935 S.W.2d 544 (1996).