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Illinois Compiled Statutes

810 ILCS 5/4-401 (2026)

When bank may charge customer's account

✓ current as of May 2026
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(810 ILCS 5/4-401) (from Ch. 26, par. 4-401)
    Sec. 4-401. When bank may charge customer's account.
    (a) A bank may charge against the account of a customer an item that is properly payable from that account even though the charge creates an overdraft. An item is properly payable if it is authorized by the customer and is in accordance with any agreement between the customer and bank.
    (b) A customer is not liable for the amount of an overdraft if the customer neither signed the item nor benefited from the proceeds of the item.
    (c) A bank may charge against the account of a customer a check that is otherwise properly payable from the account, even though payment was made before the date of the check, unless the customer has given notice to the bank of the postdating describing the check with reasonable certainty. The notice is effective for the period stated in Section 4-403(b) for stop-payment orders, and must be received at such time and in such manner as to afford the bank a reasonable opportunity to act on it before any action by the bank with respect to the check described in Section 4-303. If a bank charges against the account of a customer a check before the date stated in the notice of postdating, the bank is liable for damages for the loss resulting from its act. The loss may include damages for dishonor of subsequent items under Section 4-402.
    (d) A bank that in good faith makes payment to a holder may charge the indicated account of its customer according to:
        (1) the original terms of the altered item; or
        (2) the terms of the completed item, even though the
    
bank knows the item has been completed unless the bank has notice that the completion was improper.
(Source: P.A. 87-582; 87-1135.)

    
Notes of Decisions
Cited in 11 cases, 1995–2019 · leading case: United States Life Ins. v. Wilson, 18 A.3d 110 (Md. Ct. Spec. App. 2011).
Sort: Relevance Newest Treatment
United States Life Ins. v. Wilson, 18 A.3d 110 (Md. Ct. Spec. App. 2011). · cites it 2× “Except as provided in § 4 — 401(c) [§ 810 ILCS 5/4-401, accord, CL § 4-401(c) ], an instrument payable on demand is not payable before the date of the instrument.”
Cont'l Cas. Co. v. Am. Nat'l Bank & Trust Co., 768 N.E.2d 352 (Ill. App. Ct. 2002). “t claim, was properly time-barred by either the three-year limitations period found in section 3 — 118(g), which applies to a conversion of a negotiable instrument claim under section 3 — 420(a) of the UCC (810 ILCS 5/3—420(a) (West 1994)), or the three-year limitations period…”
PSI Resources, LLC v. MB Fin. Bank, 2016 IL App (1st) 152204 (Ill. App. Ct. 2016). “The bank, on the other hand, argued that the corporation’s claim, properly characterized, was either a UCC claim for conversion of a negotiable instrument (810 ILCS 5/3-420(a) (West 1994)) or a UCC claim for improper payment (810 ILCS 5/4-401(a) (West 1994)), both of which are…”
Newell v. Newell, 942 N.E.2d 776 (Ill. App. Ct. 2011). “His complaint claims that the bank breached its contractual obligation to him by allowing Ruth to withdraw funds by presenting her signature on a withdrawal slip without an accompanying court order. Section 4-401(a) of the UCC provides that an item is "properly payable if it is…”
Barber v. First Nat'l Bank of Chillicothe (In Re Ostrom-Martin, Inc.), 188 B.R. 245 (Bankr. C.D. Ill. 1995). “In the context of this case there was a forged endorsement and the banks are liable unless they can bring themselves within one of the exceptions. Turning first to the motion for summary judgment filed by the PRINCEVILLE BANK, under § 4-401(a) of the UCC a bank may only charge…”
Young Soon Kim v. TD Ameritrade, Inc., 891 F. Supp. 2d 936 (N.D. Ill. 2012). “First, defendant argues that 810 ILCS 5/4-401 is inapplicable because it had no customer relationship with plaintiffs.”
APM Restaurant Grp. Inc. v. Associated Bank (N.D. Ill. 2019). · cites it 2× “In Count I, APM alleges that Associated violated the UCC by unlawfully charging APM’s bank account for forged checks that were not properly payable pursuant to 810 ILCS 5/4-401, and for cashing the forged and unauthorized checks (doc.”
Cont'l Cas. Co. v. Am. Nat'l Bank & Trust Co. (Ill. App. Ct. 2002). · cites it 3× “On appeal, GAI contends that: (1) the trial court erred in finding that its breach of contract claim was time-barred by the three-year limitations period found in section 4-111, which applies to an improper payment claim under UCC section 4-401(a) (810 ILCS 5/4-401(a) (West…”
Advocate Health & Hospitals Corp. v. Bank One, N.A. (Ill. App. Ct. 2004). · cites it 2× “The hospital claimed that First National's payment of the check bearing the client's forged endorsement was a breach of section 4-401 of the UCC (810 ILCS 5/4-401 (West 2000)). Section 4-401 indicates a bank may charge an item against a customer's account only if the item is…”
Newell v. Newell (Ill. App. Ct. 2011). “Section 4-401(a) of the UCC provides that an item is "properly payable if it is authorized by the customer and is in accordance with any agreement between the customer and the bank.”
Clean World Eng'g, LTD. v. MidAmerica Bank (Ill. App. Ct. 2003). “Count I of Clean World's complaint, which was directed against MidAmerica, alleged that it violated section 4-401 of the Illinois Uniform Commercial Code (810 ILCS 5/4-401 (West 2000)) by unlawfully charging its account for items (forged checks) that were not properly payable.”
— 810 ILCS 5/4-401(a) — 6 cases
Cont'l Cas. Co. v. Am. Nat'l Bank & Trust Co., 768 N.E.2d 352 (Ill. App. Ct. 2002). “t claim, was properly time-barred by either the three-year limitations period found in section 3 — 118(g), which applies to a conversion of a negotiable instrument claim under section 3 — 420(a) of the UCC (810 ILCS 5/3—420(a) (West 1994)), or the three-year limitations period…”
PSI Resources, LLC v. MB Fin. Bank, 2016 IL App (1st) 152204 (Ill. App. Ct. 2016). “The bank, on the other hand, argued that the corporation’s claim, properly characterized, was either a UCC claim for conversion of a negotiable instrument (810 ILCS 5/3-420(a) (West 1994)) or a UCC claim for improper payment (810 ILCS 5/4-401(a) (West 1994)), both of which are…”
Newell v. Newell, 942 N.E.2d 776 (Ill. App. Ct. 2011). “His complaint claims that the bank breached its contractual obligation to him by allowing Ruth to withdraw funds by presenting her signature on a withdrawal slip without an accompanying court order. Section 4-401(a) of the UCC provides that an item is "properly payable if it is…”
Barber v. First Nat'l Bank of Chillicothe (In Re Ostrom-Martin, Inc.), 188 B.R. 245 (Bankr. C.D. Ill. 1995). “In the context of this case there was a forged endorsement and the banks are liable unless they can bring themselves within one of the exceptions. Turning first to the motion for summary judgment filed by the PRINCEVILLE BANK, under § 4-401(a) of the UCC a bank may only charge…”
Cont'l Cas. Co. v. Am. Nat'l Bank & Trust Co. (Ill. App. Ct. 2002). “On appeal, GAI contends that: (1) the trial court erred in finding that its breach of contract claim was time-barred by the three-year limitations period found in section 4-111, which applies to an improper payment claim under UCC section 4-401(a) (810 ILCS 5/4-401(a) (West…”
— 810 ILCS 5/4-401(c) — 1 case
United States Life Ins. v. Wilson, 18 A.3d 110 (Md. Ct. Spec. App. 2011). “Except as provided in § 4 — 401(c) [§ 810 ILCS 5/4-401, accord, CL § 4-401(c) ], an instrument payable on demand is not payable before the date of the instrument.”
— 810 ILCS 5/4-401(d) — 1 case
APM Restaurant Grp. Inc. v. Associated Bank (N.D. Ill. 2019). “In Count I, APM alleges that Associated violated the UCC by unlawfully charging APM’s bank account for forged checks that were not properly payable pursuant to 810 ILCS 5/4-401, and for cashing the forged and unauthorized checks (doc.”
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