Iowa Code

Iowa Code § 554.4302 (2026)

Payor bank’s responsibility for late return of item

✓ current as of July 2026

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1. If an item is presented to and received by a payor bank, the bank is accountable for the amount of:

a. a demand item, other than a documentary draft, whether properly payable or not, if the bank, in any case in which it is not also the depositary bank, retains the item beyond midnight of the banking day of receipt without settling for it or, whether or not it is also the depositary bank, does not pay or return the item or send notice of dishonor until after its midnight deadline; or

b. any other properly payable item unless, within the time allowed for acceptance or payment of that item, the bank either accepts or pays the item or returns it and accompanying documents.

2. The liability of a payor bank to pay an item pursuant to subsection 1 is subject to defenses based on breach of a presentment warranty (section 554.4208) or proof that the person seeking enforcement of the liability presented or transferred the item for the purpose of defrauding the payor bank. [C66, 71, 73, 75, 77, 79, 81, §554.4302] 94 Acts, ch 1167, §105, 122 Referred to in §554.3312, 554.3502, 554.4303 \n

Notes of Decisions

Cited in 1 case, 2002–2002 · leading case: Farm Credit Servs. of Am. v. Am. State Bank, 212 F. Supp. 2d 1034 (N.D. Iowa 2002).

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Farm Credit Servs. of Am. v. Am. State Bank, 212 F. Supp. 2d 1034 (N.D. Iowa 2002). · cites it 2× “demand item, other than a documentary draft, whether properly payable or not, if the bank, in any case in which it is not also the depositary bank, retains the item beyond midnight of the banking day of receipt without settling for it or, whether or not it is also the depositary…”

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