§4-406. Customer's duty to discover and report unauthorized signature or alteration
(a) A bank that sends or makes available to a customer a statement of account showing payment of items for the account shall either return or make available to the customer the items paid or provide information in the statement of account sufficient to allow the customer reasonably to identify the items paid. The statement of account provides sufficient information if the item is described by item number, amount, and date of payment.
(b) If the items are not returned to the customer, the person retaining the items shall either retain the items or, if the items are destroyed, maintain the capacity to furnish legible copies of the items until the expiration of seven years after receipt of the items. A customer may request an item from the bank that paid the item, and that bank must provide in a reasonable time either the item or, if the item has been destroyed or is not otherwise obtainable, a legible copy of the item.
(c) If a bank sends or makes available a statement of account or items pursuant to Subsection (a), the customer must exercise reasonable promptness in examining the statement or the items to determine whether any payment was not authorized because of an alteration of an item or because a purported signature by or on behalf of the customer was not authorized. If, based on the statement or items provided, the customer should reasonably have discovered the unauthorized payment, the customer must promptly notify the bank of the relevant facts.
(d) If the bank proves that the customer failed, with respect to an item, to comply with the duties imposed on the customer by Subsection (c), the customer is precluded from asserting against the bank:
(1) the customer's unauthorized signature or any alteration on the item, if the bank also proves that it suffered a loss by reason of the failure; and
(2) the customer's unauthorized signature or alteration by the same wrongdoer on any other item paid in good faith by the bank if the payment was made before the bank received notice from the customer of the unauthorized signature or alteration and after the customer had been afforded a reasonable period of time, not exceeding thirty days, in which to examine the item or statement of account and notify the bank.
(e) If Subsection (d) applies and the customer proves that the bank failed to exercise ordinary care in paying the item and that the failure substantially contributed to loss, the loss is allocated between the customer precluded and the bank asserting the preclusion according to the extent to which the failure of the customer to comply with Subsection (c) and the failure of the bank to exercise ordinary care contributed to the loss. If the customer proves that the bank did not pay the item in good faith, the preclusion under Subsection (d) does not apply.
(f) Without regard to care or lack of care of either the customer or the bank, a customer who does not within one year after the statement or items are made available to the customer (Subsection (a)) discover and report the customer's unauthorized signature on or any alteration on the item is precluded from asserting against the bank the unauthorized signature or alteration. If there is a preclusion under this Subsection, the payor bank may not recover for breach of warranty under R.S. 10:4-208 with respect to the unauthorized signature or alteration to which the preclusion applies.
Acts 1992, No. 1133, §4, eff. July 1, 1993; Acts 1993, No. 948, §10, eff. Jan. 1, 1994.
Notes of Decisions
Cited in
28
cases (
4 in the last 5 years), 1980–2025 · leading case:
Prestridge v. Bank of Jena, 924 So. 2d 1266 (La. Ct. App. 2006).
Prestridge v. Bank of Jena, 924 So. 2d 1266 (La. Ct. App. 2006).
· cites it 28× “]R.S. 10:4-406 to the facts of this matter, in that a proper application thereof would preclude any recovery by Plaintiff[s].”
Ducote v. Whitney Nat'l Bank, 212 So. 3d 729 (La. Ct. App. 2017).
· cites it 11× “R.S. 10:4-406 due to plaintiffs’ failure to timely report the items as unauthorized, and that the claims are barred by apparent authority.”
ASP Enter., Inc. v. Guillory, 22 So. 3d 964 (La. Ct. App. 2009).
· cites it 6× “R.S. 10:4-406, Revised Uniform Commercial Code Comment, (1).”
Marx v. Whitney Nat. Bank, 713 So. 2d 1142 (La. 1998).
· cites it 9× “R.S. 10:4-406 provides in pertinent part: (c) If a bank sends or makes available a statement of account or items pursuant to Subsection (a), the customer must exercise reasonable promptness in examining the statement or the items to determine whether any payment was not…”
Brooks v. Transamerica Fin. Advisors, 57 So. 3d 1153 (La. Ct. App. 2011).
· cites it 7× “R.S. 10:4-406, which is found in Chapter 4, Uniform Commercial Code — Bank Deposits and Collections.”
Graham v. Strother, 684 So. 2d 1088 (La. Ct. App. 1996).
· cites it 9× “No Louisiana court has previously addressed the issue of whether the defenses of LSA-R.S. 10:4-406 are applicable in an action where the maker of a check files suit for breach of warranty against a collecting bank under LSA-R.”
ASHLEY-HALL, ETC. v. Bank of New Orleans, 389 So. 2d 850 (La. Ct. App. 1980).
· cites it 5× “Also relevant is R.S. 10:4-406, which provides in pertinent part as follows: "(1) When a bank sends to its customer a statement of account accompanied by items paid in good faith in support of the debit entries or holds the statement and items pursuant to a request or…”
Peak v. Tuscaloosa Com. Bank, 707 So. 2d 59 (La. Ct. App. 1997).
· cites it 6× “10:3-406 and LSA-R.S. 10:4-406. She argues that the issues of whether the Bank breached those duties, and whether the loss should be allocated according to the extent to which each party's failure to exercise ordinary care contributed to the loss, require a factual inquiry…”
Grodner & Assocs. v. Regions Bank, 338 F. Supp. 3d 488 (M.D. La. 2018).
· cites it 12× “R.S. § 10:4-406 because Plaintiff failed to properly inspect its bank statements and did not report the fraud for well over a year after receiving the bank statements that indicated fraud.”
Par. Nat. Bank v. Ott, 841 So. 2d 749 (La. 2003).
“…such as the time limit for when a deposit account owner must notify the drawer bank of an unauthorized check. La. R.S. 10:4-406.”
Stanley Ex Rel. Est. of Hale v. Trinchard, 579 F.3d 515 (5th Cir. 2009).
“§ 4-406(4), which Louisiana codified as La. Rev. Stat. § 10:4-406(4), states that a bank customer who does not notify a bank within a year of receiving a bank statement of any items that contain an "unauthorized signature” is "precluded from asserting against the bank such…”
La. Rev. Stat. § 10:4-406(1): 1 case
La. Rev. Stat. § 10:4-406(4): 7 cases
Graham v. Strother, 684 So. 2d 1088 (La. Ct. App. 1996).
“No Louisiana court has previously addressed the issue of whether the defenses of LSA-R.S. 10:4-406 are applicable in an action where the maker of a check files suit for breach of warranty against a collecting bank under LSA-R.”
Stanley Ex Rel. Est. of Hale v. Trinchard, 579 F.3d 515 (5th Cir. 2009).
“§ 4-406(4), which Louisiana codified as La. Rev. Stat. § 10:4-406(4), states that a bank customer who does not notify a bank within a year of receiving a bank statement of any items that contain an "unauthorized signature” is "precluded from asserting against the bank such…”
La. Rev. Stat. § 10:4-406(5): 1 case
Graham v. Strother, 684 So. 2d 1088 (La. Ct. App. 1996).
“No Louisiana court has previously addressed the issue of whether the defenses of LSA-R.S. 10:4-406 are applicable in an action where the maker of a check files suit for breach of warranty against a collecting bank under LSA-R.”
La. Rev. Stat. § 10:4-406(a): 3 cases
Prestridge v. Bank of Jena, 924 So. 2d 1266 (La. Ct. App. 2006).
“]R.S. 10:4-406 to the facts of this matter, in that a proper application thereof would preclude any recovery by Plaintiff[s].”
La. Rev. Stat. § 10:4-406(c): 8 cases
Prestridge v. Bank of Jena, 924 So. 2d 1266 (La. Ct. App. 2006).
“]R.S. 10:4-406 to the facts of this matter, in that a proper application thereof would preclude any recovery by Plaintiff[s].”
Peak v. Tuscaloosa Com. Bank, 707 So. 2d 59 (La. Ct. App. 1997).
“10:3-406 and LSA-R.S. 10:4-406. She argues that the issues of whether the Bank breached those duties, and whether the loss should be allocated according to the extent to which each party's failure to exercise ordinary care contributed to the loss, require a factual inquiry…”
Grodner & Assocs. v. Regions Bank, 338 F. Supp. 3d 488 (M.D. La. 2018).
“R.S. § 10:4-406 because Plaintiff failed to properly inspect its bank statements and did not report the fraud for well over a year after receiving the bank statements that indicated fraud.”
La. Rev. Stat. § 10:4-406(d): 3 cases
Prestridge v. Bank of Jena, 924 So. 2d 1266 (La. Ct. App. 2006).
“]R.S. 10:4-406 to the facts of this matter, in that a proper application thereof would preclude any recovery by Plaintiff[s].”
Peak v. Tuscaloosa Com. Bank, 707 So. 2d 59 (La. Ct. App. 1997).
“10:3-406 and LSA-R.S. 10:4-406. She argues that the issues of whether the Bank breached those duties, and whether the loss should be allocated according to the extent to which each party's failure to exercise ordinary care contributed to the loss, require a factual inquiry…”
La. Rev. Stat. § 10:4-406(d)(2): 3 cases
Prestridge v. Bank of Jena, 924 So. 2d 1266 (La. Ct. App. 2006).
“]R.S. 10:4-406 to the facts of this matter, in that a proper application thereof would preclude any recovery by Plaintiff[s].”
Grodner & Assocs. v. Regions Bank, 338 F. Supp. 3d 488 (M.D. La. 2018).
“R.S. § 10:4-406 because Plaintiff failed to properly inspect its bank statements and did not report the fraud for well over a year after receiving the bank statements that indicated fraud.”
La. Rev. Stat. § 10:4-406(e): 3 cases
Prestridge v. Bank of Jena, 924 So. 2d 1266 (La. Ct. App. 2006).
“]R.S. 10:4-406 to the facts of this matter, in that a proper application thereof would preclude any recovery by Plaintiff[s].”
Marx v. Whitney Nat. Bank, 713 So. 2d 1142 (La. 1998).
“R.S. 10:4-406 provides in pertinent part: (c) If a bank sends or makes available a statement of account or items pursuant to Subsection (a), the customer must exercise reasonable promptness in examining the statement or the items to determine whether any payment was not…”
La. Rev. Stat. § 10:4-406(f): 6 cases
Ducote v. Whitney Nat'l Bank, 212 So. 3d 729 (La. Ct. App. 2017).
“R.S. 10:4-406 due to plaintiffs’ failure to timely report the items as unauthorized, and that the claims are barred by apparent authority.”
Grodner & Assocs. v. Regions Bank, 338 F. Supp. 3d 488 (M.D. La. 2018).
“R.S. § 10:4-406 because Plaintiff failed to properly inspect its bank statements and did not report the fraud for well over a year after receiving the bank statements that indicated fraud.”
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