336.4-406 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 30 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 section
with respect to the unauthorized signature or alteration to
which the preclusion applies.
History: 1965 c 811 s 336.4-406; 1986 c 444; 1992 c 565 s 107