(810 ILCS 5/4-402)
(from Ch. 26, par. 4-402)
Bank's liability to customer for wrongful dishonor; time
of determining insufficiency of account.
(a) Except as otherwise provided in this Article, 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 had agreed to pay the overdraft.
(b) 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.
(c) 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 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.
(Source: P.A. 87-582; 87-1135.)