The Vermont Statutes Online
The Statutes below include the actions of the 2025 session of the General Assembly.
NOTE: The Vermont Statutes Online is an unofficial copy of the Vermont Statutes Annotated that is provided as a convenience.
(Cite as: 9A V.S.A. § 4-402)
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§ 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 has 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. (Added 1993, No. 158 (Adj. Sess.), § 13, eff. Jan. 1, 1995.)