N.Y. Uniform Commercial Code Law § 4-212: Right of Charge-Back or Refund

Section 4--212. Right of Charge-Back or Refund.

(1) If a collecting bank has made provisional settlement with its

customer for an item and itself fails by reason of dishonor, suspension

of payments by a bank or otherwise to receive a settlement for the item

which is or becomes final, the bank may revoke the settlement given by

it, charge back the amount of any credit given for the item to its

customer's account or obtain refund from its customer whether or not it

is able to return the items if by its midnight deadline or within a

longer reasonable time after it learns the facts it returns the item or

sends notification of the facts. These rights to revoke, charge-back and

obtain refund terminate if and when a settlement for the item received

by the bank is or becomes final (subsection (3) of Section 4--211 and

subsections (2) and (3) of Section 4--213).

(2) Within the time and manner prescribed by this section and Section

4--301, an intermediary or payor bank, as the case may be, may return an

unpaid item directly to the depositary bank and may send for collection

a draft on the depositary bank and obtain reimbursement. In such case,

if the depositary bank has received provisional settlement for the item,

it must reimburse the bank drawing the draft and any provisional credits

for the item between banks shall become and remain final.

(3) A depositary bank which is also the payor may charge-back the

amount of an item to its customer's account or obtain refund in

accordance with the section governing return of an item received by a

payor bank for credit on its books (Section 4--301).

(4) The right to charge-back is not affected by

(a) prior use of the credit given for the item; or

(b) failure by any bank to exercise ordinary care with respect to

the item but any bank so failing remains liable.

(5) A failure to charge-back or claim refund does not affect other

rights of the bank against the customer or any other party.

(6) If credit is given in dollars as the equivalent of the value of an

item payable in a foreign currency the dollar amount of any charge-back

or refund shall be calculated on the basis of the buying sight rate for

the foreign currency prevailing on the day when the person entitled to

the charge-back or refund learns that it will not receive payment in

ordinary course.