N.Y. Uniform Commercial Code Law § 4-a-204: Refund of Payment and Duty of Customer to Report With Respect to Unauthorized Payment Order

Section 4-A-204. Refund of Payment and Duty of Customer to Report With

Respect to Unauthorized Payment Order.

(1) If a receiving bank accepts a payment order issued in the name of

its customer as sender which is (a) not authorized and not effective as

the order of the customer under Section 4-A-202, or (b) not enforceable,

in whole or in part, against the customer under Section 4-A-203, the

bank shall refund any payment of the payment order received from the

customer to the extent the bank is not entitled to enforce payment and

shall pay interest on the refundable amount calculated from the date the

bank received payment to the date of the refund. However, the customer

is not entitled to interest from the bank on the amount to be refunded

if the customer fails to exercise ordinary care to determine that the

order was not authorized by the customer and to notify the bank of the

relevant facts within a reasonable time not exceeding ninety days after

the date the customer received notification from the bank that the order

was accepted or that the customer's account was debited with respect to

the order. The bank is not entitled to any recovery from the customer on

account of a failure by the customer to give notification as stated in

this section.

(2) Reasonable time under subsection (1) may be fixed by agreement as

stated in subsection (b) of Section 1--302, but the obligation of a

receiving bank to refund payment as stated in subsection (b) may not

otherwise be varied by agreement.