                                 CODE OF VIRGINIA

RIGHT OF CHARGE-BACK OR REFUND; LIABILITY OF COLLECTING BANKS; RETURN OF ITEM
(§ 8.4-212)

a. If a collecting bank has made provisional settlement with its customer for an
item and 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&#8217;s account or obtain refund from its
customer, whether or not it is able to return the item, 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. If the return or notice is delayed
beyond the bank&#8217;s midnight deadline or a longer reasonable time after it
learns the facts, the bank may revoke the settlement, charge-back the credit or
obtain a refund from its customer, but it is liable for any loss resulting from
the delay. 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.

b. A collecting bank returns an item when it is sent or delivered to the
bank&#8217;s customer or transferor or pursuant to its instructions.

c. A depositary bank that is also the payor may charge-back the amount of an
item to its customer&#8217;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 (&#xA7; 8.4-301).

d. The right to charge-back is not affected by:

   1. previous use of a credit given for the item; or

   2. failure by any bank to exercise ordinary care with respect to the item but
   any bank so failing remains liable.

e. A failure to charge-back or claim refund does not affect other rights of the
bank against the customer or any other party.

f. If credit is given in dollars as the equivalent of the value of an item
payable in a foreign money the dollar amount of any charge-back or refund shall
be calculated on the basis of the bank-offered spot rate for the foreign money
prevailing on the day when the person entitled to the charge-back or refund
learns that it will not receive payment in ordinary course.

HISTORY: 1964, c. 219; 1992, c. 693.