                                 CODE OF VIRGINIA

BANK&#8217;S LIABILITY TO CUSTOMER FOR WRONGFUL DISHONOR; TIME OF DETERMINING
INSUFFICIENCY OF ACCOUNT (§ 8.4-402)

a. Except as otherwise provided in this title, 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&#8217;s determination of the customer&#8217;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&#8217;s decision to dishonor the item, the account balance
at the time is determinative of whether a dishonor for insufficiency of
available funds is wrongful.

HISTORY: Code 1950, § 6-71; 1964, c. 219; 1992, c. 693.