                                 CODE OF VIRGINIA

CUSTOMER&#8217;S DUTY TO DISCOVER AND REPORT UNAUTHORIZED SIGNATURE OR
ALTERATION (§ 8.4-406)

a. A bank that sends or makes available to a customer a statement of account
showing payment of items for the account shall either return or make available
to the customer the items paid or provide information in the statement of
account sufficient to allow the customer reasonably to identify the items paid.
The statement of account provides sufficient information if the item is
described by item number, amount, and date of payment.

b. If the items are not returned to the customer, the person retaining the items
shall either retain the items or, if the items are destroyed, maintain the
capacity to furnish legible copies of the items until the expiration of seven
years after receipt of the items. A customer may request an item from the bank
that paid the item, and the bank must provide in a reasonable time either the
item or, if the item has been destroyed or is not otherwise obtainable, a
legible copy of the item.

c. If a bank sends or makes available a statement of account or items pursuant
to subsection (a), the customer must exercise reasonable promptness in examining
the statement or the items to determine whether any payment was not authorized
because of an alteration of an item or because a purported signature by or on
behalf of the customer was not authorized. If, based on the statement or items
provided, the customer should reasonably have discovered the unauthorized
payment, the customer must promptly notify the bank of the relevant facts.

d. If the bank proves that the customer failed with respect to an item to comply
with the duties imposed on the customer by subsection (c) the customer is
precluded from asserting against the bank:

   1. the customer&#8217;s unauthorized signature or any alteration on the item,
   if the bank also proves that it suffered a loss by reason of the failure; and

   2. the customer&#8217;s unauthorized signature or alteration by the same
   wrongdoer on any other item paid in good faith by the bank if the payment was
   made before the bank received notice from the customer of the unauthorized
   signature or alteration and after the customer had been afforded a reasonable
   period of time, not exceeding thirty days, in which to examine the item or
   statement of account and notify the bank.

e. If subsection (d) applies and the customer proves that the bank failed to
exercise ordinary care in paying the item and that the failure substantially
contributed to loss, the loss is allocated between the customer precluded and
the bank asserting the preclusion according to the extent to which the failure
of the customer to comply with subsection (c) and the failure of the bank to
exercise ordinary care contributed to the loss. If the customer proves that the
bank did not pay an item in good faith, the preclusion under subsection (d) does
not apply.

f. Without regard to care or lack of care of either the customer or the bank, a
customer who does not within one year after the statement or items are made
available to the customer (subsection (a)) discover and report the
customer&#8217;s unauthorized signature on or any alteration on the item is
precluded from asserting against the bank the unauthorized signature or
alteration. If there is a preclusion under this subsection, the payor bank may
not recover for breach of warranty under &#xA7; 8.4-207.2 with respect to the
unauthorized signature or alteration to which the preclusion applies.

HISTORY: Code 1950, §§ 6-74, 6-75; 1964, c. 219; 1978, c. 75; 1992, c. 693.