The 2023 Florida Statutes (including Special Session C)

Title XXXIX
COMMERCIAL RELATIONS

Chapter 674
UNIFORM COMMERCIAL CODE: BANK DEPOSITS AND COLLECTIONS

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F.S. 674.406

674.406 Customer’s duty to discover and report unauthorized signature or alteration.—

(1) 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.

(2) 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 5 years after receipt of the items. A customer may request an item from the bank that paid the item, and that 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.

(3) If a bank sends or makes available a statement of account or items pursuant to subsection (1), 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.

(4) If the bank proves that the customer failed, with respect to an item, to comply with the duties imposed on the customer by subsection (3), the customer is precluded from asserting against the bank:

(a) The customer’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

(b) The customer’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 30 days, in which to examine the item or statement of account and notify the bank.

(5) If subsection (4) 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 (3) and the failure of the bank to exercise ordinary care contributed to the loss. If the customer proves that the bank did not pay the item in good faith, the preclusion under subsection (4) does not apply.

(6) Without regard to care or lack of care of either the customer or the bank, a customer who does not within 180 days after the statement or items are made available to the customer (subsection (1)) discover and report the customer’s unauthorized signature on or any alteration on the item or who does not, within 1 year after that time, discover and report any unauthorized endorsement 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 s. 674.2081 with respect to the unauthorized signature or alteration to which the preclusion applies.

History.—s. 1, ch. 65-254; s. 43, ch. 92-82; s. 24, ch. 2004-340; s. 107, ch. 2004-390.

Note.—s. 4-406, U.C.C.; supersedes s. 659.37.

F.S. 674.406 on Google Scholar

F.S. 674.406 on Casetext

Amendments to 674.406

Arrestable Offenses / Crimes under Fla. Stat. 674.406

Level: Degree
Misdemeanor/Felony: First/Second/Third

Current data shows no reason an arrest or criminal charge should have occurred directly under Florida Statute 674.406.

Annotations, Discussions, Cases:

Cases from cite.case.law:

GILBERT CADDY, P. A. v. JP MORGAN CHASE BANK, N. A., 193 F. Supp. 3d 1294 (S.D. Fla. 2016)

. . . Ann. § 674.406. . . . Stat: Ann. § 674.406. See EOF No. [125] at 6. . . . Ann.. § 674.406 to include electronic transfers. . . . Ann. § 674.406. . . . Ann. § 674.406. 2. . . .

ANDERSON, v. BRANCH BANKING AND TRUST COMPANY, LLC,, 119 F. Supp. 3d 1328 (S.D. Fla. 2015)

. . . .§§ 674.406(6) (items), 670.505 (funds transfers). . . . Stat. § 674.406(6) (emphasis supplied); see also Redland Co. v. Bank of Am. . . . Stat. §§ 674.406(6) and 670.505. . . . Stat. § 674.406(1). . . . Stat. § 674.406(6). Similarly, Article 4A initially places the risk of loss on the bank. Fla. . . .

REDLAND COMPANY, INC. a v. BANK OF AMERICA CORPORATION, a f. k. a. N. A., 568 F.3d 1232 (11th Cir. 2009)

. . . . § 674.406; see also Cheese & Grill, 970 So.2d at 375. . . . Stat. 674.406(3). That argument fails. . . .

CHEESE GRILL RESTAURANT, INC. v. WACHOVIA BANK, N. A., 970 So. 2d 372 (Fla. Dist. Ct. App. 2007)

. . . Subsection 674.406(1) of the Florida Statutes provides that a statement of account provided by a bank . . . forgery of the maker’s signature — only an unauthorized endorsement on the back of the checks. . § 674.406 . . .

BANK OF AMERICA, N. A. v. PUTNAL SEED AND GRAIN, INC., 965 So. 2d 300 (Fla. Dist. Ct. App. 2007)

. . . Section 674.406(6), Florida Statutes (2002), states that a customer is precluded from asserting a claim . . .

In CARLOW, v. N. A., 370 B.R. 402 (Bankr. S.D. Fla. 2007)

. . . UCC Article 4 issues Colonial Bank relies upon UCC § 4-406, Florida Statutes § 674.406, for the proposition . . . failed to complain within the short 180-day period provided for in the applicable version of F.S. § 674.406 . . . The statute of limitations defense under F.S. § 674.406(6) on which Colonial Bank relies in seeking summary . . .

T. COUTANT, v. SUNBANK SOUTH FLORIDA, N. A. n k a N. A., 813 So. 2d 1037 (Fla. Dist. Ct. App. 2002)

. . . of the condition precedent to suit provisions governing bank-customer relations contained in section 674.406 . . .

COLE TAYLOR BANK, v. SHANNON,, 772 So. 2d 546 (Fla. Dist. Ct. App. 2000)

. . . For example, Cole Taylor contends that under section 674.406, Florida Statutes (1997), Mrs. . . . Without addressing the validity of appellant’s interpretation of section 674.406 or its constructive . . .

LOWENSTEIN, v. BARNETT BANK OF SOUTH FLORIDA, N. A., 720 So. 2d 596 (Fla. Dist. Ct. App. 1998)

. . . Thus, the bank argued, the customer was precluded from recovery under section 674.406(4) Florida Statutes . . . (1991), moved after January 1, 1993, to section 674.406(6) Florida Statutes (1995). . . . Section 674.406(6) provides as did its predecessor: Without regard to care or lack of care of either . . . As mandated by section 674.406, the customer had an obligation to examine bank statements and notify . . .

LOWENSTEIN, v. BARNETT BANK OF SOUTH FLORIDA, N. A., 789 So. 2d 1012 (Fla. Dist. Ct. App. 1998)

. . . Thus, the bank argued, the customer was precluded from recovery under section 674.406(4) Florida Statutes . . . Section 674.406 provides in part: (3) If a bank sends or makes available a statement of account or items . . . As mandated by section 674.406, the customer had an obligation to examine bank statements and notify . . .

SUN BANK, N. A. v. MERRILL LYNCH, PIERCE, FENNER AND SMITH, INC., 637 So. 2d 279 (Fla. Dist. Ct. App. 1994)

. . . Sun Bank next argues that Florida Statutes section 674.406 permits a customer to make a claim upon a . . . However, Sun Bank’s argument lacks merit because section 674.406 allows a claim to be made; it does not . . .

E. GERBER, v. CITY NATIONAL BANK OF FLORIDA,, 619 So. 2d 328 (Fla. Dist. Ct. App. 1993)

. . . A bank customer appeals the dismissal of his complaint against a bank as being barred by Section 674.406 . . . The bank filed a motion to dismiss, claiming that the suit was barred by Section 674.406(4). . . . Section 674.406(4), which is based upon U.C.C. . . . significantly from that used in Section 674.406(4)). . . . Section 674.406 only imposes on bank customers, who are in a better position to detect forgeries than . . .

V. APRILE, Jr. V. Jr. v. SUNCOAST SCHOOLS FEDERAL CREDIT UNION, a, 596 So. 2d 1290 (Fla. Dist. Ct. App. 1992)

. . . judgment on the ground that the action was barred by the statutes of limitations set forth in subsections 674.406 . . . Under subsection 674.406(4), a customer has one year within which to discover and report his unauthorized . . . Finally, the statute of limitations in subsection 674.406(4), is inapplicable in this case because the . . . Although Suncoast may not prevail on its affirmative defense of statute of limitations under subsection 674.406 . . .

FEDERAL INSURANCE COMPANY, v. NCNB NATIONAL BANK OF NORTH CAROLINA, NCNB, 958 F.2d 1544 (11th Cir. 1992)

. . . Florida statute § 674.406, which provides a defense to a bank if a customer fails to discover and report . . . Fla.Stat. § 674.406(3). . . . As the commentary to Fla.Stat. § 674.406 states: Subsection (3). . . .

PODINI, v. INTERCONTINENTAL BANK,, 557 So. 2d 229 (Fla. Dist. Ct. App. 1990)

. . . Flagship Bank of Melbourne, N.A., 402 So.2d 586 (Fla. 5th DCA 1981); Sections 674.406(1) & 674.-406(4 . . .

CORONET INSURANCE COMPANY, v. ALFARO,, 36 Fla. Supp. 2d 182 (Fla. Cir. Ct. 1989)

. . . . § 674.406(4)]. FINDINGS 1. . . . “The one-year period of limitation in subsection (4) [F.S. § 674.406(4)] is not merely a statute of limitation . . .

H. BURDINE- COAKLEY, v. CAPITAL BANK,, 542 So. 2d 1019 (Fla. Dist. Ct. App. 1989)

. . . Coles’s account, see § 674.401, Fla.Stat. (1983), was the plaintiff’s failure to comply with section 674.406 . . . Under section 674.406(3), however: (3) The preclusion under subsection (2) does not apply if the customer . . . s payment of the checks executed under the power of attorney was or was not negligent under section 674.406 . . . The bank does not invoke § 674.406(4), Fla. Stat. (1983) as a defense. See Space Distribs., Inc. v. . . . (d) Plaintiff is precluded from this action by Florida Statutes § 674.406 due to his failure to review . . . See section 674.406(3), Fla.Stat. (1983); Ossip Harris Ins., Inc. v. . . .

SOUTHERN CONTRACT CARPET, INC. v. COUNTY NATIONAL BANK OF SOUTH FLORIDA,, 528 So. 2d 42 (Fla. Dist. Ct. App. 1988)

. . . defendant on the ground that the action was barred by the statute of limitations contained in section 674.406 . . . Our holding that the single-signature-when-two-are-required is an “unauthorized” one for 674.406(4) purposes . . . directly contrary to the appellant’s position that, for practical purposes, only forgeries qualify under 674.406 . . . Since the action was commenced beyond the period provided by the thus applicable terms of section 674.406 . . .

CORAL GABLES FEDERAL SAVINGS LOAN ASSOCIATION, v. CITY OF OPA- LOCKA,, 516 So. 2d 989 (Fla. Dist. Ct. App. 1987)

. . . DCA 1983) (customer’s negligent failure to promptly reconcile bank statements as required by section 674.406 . . .

KEY BANK OF FLORIDA, v. FIRST UNITED LAND TITLE COMPANY,, 502 So. 2d 1280 (Fla. Dist. Ct. App. 1987)

. . . I further believe that the facts do not support the Bank’s affirmative defense under section 674.406, . . .

PATTERSON PRODUCE COMPANY, INC. v. FIRST NATIONAL BANK OF FLORIDA,, 475 So. 2d 1368 (Fla. Dist. Ct. App. 1985)

. . . The trial court entered summary judgment in favor of the bank on the authority of section 674.406, Florida . . . At the hearing on the motion for summary judgment, the bank argued that section 674.406(4) requires the . . . sole issue on appeal is whether the trial court correctly applied the one-year limitation of section 674.406 . . . the case law interpreting it, we conclude the legislature intended the one-year limitation of section 674.406 . . . RYDER, C.J., and LEHAN, J., concur. . 674.406 Customer’s duty to discover and report unauthorized signature . . .

LAWRENCE, v. CENTRAL PLAZA BANK AND TRUST COMPANY,, 469 So. 2d 201 (Fla. Dist. Ct. App. 1985)

. . . Central Plaza Bank will lose the benefit of the defenses guaranteed to the County Bank under section 674.406 . . .

FLAGSHIP BANK OF SEMINOLE, v. COMPLETE INTERIORS, INC. d b a, 450 So. 2d 337 (Fla. Dist. Ct. App. 1984)

. . . To support the trial court’s judgment, appellee relies on section 674.406, Florida Statutes (1981). . . . of ordinary care on the part of the bank in paying the item(s) as provided under subsection 3 of § 674.406 . . . Contrary to the appellee’s position, section 674.406 does not create an absolute liability on the part . . . 4th Cir.1980) the Louisiana appellate court, applying a statute almost identical to Florida Statute § 674.406 . . . Section 674.406, in relevant part, says: Customer’s duty to discover and report unauthorized signature . . .

OSSIP- HARRIS INSURANCE, INC. v. BARNETT BANK OF SOUTH FLORIDA, N. A., 428 So. 2d 363 (Fla. Dist. Ct. App. 1983)

. . . defenses, inter alia, that Ossip failed to detect and report the forgeries to Barnett pursuant to Section 674.406 . . . care in paying the items, thereby allowing for assertion of liability by Ossip pursuant to Section 674.406 . . . Resolution of this dispute turns on the provisions of subsections (1) through (3) of Section 674.406, . . . Flagship Bank of Melbourne, N.A., 402 So.2d at 588, and under Section 674.406(2)(b), is therefore precluded . . . Under Section 674.406(3), the burden of proving Barnett’s lack of ordinary care falls squarely on Ossip-Harris . . .

FIRST NATIONAL BANK OF CAPE CANAVERAL, a a v. KESHISHIAN,, 427 So. 2d 313 (Fla. Dist. Ct. App. 1983)

. . . record shows there were material questions of fact as to the Bank’s defenses under sections 673.406 and 674.406 . . . Neal, 3 Burr. 1354, has been complicated somewhat by sections 673.406 and 674.406, Florida Statutes ( . . . Appellee argues that both sections 673.406and 674.406 require an affirmative showing by the Bank that . . . regard to section 673.406 this may be true if the matter proceeds to trial, but with regard to section 674.406 . . . Section 674.406, Florida Statutes (1977), provides in part: (1) When a bank sends to its customer a statement . . .

SPACE DISTRIBUTORS, INC. a d b a v. FLAGSHIP BANK OF MELBOURNE, N. A. R., 402 So. 2d 586 (Fla. Dist. Ct. App. 1981)

. . . Section 674.406(1), Florida Statutes (1979), imposes the following duties upon a bank customer: When . . . failed to exercise reasonable care by promptly examining its cancelled checks as required by section 674.406 . . . Section 674.406(2) defines the effect of the failure of the customer to comply with subsection (1): If . . . Section 674.406(4) provides that: Without regard to care or lack of care of either the customer or the . . . Thus, under section 674.406(4), Tropic Air is not precluded from asserting unauthorized signatures on . . .

FLORIDA FEDERAL SAVINGS LOAN ASSOCIATION, v. E. MARTIN, E. Jr. D. a, 400 So. 2d 151 (Fla. Dist. Ct. App. 1981)

. . . MARTIN; and that pursuant to the preclusionary rules set forth in Section 674.406 of the Florida Statutes . . . the trial judge that Florida Federal could not avail itself of the defense it asserted under section 674.406 . . . Florida Federal therefore cannot rely upon section 674.406 in defense of Martin’s claim. . . .