Tex. Bus. & Com. Code Section 4.303
When Items Subject to Notice, Stop-payment Order, Legal Process, or Setoff; Order in Which Items May Be Charged or Certified

(a)

Any knowledge, notice, or stop-payment order received by, legal process served upon, or setoff exercised by a payor bank comes too late to terminate, suspend, or modify the bank’s right or duty to pay an item or to charge its customer’s account for the item if the knowledge, notice, stop-payment order, or legal process is received or served and a reasonable time for the bank to act thereon expires or the setoff is exercised after the earliest of the following:

(1)

the bank accepts or certifies the item;

(2)

the bank pays the item in cash;

(3)

the bank settles for the item without having a right to revoke the settlement under statute, clearing-house rule, or agreement;

(4)

the bank becomes accountable for the amount of the item under Section 4.302 (Payor Bank’s Responsibility for Late Return of Item) dealing with the payor bank’s responsibility for late return of items; or

(5)

with respect to checks, a cutoff hour not earlier than one hour after the opening of the next banking day after the banking day on which the bank received the check and not later than the close of that next banking day or, if no cutoff hour is fixed, the close of the next banking day after the banking day on which the bank received the check.

(b)

Subject to Subsection (a), items may be accepted, paid, certified, or charged to the indicated account of a bank’s customer in any order and before or after the bank’s regular banking hours. A bank is under no obligation to determine the time of day an item is received and without liability may withhold the amount thereof pending a determination of the effect, consequence or priority of any knowledge, notice, stop-payment order, or legal process concerning the same, or interplead such amount and the claimants thereto.
Acts 1967, 60th Leg., p. 2343, ch. 785, Sec. 1, eff. Sept. 1, 1967. Amended by Acts 1985, 69th Leg., ch. 621, Sec. 2, eff. June 14, 1985; Acts 1995, 74th Leg., ch. 921, Sec. 4, eff. Jan. 1, 1996.

Source: Section 4.303 — When Items Subject to Notice, Stop-payment Order, Legal Process, or Setoff; Order in Which Items May Be Charged or Certified, https://statutes.­capitol.­texas.­gov/Docs/BC/htm/BC.­4.­htm#4.­303 (accessed Jun. 5, 2024).

4.101
Short Title 4.102
Applicability 4.103
Variation by Agreement 4.104
Definitions and Index of Definitions 4.106
Payable Through or Payable at Bank 4.107
Separate Office of a Bank 4.108
Time of Receipt of Items 4.109
Delays 4.110
Electronic Presentment 4.111
Statute of Limitations 4.112
Payment of Check at Par 4.202
Responsibility for Collection or Return 4.203
Effect of Instructions 4.204
Methods of Sending and Presenting 4.205
Depository Bank Holder of Unindorsed Item 4.206
Transfer Between Banks 4.207
Transfer Warranties 4.208
Presentment Warranties 4.209
Encoding and Retention Warranties 4.210
Security Interest of Collecting Bank in Items, Accompanying Documents and Proceeds 4.211
When Bank Gives Value for Purposes of Holder in Due Course 4.212
Presentment by Notice of Item Not Payable By, Through or at a Bank 4.213
Medium and Time of Settlement by Bank 4.214
Right of Charge-back or Refund 4.215
Final Payment of Item by Payor Bank 4.216
Insolvency and Preference 4.301
Deferred Posting 4.302
Payor Bank’s Responsibility for Late Return of Item 4.303
When Items Subject to Notice, Stop-payment Order, Legal Process, or Setoff 4.401
When Bank May Charge Customer’s Account 4.402
Bank’s Liability to Customer for Wrongful Dishonor 4.403
Customer’s Right to Stop Payment 4.404
Bank Not Obligated to Pay Check More than Six Months Old 4.405
Death or Incompetence of Customer 4.406
Customer’s Duty to Discover and Report Unauthorized Signature or Alteration 4.407
Payor Bank’s Right to Subrogation on Improper Payment 4.501
Handling of Documentary Drafts 4.503
Responsibility of Presenting Bank for Documents and Goods 4.504
Privilege of Presenting Bank to Deal with Goods
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Accessed:
Jun. 5, 2024

§ 4.303’s source at texas​.gov