Rule 6 - Definitions
"Financial institution" includes banks, savings and loan associations, credit unions, savings banks and any other business or person which accepts for deposit funds held in trust by lawyers. "Properly payable" refers to an instrument which, if presented in the normal course of business, is in a form requiring payment under the laws of this jurisdiction.
"Notice of dishonor" refers to the notice which a financial institution is required to give, under the laws of this jurisdiction, upon presentation of an instrument which the institution dishonors.
Comment
Under the laws of most jurisdictions, the definition of "properly payable" will be contained in Uniform Commercial Code (U.L.A.) º 4-401(a) (Amended Article 4, 1990) ("An item is properly payable if it is authorized by the customer and is in accordance with any agreement between the customer and bank.") or its predecessor, Uniform Commercial Code (U.L.A.) º 4-104(i) (Prior Article 4, pre-1990) ("'Properly payable' includes the availability of funds for payment at the time of decision to pay or dishonor").
Under the laws of most jurisdictions, the definition of "notice of dishonor" will be determined by reference to Uniform Commercial Code (U.L.A.) º 3-503(c) (Revised Article 3, 1990), under which notice must be given by a collecting bank before midnight of the next banking day following the banking day on which the bank receives notice of dishonor or by any other person within 30 days following the day on which the person receives notice of dishonor, or its predecessor, Uniform Commercial Code (U.L.A.) º 3-508(2) (Prior Article 3, pre-1990), which states any necessary notice must be given by a bank before its midnight deadline and by any other person before midnight of the third business day after dishonor or receipt of notice of dishonor.