[Code of Federal Regulations]

[Title 12, Volume 3]

[Revised as of January 1, 2006]

From the U.S. Government Printing Office via GPO Access

[CITE: 12CFR229.56]



[Page 572-573]

 

                       TITLE 12--BANKS AND BANKING

 

                   CHAPTER II--FEDERAL RESERVE SYSTEM

 

PART 229_AVAILABILITY OF FUNDS AND COLLECTION OF CHECKS (REGULATION CC)

--Table of Contents

 

                       Subpart D_Substitute Checks

 

Sec. 229.56  Liability.



    (a) Measure of damages--(1) In general. Except as provided in 

paragraph (a)(2) or (a)(3) of this section or Sec. 229.53, any person 

that breaches a warranty described in Sec. 229.52 or fails to comply 

with any requirement of this subpart with respect to any other person 

shall be liable to that person for an amount equal to the sum of--

    (i) The amount of the loss suffered by the person as a result of the 

breach or failure, up to the amount of the substitute check; and

    (ii) Interest and expenses (including costs and reasonable 

attorney's fees and other expenses of representation) related to the 

substitute check.

    (2) Offset of recredits. The amount of damages a person receives 

under paragraph (a)(1) of this section shall be reduced by any amount 

that the person receives and retains as a recredit under Sec. 229.54 or 

Sec. 229.55.

    (3) Comparative negligence. (i) If a person incurs damages that 

resulted in whole or in part from that person's negligence or failure to 

act in good faith, then the amount of any damages due to that person 

under paragraph (a)(1) of this section shall be reduced in proportion to 

the amount of negligence or bad faith attributable to that person.

    (ii) Nothing in this paragraph (a)(3) reduces the rights of a 

consumer or any other person under the U.C.C. or other applicable 

provision of federal or state law.

    (b) Timeliness of action. Delay by a bank beyond any time limits 

prescribed or permitted by this subpart is excused if the delay is 

caused by interruption of communication or computer



[[Page 573]]



facilities, suspension of payments by another bank, war, emergency 

conditions, failure of equipment, or other circumstances beyond the 

control of the bank and if the bank uses such diligence as the 

circumstances require.

    (c) Jurisdiction. A person may bring an action to enforce a claim 

under this subpart in any United States district court or in any other 

court of competent jurisdiction. Such claim shall be brought within one 

year of the date on which the person's cause of action accrues. For 

purposes of this paragraph, a cause of action accrues as of the date on 

which the injured person first learns, or by which such person 

reasonably should have learned, of the facts and circumstances giving 

rise to the cause of action, including the identity of the warranting or 

indemnifying bank against which the action is brought.

    (d) Notice of claims. Except as otherwise provided in this paragraph 

(d), unless a person gives notice of a claim under this section to the 

warranting or indemnifying bank within 30 calendar days after the person 

has reason to know of both the claim and the identity of the warranting 

or indemnifying bank, the warranting or indemnifying bank is discharged 

from liability in an action to enforce a claim under this subpart to the 

extent of any loss caused by the delay in giving notice of the claim. A 

timely recredit claim by a consumer under Sec. 229.54 constitutes 

timely notice under this paragraph.