1. (a) A person who encodes information on or with respect to an item after issue warrants to any subsequent collecting bank and to the payor bank or other payor that the information is correctly encoded. If the customer of a depositary bank encodes, that bank also makes the warranty.
2. (b) A person who undertakes to retain an item pursuant to an agreement for electronic presentment warrants to any subsequent collecting bank and to the payor bank or other payor that retention and presentment of the item comply with the agreement. If a customer of a depositary bank undertakes to retain an item, that bank also makes this warranty.

3. (c) A person to whom warranties are made under this section and who took the item in good faith may recover from the warrantor as damages for breach of warranty an amount equal to the loss suffered as a result of the breach, plus expenses and loss of interest incurred as a result of the breach.

   Oklahoma Code Comment

4. 1. Usually, if an error occurs during the encoding process, some person If the amount is over-encoded, the depositor has the excess amount credited to the deposit account. If the amount is under-encoded, the drawer has too little deducted. Oklahoma law prior to the 1992 UCC revisions afforded no clear route of recovery. This Section does, but does not limit the right of the depositary or payor bank, as the case may be, to recover any excess deposit or to charge the drawer's account for the full amount of the item as drawn.

   Some MICR fraud losses also have resulted from encoding erroneous routing numbers on checks, thereby interfering with the forward collection process. If the culprit (the customer) cannot be found, the depositary bank will now be liable for all these losses because its customer did the encoding.

5. 2. The retention warranty under subsection (b) runs from the retaining bank. The warranty is that the retaining bank complied with its agreements regarding electronic presentment and retention, if any. The payor bank should ensure that any retention and electronic presentment agreements permit the payor to satisfy the requirements of subsections 4-406(a) and (b).

Laws 1961, SB 36, p. 126, §