— return of items by payor bank. 1. Ifa payor settles for ademand itemother than a documentary draftpresented otherwise than for immediate payment over the counter before midnight of the banking day of receipt, the payor bank may revoke the settlement and recover the payment settlement if,before it has made final payment and before itsmidnight deadline, it a. returns the item; or b. sends written notice of dishonor or nonpayment if the item is unavailable for return; and the item or notice includes the reason for dishonor or nonpayment. 2. If a demand item is received by a payor bank for credit on its books, itmay return the item or send notice of dishonor and may revoke any credit given or recover the amount thereof withdrawn by its customer, ifitacts within the time limit and inthe manner specified in subsection 1. 3. Unless previous notice of dishonor has been sent, an item is dishonored at the time when for purposes of dishonor itis returned or notice sent in accordance with this section. 4. An item isreturned: a. as to an item presented through a clearing house, when itis delivered to the presenting or last collecting bank or to the clearing house or is sent or delivered in accordance with clearing-house rules; or b. in allother cases, when it issent or delivered to the bank’s customer or transferor or pursuant to that customer’s or transferor’s instructions.
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