For a discussion of Article 4 of the UCC* an understanding of the following terms is essential.
a) Depositary bank t the first bank to which an item is transferred for collection, even though it is also the payor bank
b) Payor bank ： a bank by which an item is payable as drawn or accepted :
c) Intermediary bank： any bank to which an item is transferred in course of collection except the depositary or payor bank
d) Collecting bank： any bank handling the item for collection except the payor bank;
e) Presenting bank： any bank presenting an item except the payor bank;
f) Remitting bank： any payor or intermediary bank remitting for an item;
g) Banking day: that part of any day on which a bank is open to the public for carrying on substantially all of its banking (unctions )
h) Cutoff hour： usually 2: 00 p. m. or later on a banking day» after which the bank processes items, proves balances, and makes the necessary entries to determine its position for the day.1 Items received after the cutoff hour or after the close of the banking day are treated as having been received at the opening of the next banking day
i) Clearing house: an association of banks that engages in the clearing or settling of accounts between banks in connection with checks;
j) Midnight deadline: Midnight on the next banking day following the banking day on which the bank receives the check or notice with regard to it.

The Collection Process
The collection process begins when a customer deposits a check to his account. The bank usually takes the check and provisionally credits the account of the customer. The check then passes through the collecting banks, each of which provisionally credits the account of the prior bank.2 When the check reaches the payor bank, that bank also provisionally settles with the presenting bank. Between the provisional settlement and the midnight deadline the bank has to decide whether or not the check is good. If the payor bank decides to honor the check, it will debit the drawer’s account.3 If it decides to dishonor the check 9 it will revoke its settlement and • return the check or send notice of dishonor to the prior bank. Each presenting bank will then throw the loss back upstream by revoking its provisional settlement and charging the item back to the account of the next prior collecting bank. * The depositary bank will cancel the provisional credit given to the customer and return the dishonored check to him.

When the payor bank 1) pays an item for cash, 2) settles for it without reserving the right to revoke the settlement,5 3) fails to revoke the provisional credit within the prescribed time or 4) has completed the process of posting the item to the indicated account of the drawer, settlement becomes final. Upon final payment, the payor bank is accountable for the item.

A bank receiving a check for collection has the duty to use ordinary care in performing its collection operations, which include presenting the check to the drawee or forwarding it for presentment, sending notice of nonpayment if it occurs, and returning the check after learning that it has been dishonored，and settling for the check when it receives final payment. A depositary bank has additional responsibilities. Failure to use ordinary care subjects the bank to liability to the depositor for any loss or damages sustained.

A bank has also the duty to act seasonably, which means that it has to take action before the midnight deadline following the receipt of a check9 a notice, or a payment. If a bank fails to act seasonably, it has liability unless it is excused by matters beyond its control. If a payor-drawee bank fails to take action within the prescribed time, it may be held accountable to the depositor who is not paid.

Answer the following questions :
1. When does the check collection start?
2. What are the names we give to banks involved in the collection process?
3. What is the depositary bank?
4. What is the payor or drawee bank?
5. What is an intermediary bank?
6. What is a collecting bank?
7. Does the depositary bank have the duty to pay in cash when it receives an item payable at another bank?
8. What will the depositary bank do if it does not pay an item in cash?
9. What will other collecting banks do after the depositary bank provisionally settles with the depositor?
10. Can final payment occur before the midnight deadline?
11. Can the payor bank revoke its final settlement before the midnight deadline?
12. What are the legal consequences of final settlement?