Also known as: payor bank · payor bank's · paying bank
Written by attorneys · grounded in primary & secondary sources — see below
A bank that is the drawee of a draft and is obligated to pay the instrument when it is duly presented for payment.
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Alice writes a check drawn on her account at City Bank payable to Vendor Inc. Vendor presents the check for payment. City Bank, the payor bank, pays the item in cash on the day of presentment. The item is therefore finally paid by the payor bank under applicable UCC rules.
Pedro Pacheco issues a check drawn on his account at Regional Bank to Prime Logistics. Prime Logistics presents the check for payment other than over the counter. Regional Bank, the payor bank, makes a timely return of the check under the applicable midnight deadline rules. The check is therefore dishonored.
A lawyer may deposit personal funds in a client trust account only to pay bank service charges on that account and only in an amount necessary for that purpose.
A check is dishonored if the payor bank makes a timely return or sends timely notice of dishonor or nonpayment under the applicable sections or becomes accountable for the amount of the check.
Final payment by a payor bank occurs when the bank has paid the item in cash, settled for the item without a right to revoke, or failed to revoke a provisional settlement in the permitted time.