Section 4--301. Deferred Posting; Recovery of Payment by Return of Items; Time of Dishonor

(1) Where an authorized settlement for a demand  item  (other  than  a
  documentary draft) received by a payor bank otherwise than for immediate
  payment  over  the  counter has been made before midnight of the banking
  day of receipt the payor bank may revoke the settlement and recover  any
  payment  if  before it has made final payment (subsection (1) of Section   4--213) and before its midnight deadline it
         (a) returns the item; or
         (b) sends written notice of dishonor or nonpayment if the item is
             held for protest or is otherwise unavailable for return.
    (2) If a demand item is received by a payor bank  for  credit  on  its
  books  it may return such item or send notice of dishonor and may revoke
  any credit  given  or  recover  the  amount  thereof  withdrawn  by  its
  customer,  if  it acts within the time limit and in the manner specified
  in the preceding subsection.
    (3) Unless previous notice of  dishonor  has  been  sent  an  item  is
  dishonored  at  the time when for purposes of dishonor it is returned or
  notice sent in accordance with this section.
    (4) An item is returned:
         (a) as to an item received through a clearing house, when  it  is
             delivered to the presenting or last collecting bank or to the
             clearing house or is sent or delivered in accordance with its
             rules; or
         (b) in  all  other  cases,  when  it  is sent or delivered to the
             bank's  customer   or   transferor   or   pursuant   to   his
             instructions.