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355.4A-204 Refund of payment and duty of customer to report with respect to
unauthorized payment order.
(1)
(2)
If a receiving bank accepts a payment order issued in the name of its customer as
sender which is:
(a) Not authorized and not effective as the order of the customer under KRS
355.4A-202; or
(b) Not enforceable, in whole or in part, against the customer under KRS 355.4A203, the bank shall refund any payment of the payment order received from
the customer to the extent the bank is not entitled to enforce payment and shall
pay interest on the refundable amount calculated from the date the bank
received payment to the date of the refund. However, the customer is not
entitled to interest from the bank on the amount to be refunded if the customer
fails to exercise ordinary care to determine that the order was not authorized
by the customer and to notify the bank of the relevant facts within a
reasonable time not exceeding ninety (90) days after the date the customer
received notification from the bank that the order was accepted or that the
customer's account was debited with respect to the order. The bank is not
entitled to any recovery from the customer on account of a failure by the
customer to give notification as stated in this section.
Reasonable time under subsection (1) of this section may be fixed by agreement as
stated in KRS 355.1-302(2), but the obligation of a receiving bank to refund
payment as stated in subsection (1) may not otherwise be varied by agreement.
Effective: July 12, 2006
History: Amended 2006 Ky. Acts ch. 242, sec. 54, effective July 12, 2006. -- Created
1992 Ky. Acts ch. 116, sec. 35, effective July 14, 1992.
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