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355.4-103 Variation by agreement -- Measure of damages -- Action constituting
ordinary care.
(1)
(2)
(3)
(4)
(5)
The effect of the provisions of this article may be varied by agreement, but the
parties to the agreement cannot disclaim a bank's responsibility for its lack of good
faith or failure to exercise ordinary care or limit the measure of damages for the lack
or failure. However, the parties may determine by agreement the standards by which
the bank's responsibility is to be measured if those standards are not manifestly
unreasonable.
Federal Reserve regulations and operating circulars, clearing-house rules, and the
like have the effect of agreements under subsection (1) of this section, whether or
not specifically assented to by all parties interested in items handled.
Action or nonaction approved by this article or pursuant to Federal Reserve
regulations or operating circulars is the exercise of ordinary care and, in the absence
of special instructions, action or nonaction consistent with clearing-house rules and
the like or with a general banking usage not disapproved by this article, is prima
facie the exercise of ordinary care.
The specification or approval of certain procedures by this article is not disapproval
of other procedures that may be reasonable under the circumstances.
The measure of damages for failure to exercise ordinary care in handling an item is
the amount of the item reduced by an amount that could not have been realized by
the exercise of ordinary care. If there is also bad faith it includes any other damages
the party suffered as a proximate consequence.
Effective: January 1, 1997
History: Amended 1996 Ky. Acts ch. 130, sec. 74, effective January 1, 1997. -- Created
1958 Ky. Acts ch. 77, sec. 4-103, effective July 1, 1960.
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