History: L. 1965, ch. 564, § 201; L. 1991, ch. 296, § 71; Feb. 1, 1992.
(b) The liability of a bank for action or nonaction with respect to an item handled by it for purposes of presentment, payment or collection is governed by the law of the place where the bank is located. In the case of action or nonaction by or at a branch or separate office of a bank, its liability is governed by the law of the place where the branch or separate office is located.
History: L. 1965, ch. 564, § 202; L. 1991, ch. 296, § 72; Feb. 1, 1992.
(b) Federal Reserve regulations and operating circulars, clearing-house rules, and the like have the effect of agreements under subsection (a), whether or not specifically assented to by all parties interested in items handled.
(c) 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.
(d) The specification or approval of certain procedures by this article is not disapproval of other procedures that may be reasonable under the circumstances.
(e) 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.
History: L. 1965, ch. 564, § 203; L. 1991, ch. 296, § 73; Feb. 1, 1992.
(1) "Account" means any deposit or credit account with a bank, including a demand, time, savings, passbook, share draft, or like account, other than an account evidenced by a certificate of deposit;
(2) "Afternoon" means the period of a day between noon and midnight;
(3) "Banking day" means the part of a day on which a bank is open to the public for carrying on substantially all of its banking functions;
(4) "Clearing house" means an association of banks or other payors regularly clearing items;
(5) "Customer" means a person having an account with a bank or for whom a bank has agreed to collect items, including a bank that maintains an account at another bank;
(6) "Documentary draft" means a draft to be presented for acceptance or payment if specified documents, certificated securities K.S.A. 84-8-102 or instructions for uncertificated securities (K.S.A. 84-8-308 and amendments thereto), or other certificates, statements, or the like are to be received by the drawee or other payor before acceptance or payment of the draft;
(7) "Draft" means a draft as defined in K.S.A. 84-3-104 and amendments thereto, or an item, other than an instrument, that is an order.
(8) "Drawee" means a person ordered in a draft to make payment;
(9) "Item" means an instrument or a promise in order to pay money handled by a bank for collection or payment. The term does not include a payment order governed by article 4a or a credit or debit card slip;
(10) "Midnight deadline" with respect to a bank is midnight on its next banking day following the banking day on which it receives the relevant item or notice or from which the time for taking action commences to run, whichever is later;
(11) "Settle" means to pay in cash, by clearing-house settlement, in a charge or credit or by remittance, or otherwise as agreed. A settlement may be either provisional or final;
(12) "Suspends payments" with respect to a bank means that it has been closed by order of the supervisory authorities, that a public officer has been appointed to take it over or that it ceases or refuses to make payments in the ordinary course of business.
(b) Other definitions applying to this article and the sections in which they appear are:
"Agreement for electronic presentment."
84-4-110.
"Bank."
84-4-105.
"Collecting bank."
84-4-105.
"Depository bank."
84-4-105.
"Intermediary bank."
84-4-105.
"Payor bank."
84-4-105.
"Presenting bank."
84-4-105.
"Presentment notice."
84-4-110.
(c) The following definitions in other articles apply to this article:
"Acceptance."
84-3-410.
"Alteration."
84-3-407.
"Cashier's check."
84-3-104.
"Certificate of deposit."
84-3-104.
"Certified check."
84-3-409.
"Check."
84-3-104.
"Good Faith."
84-3-103.
"Draft."
84-3-104.
"Holder in due course."
84-3-302.
"Instrument."
84-3-104.
"Notice of dishonor."
84-3-503.
"Order."
84-3-103.
"Ordinary care."
84-3-103.
"Person entitled to enforce."
84-3-301.
"Presentment."
84-3-504.
"Promise."
84-3-103.
"Prove."
84-3-103.
"Teller's check."
84-3-104.
"Unauthorized signature."
84-3-403.
(d) In addition, article 1 contains general definitions and principles of construction and interpretation applicable throughout this article.
History: L. 1965, ch. 564, § 204; L. 1991, ch. 296, § 74; L. 1996, ch. 202, § 81; July 1.
(1) "Bank" means a person engaged in the business of banking, including a savings bank, savings and loan association, credit union, or trust company.
(2) "Depository bank" means the first bank to take an item even though it is also the payor bank, unless the item is presented for immediate payment over the counter;
(3) "Payor bank" means a bank that is the drawee of a draft;
(4) "Intermediary bank" means a bank to which an item is transferred in course of collection except the depository or payor bank;
(5) "Collecting bank" means a bank handling an item for collection except the payor bank;
(6) "Presenting bank" means a bank presenting an item except a payor bank.
History: L. 1965, ch. 564, § 205; L. 1991, ch. 296, § 75; Feb. 1, 1992.
(b) If an item states that it is "payable at" a bank identified in the item, the item is equivalent to a draft drawn on the bank.
(c) If a draft names a nonbank drawee and it is unclear whether a bank named in the draft is a codrawee or a collecting bank, the bank is a collecting bank.
History: L. 1991, ch. 296, § 76; Feb. 1, 1992.
History: L. 1965, ch. 564, § 206; L. 1991, ch. 296, § 77; Feb. 1, 1992.
(b) An item or deposit of money received on any day after a cutoff hour so fixed or after the close of the banking day may be treated as being received at the opening of the next banking day.
History: L. 1965, ch. 564, § 207; L. 1991, ch. 296, § 78; Feb. 1, 1992.
(b) Delay by a collecting bank or payor bank beyond time limits prescribed or permitted by this act or by instructions is excused if (1) the delay is caused by interruption of communication or computer facilities, suspension of payments by another bank, war, emergency conditions failure of equipment, or other circumstances beyond the control of the bank, and (2) the bank exercises such diligence as the circumstances require.
History: L. 1965, ch. 564, § 208; L. 1991, ch. 296, § 79; Feb. 1, 1992.
(b) Presentment of an item pursuant to an agreement for presentment is made when the presentment notice is received.
(c) If presentment is made by presentment notice, a reference to "item" or "check" in this article means the presentment notice unless the context otherwise indicates.
History: L. 1991, ch. 296, § 80; Feb. 1, 1992.
History: L. 1991, ch. 296, § 81; Feb. 1, 1992.
(b) After an item has been endorsed with the words "pay any bank" or the like, only a bank may acquire the rights of a holder until the item has been:
(1) Returned to the customer initiating collection; or
(2) specially endorsed by a bank to a person who is not a bank.
History: L. 1965, ch. 564, § 210; L. 1991, ch. 296, § 82; Feb. 1, 1992.
(1) Presenting an item or sending it for presentment;
(2) sending notice of dishonor or nonpayment or returning an item other than a documentary draft to the bank's transferor after learning that the item has not been paid or accepted, as the case may be;
(3) settling for an item when the bank receives final settlement; and
(4) notifying its transferor of any loss or delay in transit within a reasonable time after discovery thereof.
(b) A collecting bank exercises ordinary care under subsection (a) by taking proper action before its midnight deadline following receipt of an item, notice, or settlement. Taking proper action within a reasonably longer time may constitute the exercise of ordinary care, but the bank has the burden of establishing timeliness.
(c) Subject to subsection (a)(1), a bank is not liable for the insolvency, neglect, misconduct, mistake, or default of another bank or person or for loss or destruction of an item in the possession of others or in transit.
History: L. 1965, ch. 564, § 211; L. 1991, ch. 296, § 83; Feb. 1, 1992.
History: L. 1965, ch. 564, § 212; L. 1991, ch. 296, § 84; Feb. 1, 1992.
(b) A collecting bank may send:
(1) An item directly to the payor bank;
(2) an item to a nonbank payor if authorized by its transferor; and
(3) an item other than documentary drafts to a nonbank payor, if authorized by federal reserve regulation or operating circular, clearing-house rule, or the like.
(c) Presentment may be made by a presenting bank at a place where the payor bank or other payor has requested that presentment be made.
History: L. 1965, ch. 564, § 213; L. 1991, ch. 296, § 85; Feb. 1, 1992.
(a) The depository bank becomes a holder of the item at the time it receives the item for collection if the customer at the time of delivery was a holder of the item, whether or not the customer endorses the item, and, if the bank satisfies the other requirements of K.S.A. 84-3-302, it is a holder in due course; and
(b) the depository bank warrants to collecting banks, the payor bank or other payor, and the drawer that the amount of the item was paid to the customer or deposited to the customer's account.
History: L. 1965, ch. 564, § 214; L. 1991, ch. 296, § 86; Feb. 1, 1992.
History: L. 1965, ch. 564, § 215; L. 1991, ch. 296, § 87; Feb. 1, 1992.
(1) The warrantor is a person entitled to enforce the item;
(2) all signatures on the item are authentic and authorized;
(3) the item has not been altered;
(4) the item is not subject to a defense or claim in recoupment (K.S.A. 84-3-305(a)) of any party that can be asserted against the warrantor;
(5) the warrantor has no knowledge of any insolvency proceeding commenced with respect to the maker or acceptor or, in the case of an unaccepted draft, the drawer; and
(6) if the item is a demand draft, creation of the item according to the terms on its face was authorized by the person identified as drawer.
(b) If an item is dishonored, a customer or collecting bank transferring the item and receiving settlement or other consideration is obliged to pay the amount due on the item (1) according to the terms of the item at the time it was transferred, or (2) if the transfer was of an incomplete item, according to its terms when completed as stated in K.S.A. 84-3-115 and 84-3-407, and amendments thereto. The obligation of a transferor is owed to the transferee and to any subsequent collecting bank that takes the item in good faith. A transferor cannot disclaim its obligation under this subsection by an endorsement stating that it is made "without recourse" or otherwise disclaiming liability.
(c) A person to whom the warranties under subsection (a) are made and who took the item in good faith may recover from the warrantor as damages for breach of warranty an amount equal to the loss suffered as a result of the breach, but not more than the amount of the item plus expenses and loss of interest incurred as a result of the breach.
(d) The warranties stated in subsection (a) cannot be disclaimed with respect to checks. Unless notice of a claim for breach of warranty is given to the warrantor within 30 days after the claimant has reason to know of the breach and the identity of the warrantor, the warrantor is discharged to the extent of any loss caused by the delay in giving notice of the claim.
(e) A cause of action for breach of warranty under this section accrues when the claimant has reason to know of the breach.
(f) If the warranty in subsection (a)(6) is not given by a transferor or collecting bank under applicable conflict of law rules, then the warranty is not given to that transferor when that transferor is a transferee nor to any prior collecting bank of that transferee.
History: L. 1991, ch. 296, § 88; L. 2005, ch. 58, § 6; July 1.
(A) The warrantor is, or was, at the time the warrantor transferred the draft, a person entitled to enforce the draft or authorized to obtain payment or acceptance of the draft on behalf of a person entitled to enforce the draft;
(B) the draft has not been altered;
(C) the warrantor has no knowledge that the signature of the purported drawer of the draft is unauthorized; and
(D) if the draft is a demand draft, creation of the demand draft according to the terms on its face was authorized by the person identified as drawer.
(b) A drawee making payment may recover from a warrantor damages for breach of warranty equal to the amount paid by the drawee less the amount the drawee received or is entitled to receive from the drawer because of the payment. In addition, the drawee is entitled to compensation for expenses and loss of interest resulting from the breach. The right of the drawee to recover damages under this subsection is not affected by any failure of the drawee to exercise ordinary care in making payment. If the drawee accepts the draft (1) breach of warranty is a defense to the obligation of the acceptor, and (2) if the acceptor makes payment with respect to the draft, the acceptor is entitled to recover from a warrantor for breach of warranty the amounts stated in this subsection.
(c) If a drawee asserts a claim for breach of warranty under subsection (a) based on an unauthorized endorsement of the draft or an alteration of the draft, the warrantor may defend by proving that the endorsement is effective under K.S.A. 84-3-404 or 84-3-405, and amendments thereto, or the drawer is precluded under K.S.A. 84-3-406 or K.S.A. 84-4-406, and amendments thereto, from asserting against the drawee the unauthorized endorsement or alteration.
(d) If (1) a dishonored draft is presented for payment to the drawer or an endorser or (2) any other item is presented for payment to a party obliged to pay the item, and the item is paid, the person obtaining payment and a prior transferor of the item warrant to the person making payment in good faith that the warrantor is, or was, at the time the warrantor transferred the item, a person entitled to enforce the item or authorized to obtain payment on behalf of a person entitled to enforce the item. The person making payment may recover from any warrantor for breach of warranty an amount equal to the amount paid plus expenses and loss of interest resulting from the breach.
(e) The warranties stated in subsections (a) and (d) cannot be disclaimed with respect to checks. Unless notice of a claim for breach of warranty is given to the warrantor within 30 days after the claimant has reason to know of the breach and the identity of the warrantor, the warrantor is discharged to the extent of any loss caused by the delay in giving notice of the claim.
(f) A cause of action for breach of warranty under this section accrues when the claimant has reason to know of the breach.
(g) A demand draft is a check, as provided in subsection (f) of K.S.A. 84-3-104, and amendments thereto.
(h) If the warranty in subsection (a)(4) is not given by a transferor under applicable conflict of law rules, then the warranty is not given to that transferor when that transferor is a transferee.
History: L. 1991, ch. 296, § 89; L. 2005, ch. 58, § 7; July 1.
(b) A person who undertakes to retain an item pursuant to an agreement for electronic presentment warrants to any subsequent collecting bank and to the payor bank or other payor that retention and presentment of the item comply with the agreement. If a customer of a depository bank undertakes to retain an item, that bank also makes this warranty.
(c) A person to whom warranties are made under this section and who took the item in good faith may recover from the warrantor as damages for breach of warranty an amount equal to the loss suffered as a result of the breach, plus expenses and loss of interest incurred as a result of the breach.
History: L. 1991, ch. 296, § 90; Feb. 1, 1992.
(1) In case of an item deposited in an account, to the extent to which credit given for the item has been withdrawn or applied;
(2) in case of an item for which it has given credit available for withdrawal as of right, to the extent of the credit given, whether or not the credit is drawn upon or there is a right of charge-back; or
(3) if it makes an advance on or against the item.
(b) If credit given for several items received at one time or pursuant to a single agreement is withdrawn or applied in part the security interest remains upon all the items, any accompanying documents or the proceeds of either. For the purpose of this section, credits first given are first withdrawn.
(c) Receipt by a collecting bank of a final settlement for an item is a realization on its security interest in the item, accompanying documents and proceeds. So long as the bank does not receive final settlement for the item or give up possession of the item or accompanying documents for purposes other than collection, the security interest continues to that extent and is subject to article 9, but:
(1) No security agreement is necessary to make the security interest enforceable (K.S.A. 2006 Supp. 84-9-203(b)(3)(A) and amendments thereto);
(2) no filing is required to perfect the security interest; and
(3) the security interest has priority over conflicting perfected security interests in the item, accompanying documents, or proceeds.
History: L. 1965, ch. 564, § 217; L. 1991, ch. 296, § 91; L. 2000, ch. 142, § 146; July 1, 2001.
History: L. 1965, ch. 564, § 218; L. 1991, ch. 296, § 92; Feb. 1, 1992.
(b) If presentment is made by notice and payment, acceptance, or request for compliance with a requirement under K.S.A. 84-3-505 [84-3-501] is not received by the close of business on the day after maturity or in the case of demand items, by the close of business on the third banking day after notice was sent, the presenting bank may treat the item as dishonored and charge any drawer or endorser by sending such drawer or endorser notice of the facts.
History: L. 1965, ch. 564, § 219; L. 1991, ch. 296, § 93; Feb. 1, 1992.
(1) The medium of settlement is cash or credit to an account in a federal reserve bank of or specified by the person to receive settlement; and
(2) the time of settlement is:
(A) With respect to tender of settlement by cash, a cashier's check, or teller's check, when the cash or check is sent or delivered;
(B) with respect to tender of settlement by credit in an account in a federal reserve bank, when the credit is made;
(C) with respect to tender of settlement by a credit or debit to an account in a bank, when the credit or debit is made or, in the case of tender of settlement by authority to charge an account, when the authority is sent or delivered; or
(D) with respect to tender of settlement by a funds transfer, when payment is made pursuant to K.S.A. 84-4a-406(a) and amendments thereto to the person receiving settlement.
(b) If the tender of settlement is not by a medium authorized by subsection (a) or the time of settlement is not fixed by subsection (a), no settlement occurs until the tender of settlement is accepted by the person receiving settlement.
(c) If settlement for an item is made by cashier's check or teller's check and the person receiving settlement, before its midnight deadlines:
(1) Presents or forwards the check for collection, settlement is final when the check is finally paid; or
(2) fails to present or forward the check for collection, settlement is final at the midnight deadline of the person receiving settlement.
(d) If settlement for an item is made by giving authority to charge the account of the bank giving settlement in the bank receiving settlement, settlement is final when the charge is made by the bank receiving settlement if there are funds available in the account for the amount of the item.
History: L. 1965, ch. 564, § 220; L. 1991, ch. 296, § 94; Feb. 1, 1992.
(b) A collecting bank returns an item when it is sent or delivered to the bank's customer or transferor or pursuant to its instructions.
(c) A depository bank that is also the payor may charge-back the amount of an item to its customer's account or obtain refund in accordance with the section governing return of an item received by a payor bank for credit on its books (K.S.A. 84-4-301).
(d) The right to charge-back is not affected by:
(1) Previous use of a credit given for the item; or
(2) failure by any bank to exercise ordinary care with respect to the item, but a bank so failing remains liable.
(e) A failure to charge-back or claim refund does not affect other rights of the bank against the customer or any other party.
(f) If credit is given in dollars as the equivalent of the value of an item payable in foreign money, the dollar amount of any charge-back or refund must be calculated on the basis of the bank-offered spot rate for the foreign money prevailing on the day when the person entitled to the charge-back or refund learns that it will not receive payment in ordinary course.
History: L. 1965, ch. 564, § 221; L. 1991, ch. 296, § 95; Feb. 1, 1992.
(1) Paid the item in cash;
(2) settled for the item without having a right to revoke the settlement under statute, clearing-house rule, or agreement; or
(3) made a provisional settlement for the item and failed to revoke the settlement in the time and manner permitted by statute, clearing-house rule, or agreement.
(b) If provisional settlement for an item does not become final, the item is not finally paid.
(c) If provisional settlement for an item between the presenting and payor banks is made through a clearing house or by debits or credits in an account between them, then to the extent that provisional debits or credits for the item are entered in accounts between the presenting and payor banks or between the presenting and successive prior collecting banks seriatim, they become final upon final payment of the item by the payor bank.
(d) If a collecting bank receives a settlement for an item which is or becomes final, the bank is accountable to its customer for the amount of the item and any provisional credit given for the item in an account with its customer becomes final.
(e) Subject to (1) applicable law stating a time for availability of funds and (2) any right of the bank to apply the credit to an obligation of the customer, credit given by a bank for an item in a customer's account becomes available for withdrawal as of right:
(A) If the bank has received a provisional settlement for the item, when the settlement becomes final and the bank has had a reasonable time to receive return of the item and the item has not been received within that time;
(B) if the bank is both the depository bank and the payor bank, and the item is finally paid, at the opening of the bank's second banking day following receipt of the item.
(f) Subject to applicable law stating a time for availability of funds and any right of a bank to apply a deposit to an obligation of the depositor, a deposit of money becomes available for withdrawal as of right at the opening of the bank's next banking day after receipt of the deposit.
History: L. 1965, ch. 564, § 222; L. 1991, ch. 296, § 96; Feb. 1, 1992.
(b) If a payor bank finally pays an item and suspends payments without making a settlement for the item with its customer or the presenting bank which settlement is or becomes final, the owner of the item has a preferred claim against the payor bank.
(c) If a payor bank gives or a collecting bank gives or receives a provisional settlement for an item and thereafter suspends payments, the suspension does not prevent or interfere with the settlement's becoming final if the finality occurs automatically upon the lapse of certain time or the happening of certain events.
(d) If a collecting bank receives from subsequent parties settlement for an item, which settlement is or becomes final and the bank suspends payments without making a settlement for the item with its customer which settlement is or becomes final, the owner of the item has a preferred claim against the collecting bank.
History: L. 1965, ch. 564, § 223; L. 1991, ch. 296, § 97; Feb. 1, 1992.
(1) Returns the item; or
(2) sends written notice of dishonor or nonpayment if the item is unavailable for return.
(b) If a demand item is received by a payor bank for credit on its books, it may return the 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 subsection (a).
(c) 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.
(d) An item is returned:
(1) As to an item presented 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
(2) in all other cases, when it is sent or delivered to the bank's customer or transferor or pursuant to instructions.
History: L. 1965, ch. 564, § 224; L. 1991, ch. 296, § 98; Feb. 1, 1992.
(1) A demand item, other than a documentary draft, whether properly payable or not, if the bank, in any case in which it is not also the depository bank, retains the item beyond midnight of the banking day of receipt without settling for it or, whether or not it is also the depository bank, does not pay or return the item or send notice of dishonor until after its midnight deadline; or
(2) any other properly payable item unless within the time allowed for acceptance or payment of that item, the bank either accepts or pays the item or returns it and accompanying documents.
(b) The liability of a payor bank to pay an item pursuant to subsection (a) is subject to defenses based on breach of a presentment warranty (K.S.A. 84-4-208 and amendments thereto) or proof that the person seeking enforcement of the liability presented or transferred the item for the purpose of defrauding the payor bank.
History: L. 1965, ch. 564, § 225; L. 1991, ch. 296, § 99; Feb. 1, 1992.
(1) The bank accepts or certifies the item;
(2) the bank pays the item in cash;
(3) the bank settles for the item without having a right to revoke the settlement under statute, clearinghouse rule, or agreement;
(4) the bank becomes accountable for the amount of the item under K.S.A. 84-4-302 and amendments thereto dealing with the payor bank's responsibility for late return of items; or
(5) with respect to checks, a cutoff hour no earlier than one hour after the opening of the next banking day after the banking day on which the bank received the check and no later than the close of that next banking day or, if no cutoff hour is fixed, the close of the next banking day after the banking day on which the bank received the check.
(b) Subject to subsection (a), items may be accepted, paid, certified or charged to the indicated account of its customer in any order.
History: L. 1965, ch. 564, § 226; L. 1991, ch. 296, § 100; Feb. 1, 1992.
(b) A customer is not liable for the amount of an overdraft if the customer neither signed the item nor benefited from the proceeds of the item.
(c) A bank may charge against the account of a customer a check that is otherwise properly payable from the account, even though payment was made before the date of the check, unless the customer has given notice to the bank of the postdating describing the check with reasonable certainty. The notice is effective for the period stated in K.S.A. 84-4-403(b) and amendments thereto for stop-payment orders, and must be received at such time and in such manner as to afford the bank a reasonable opportunity to act on it before the bank takes any action with respect to the check described in K.S.A. 84-4-303 and amendments thereto. If a bank charges against the account of a customer a check before the date stated in the notice of postdating, the bank is liable for damages for the loss resulting from its act. The loss may include damages for dishonor of subsequent items under K.S.A. 84-4-402 and amendments thereto.
(d) A bank that in good faith makes payment to a holder may charge the indicated account of its customer according to:
(1) The original terms of the altered item; or
(2) the terms of the completed item, even though the bank knows the item has been completed unless the bank has notice that the completion was improper.
History: L. 1965, ch. 564, § 227; L. 1975, ch. 515, § 1; L. 1991, ch. 296, § 101; L. 1994, ch. 99, § 1; July 1.
(b) A payor bank is liable to its customer for damages proximately caused by the wrongful dishonor of an item. Liability is limited to actual damages proved and may include damages for an arrest or prosecution of the customer or other consequential damages. Whether any consequential damages are proximately caused by the wrongful dishonor is a question of fact to be determined in each case.
(c) A payor bank's determination of the customer's account balance on which a decision to dishonor for insufficiency of available funds is based may be made at any time between the time the item is received by the payor bank and the time that the payor bank returns the item or gives notice in lieu of return, and no more than one determination need be made. If, at the election of the payor bank, a subsequent balance determination is made for the purpose of reevaluating the bank's decision to dishonor the item, the account balance at that time is determinative of whether a dishonor for insufficiency of available funds is wrongful.
History: L. 1965, ch. 564, § 228; L. 1991, ch. 296, § 102; Feb. 1, 1992.
(b) A stop-payment order is effective for six months, but it lapses after 14 calendar days if the original order was oral and was not confirmed in writing within that period. A stop-payment order may be renewed for additional six-month periods by a writing given to the bank within a period during which the stop-payment order is effective.
(c) The burden of establishing the fact and amount of loss resulting from the payment of an item contrary to a stop-payment order or order to close an account is on the customer. The loss from payment of an item contrary to a stop-payment order may include damages for dishonor of subsequent items under K.S.A. 84-4-402 and amendments thereto.
History: L. 1965, ch. 564, § 229; L. 1991, ch. 296, § 103; Feb. 1, 1992.
History: L. 1965, ch. 564, § 230; Jan. 1, 1966.
(b) Even with knowledge, a bank may for 10 days after the date of death pay or certify checks drawn on or before that date unless ordered to stop payment by a person claiming an interest in the account.
History: L. 1965, ch. 564, § 231; L. 1991, ch. 296, § 104; Feb. 1, 1992.
(b) If the items are not returned to the customer, the person retaining the items shall either retain the items or, if the items are destroyed, maintain the capacity to furnish legible copies of the items until the expiration of seven years after receipt of the items. A customer may request an item from the bank that paid the item, and that bank must provide in a reasonable time either the item or, if the item has been destroyed or is not otherwise obtainable, a legible copy of the item.
(c) If a bank sends or makes available a statement of account or items pursuant to subsection (a), the customer must exercise reasonable promptness in examining the statement or the items to determine whether any payment was not authorized because of an alteration of an item or because a purported signature by or on behalf of the customer was not authorized. If, based on the statement or items provided, the customer should reasonably have discovered the unauthorized payment, the customer must promptly notify the bank of the relevant facts.
(d) If the bank proves that the customer failed, with respect to an item, to comply with the duties imposed on the customer by subsection (c), the customer is precluded from asserting against the bank:
(1) The customer's unauthorized signature or any alteration on the item, if the bank also proves that it suffered a loss by reason of the failure; and
(2) the customer's unauthorized signature or alteration by the same wrongdoer on any other item paid in good faith by the bank if the payment was made before the bank received notice from the customer of the unauthorized signature or alteration and after the customer had been afforded a reasonable period of time, not exceeding 30 days, in which to examine the item or statement of account and notify the bank.
(e) If subsection (d) applies and the customer proves that the bank failed to exercise ordinary care in paying the item and that the failure substantially contributed to loss, the loss is allocated between the customer precluded and the bank asserting the preclusion according to the extent to which the failure of the customer to comply with subsection (c) and the failure of the bank to exercise ordinary care contributed to the loss. If the customer proves that the bank did not pay the item in good faith, the preclusion under subsection (d) does not apply.
(f) Without regard to care or lack of care of either the customer or the bank a customer who does not within one year after the statement or items are made available to the customer (subsection (a)) discover and report the customer's unauthorized signature or any alteration on the item is precluded from asserting against the bank the unauthorized signature or alteration. If there is a preclusion under this subsection, the payor bank may not recover for breach of warranty under K.S.A. 84-4-208 with respect to the unauthorized signature or alteration to which the preclusion applies.
History: L. 1965, ch. 564, § 232; L. 1991, ch. 296, § 105; Feb. 1, 1992.
(a) Of any holder in due course on the item against the drawer or maker;
(b) of the payee or any other holder of the item against the drawer or maker either on the item or under the transaction out of which the item arose; and
(c) of the drawer or maker against the payee or any other holder of the item with respect to the transaction out of which the item arose.
History: L. 1965, ch. 564, § 233; L. 1991, ch. 296, § 106; Feb. 1, 1992.
History: L. 1965, ch. 564, § 234; L. 1991, ch. 296, § 107; Feb. 1, 1992.
History: L. 1965, ch. 564, § 235; L. 1991, ch. 296, § 108; Feb. 1, 1992.
(a) Must deliver the documents to the drawee on acceptance of the draft if it is payable more than three days after presentment; otherwise, only on payment; and
(b) upon dishonor, either in the case of presentment for acceptance or presentment for payment, may seek and follow instructions from any referee in case of need designated in the draft or if the presenting bank does not choose to utilize the referee's services, it must use diligence and good faith to ascertain the reason for dishonor, must notify its transferor of the dishonor and of the results of its effort to ascertain the reasons therefor, and must request instructions.
However, the presenting bank is under no obligation with respect to goods represented by the documents except to follow any reasonable instructions seasonably received; it has a right to reimbursement for any expense incurred in following instructions and to prepayment of or indemnity for those expenses.
History: L. 1965, ch. 564, § 236; L. 1991, ch. 296, § 109; Feb. 1, 1992.
(b) For its reasonable expenses incurred by action under subsection (a), the presenting bank has a lien upon the goods or their proceeds, which may be foreclosed in the same manner as an unpaid seller's lien.
History: L. 1965, ch. 564, § 237; L. 1991, ch. 296, § 110; Feb. 1, 1992.