57A-4-103 Variation by agreement--Measure of damages--Certain action constituting ordinary care.
Variation by agreement--Measure of damages--Certain action constituting
(a) 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.
(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 chapter, is prima facie the exercise of ordinary care.
(d) The specification or approval of certain procedures by this chapter 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
Source: SL 1994, ch 368, § 4-103.