KRS 355.4A-205: Erroneous payment orders.

(1) If an accepted payment order was transmitted pursuant to a security procedure for

the detection of error and the payment order:

(a) Erroneously instructed payment to a beneficiary not intended by the sender;

(b) Erroneously instructed payment in an amount greater than the amount

intended by the sender; or

(c) Was an erroneously transmitted duplicate of a payment order previously sent

by the sender, the following rules apply:

1. If the sender proves that the sender or a person acting on behalf of the

sender pursuant to KRS 355.4A -206 complied with the security

procedure and that the error would have been detected if the receiving

bank had also complied, the sender is not obliged to pay the order to the

extent stated in paragraphs 2. and 3.

2. If the funds tra nsfer is completed on the basis of an erroneous payment

order described in clause (a) or (c) of subsection (1), the sender is not

obliged to pay the order and the receiving bank is entitled to recover

from the beneficiary any amount paid to the beneficiary to the extent

allowed by the law governing mistake and restitution.

3. If the funds transfer is completed on the basis of a payment order

described in clause (b) of subsection (1), the sender is not obliged to pay

the order to the extent the amount receiv ed by the beneficiary is greater

than the amount intended by the sender. In that case, the receiving bank

is entitled to recover from the beneficiary the excess amount received to

the extent allowed by the law governing mistake and restitution.

(2) (a) If the sender of an erroneous payment order described in subsection (1) is not

obliged to pay all or part of the order; and

(b) The sender receives notification from the receiving bank that the order was

accepted by the bank or that the sender's account was d ebited with respect to

the order, the sender has a duty to exercise ordinary care, on the basis of

information available to the sender, to discover the error with respect to the

order and to advise the bank of the relevant facts within a reasonable time, n ot

exceeding ninety (90) days, after the bank's notification was received by the

sender. If the bank proves that the sender failed to perform that duty, the

sender is liable to the bank for the loss the bank proves it incurred as a result

of the failure, but the liability of the sender may not exceed the amount of the

sender's order.

(3) This section applies to amendments to payment orders to the same extent it applies

to payment orders.