KRS 355.4A-210: Rejection of payment order.

(1) (a) A payment order is rejected by the receiving bank by a notice of rejection

transmitted to the sender orally or in a record.

(b) A notice of rejection need not use any particular words and is sufficient if it

indicates that the receiving bank is rejecting t he order or will not execute or

pay the order.

(c) Rejection is effective when the notice is given if transmission is by a means

that is reasonable in the circumstances.

(d) If notice of rejection is given by a means that is not reasonable, rejection is

effective when the notice is received.

(e) If an agreement of the sender and receiving bank establishes the means to be

used to reject a payment order:

1. Any means complying with the agreement is reasonable; and

2. Any means not complying is not reasonable unless no significant delay

in receipt of the notice resulted from the use of the noncomplying

means.

(2) (a) This subsection applies if a receiving bank other than the beneficiary's bank

fails to execute a payment order despite the existence on the execut ion date of

a withdrawable credit balance in an authorized account of the sender

sufficient to cover the order.

(b) If the sender does not receive notice of rejection of the order on the execution

date and the authorized account of the sender does not bear interest, the bank

is obliged to pay interest to the sender on the amount of the order for the

number of days elaps ing after the execution date to the earlier of the day the

order is canceled pursuant to KRS 355.4A -211(4) or the day the sender

receives notice or learns that the order was not executed, counting the final

day of the period as an elapsed day. If the withd rawable credit balance during

that period falls below the amount of the order, the amount of interest is

reduced accordingly.

(3) If a receiving bank suspends payments, all unaccepted payment orders issued to it

are deemed rejected at the time the bank suspends payments.

(4) (a) Acceptance of a payment order precludes a later rejection of the order.

(b) Rejection of a payment order precludes a later acceptance of the order.