KRS 355.4A-302: Obligation of receiving bank in execution of payment order.

(1) Except as provided in subsections (2) through (4), if the receiving bank accepts a

payment order pursuant to KRS 355.4A -209(1), the bank has the following

obligations in executing the order:

(a) The receiving bank is obliged to issue, on the execution date , a payment order

complying with the sender's order and to follow the sender's instructions

concerning:

1. Any intermediary bank or funds -transfer system to be used in carrying

out the funds transfer; or

2. The means by which payment orders are to be trans mitted in the funds

transfer. If the originator's bank issues a payment order to an

intermediary bank, the originator's bank is obliged to instruct the

intermediary bank according to the instruction of the originator. An

intermediary bank in the funds tran sfer is similarly bound by an

instruction given to it by the sender of the payment order it accepts;

(b) If the sender's instruction states that the funds transfer is to be carried out

telephonically or by wire transfer or otherwise indicates that the funds transfer

is to be carried out by the most expeditious means, the receiving bank is

obliged to transmit its payment order by the most expeditious available means,

and to instruct any intermediary bank accordingly. If a sender's instruction

states a paymen t date, the receiving bank is obliged to transmit its payment

order at a time and by means reasonably necessary to allow payment to the

beneficiary on the payment date or as soon thereafter as is feasible.

(2) Unless otherwise instructed, a receiving bank executing a payment order may:

(a) Use any funds -transfer system if use of that system is reasonable in the

circumstances; and

(b) Issue a payment order to the beneficiary's bank or to an intermediary bank

through which a payment order conforming to the se nder's order can

expeditiously be issued to the beneficiary's bank if the receiving bank

exercises ordinary care in the selection of the intermediary bank. A receiving

bank is not required to follow an instruction of the sender designating a funds-

transfer system to be used in carrying out the funds transfer if the receiving

bank, in good faith, determines that it is not feasible to follow the instruction

or that following the instruction would unduly delay completion of the funds

transfer.

(3) Unless subsection (1)(b) applies or the receiving bank is otherwise instructed, the

bank may execute a payment order by transmitting its payment order by first class

mail or by any means reasonable in the circumstances. If the receiving bank is

instructed to execute t he sender's order by transmitting its payment order by a

particular means, the receiving bank may issue its payment order by the means

stated or by any means as expeditious as the means stated.

(4) Unless instructed by the sender:

(a) The receiving bank ma y not obtain payment of its charges for services and

expenses in connection with the execution of the sender's order by issuing a

payment order in an amount equal to the amount of the sender's order less the

amount of the charges; and

(b) May not instruct a subsequent receiving bank to obtain payment of its charges

in the same manner.