KRS 355.4A-404: Obligation of beneficiary's bank to pay and give notice to beneficiary.

(1) Subject to KRS 355.4A -211(5), 355.4A -405(4), and 355.4A -405(5), if a

beneficiary's bank accepts a payment order, the bank is obliged to pay the amount of

the order to the beneficiary of the order. Payment is due on the payment date of the

order, but if acceptance occurs on the payment date after the close of the funds -

transfer business day of the bank, payment is due on the next funds -transfer

business day. If the bank refuses to pay after demand by the beneficiary and receipt

of notice of particular circumstances that will give rise to consequential damages as

a result of nonpayment, the beneficiary may recover damages resulting from the

refusal to pay to the extent the bank had notice of the damages, unless the bank

proves that it did not pay because o f a reasonable doubt concerning the right of the

beneficiary to payment.

(2) If a payment order accepted by the beneficiary's bank instructs payment to an

account of the beneficiary, the bank is obliged to notify the beneficiary of receipt of

the order bef ore midnight of the next funds -transfer business day following the

payment date. If the payment order does not instruct payment to an account of the

beneficiary, the bank is required to notify the beneficiary only if notice is required

by the order. Notice may be given by first class mail or any other means reasonable

in the circumstances. If the bank fails to give the required notice, the bank is obliged

to pay interest to the beneficiary on the amount of the payment order from the day

notice should have been given until the day the beneficiary learned of receipt of the

payment order by the bank. No other damages are recoverable. Reasonable

attorney's fees are also recoverable if demand for interest is made and refused before

an action is brought on the claim.

(3) The right of a beneficiary to receive payment and damages as stated in subsection

(1) may not be varied by agreement or a funds -transfer system rule. The right of a

beneficiary to be notified as stated in subsection (2) may be varied by agreement o f

the beneficiary or by a funds-transfer system rule if the beneficiary is notified of the

rule before initiation of the funds transfer.