KRS 355.4A-507: Choice of law.

(1) The following rules apply unless the affected parties otherwise agree or subsection

(3) applies:

(a) The rights and obligations between the sender of a payment order and the

receiving bank are governed by the law of the jurisdiction in which the

receiving bank is located.

(b) The rights and obligations between the beneficiary's bank and the beneficiary

are governed by the law of the jurisdiction in which the beneficiary's bank is

located.

(c) The issue of when payment is made pursuant to a funds transfer by the

originator to the beneficiary is governed by the law of the jurisdiction in

which the beneficiary's bank is located.

(2) If the parties described in each paragraph of subsection (1) have made an agreement

selecting the law of a particular jurisdiction to govern rights and obligations

between each other, the law of that jurisdiction governs those rights and obligations,

whether or not the payment order or the funds transfer bears a reasonable relation to

that jurisdiction.

(3) A funds -transfer system ru le may select the law of a particular jurisdiction to

govern:

(a) Rights and obligations between participating banks with respect to payment

orders transmitted or processed through the system; or

(b) The rights and obligations of some or all parties to a f unds transfer any part of

which is carried out by means of the system.

A choice of law made pursuant to clause (a) is binding on participating banks. A

choice of law made pursuant to clause (b) is binding on the originator, other sender,

or a receiving bank having notice that the funds-transfer system might be used in the

funds transfer and of the choice of law by the system when the originator, other

sender, or receiving bank issued or accepted a payment order. The beneficiary of a

funds transfer is bound by the choice of law if, when the funds transfer is initiated,

the beneficiary has notice that the funds -transfer system might be used in the funds

transfer and of the choice of law by the system. The law of a jurisdiction selected

pursuant to this subsec tion may govern, whether or not that law bears a reasonable

relation to the matter in issue.

(4) In the event of inconsistency between an agreement under subsection (2) and a

choice-of-law rule under subsection (3), the agreement under subsection (2)

prevails.

(5) If a funds transfer is made by use of more than one funds -transfer system and there

is inconsistency between choice -of-law rules of the systems, the matter in issue is

governed by the law of the selected jurisdiction that has the most significant

relationship to the matter in issue.