N.Y. Uniform Commercial Code Law § 4-103: Variation by Agreement; Measure of Damages; Certain Action Constituting Ordinary Care

Section 4--103. Variation by Agreement; Measure of Damages; Certain

Action Constituting Ordinary Care.

(1) The effect of the provisions of this Article may be varied by

agreement except that no agreement can disclaim a bank's responsibility

for its own lack of good faith or failure to exercise ordinary care or

can limit the measure of damages for such lack or failure; but the

parties may by agreement determine the standards by which such

responsibility is to be measured if such standards are not manifestly

unreasonable.

(2) Federal Reserve regulations and operating letters, clearing house

rules, and the like, have the effect of agreements under subsection (1),

whether or not specifically assented to by all parties interested in

items handled.

(3) Action or non-action approved by this Article or pursuant to

Federal Reserve regulations or operating letters constitutes the

exercise of ordinary care and, in the absence of special instructions,

action or non-action consistent with clearing house rules and the like

or with a general banking usage not disapproved by this Article, prima

facie constitutes the exercise of ordinary care.

(4) The specification or approval of certain procedures by this

Article does not constitute disapproval of other procedures which may be

reasonable under the circumstances.

(5) The measure of damages for failure to exercise ordinary care in

handling an item is the amount of the item reduced by an amount which

could not have been realized by the use of ordinary care, and where

there is bad faith it includes other damages, if any, suffered by the

party as a proximate consequence.