{"data":{"id":"us-ky/krs-355.4-406","jurisdiction":"us-ky","citation":"KRS 355.4-406","heading":"Customer's duty to discover and report unauthorized signature or","body":"alteration.\n(1) A bank that sends or makes available to a customer a statement of account showing\npayment of items for the account shall either return or make available to the\ncustomer the items paid or provide information in the statement of account\nsufficient to allow the customer reasonably to identify the items paid. The statement\nof account provides sufficient information if the item is described by item number,\namount, and date of payment.\n(2) If the items are not returned to the customer, the person retaining the items shall\neither retain the items or, if the items are destroyed, maintain the capacity to furnish\nlegible copies of the items until the expiration of seven (7) years a fter receipt of the\nitems. A customer may request an item from the bank that paid the item, and that\nbank must provide in a reasonable time either the item or, if the item has been\ndestroyed or is not otherwise obtainable, a legible copy of the item.\n(3) If a bank sends or makes available a statement of account or items pursuant to\nsubsection (1) of this section, the customer must exercise reasonable promptness in\nexamining the statement or the items to determine whether any payment was not\nauthorized because of an alteration of an item or because a purported signature by or\non behalf of the customer was not authorized. If, based on the statement or items\nprovided, the customer should reasonably have discovered the unauthorized\npayment, the customer must promptly notify the bank of the relevant facts.\n(4) If the bank proves that the customer failed, with respect to an item, to comply with\nthe duties imposed on the customer by subsection (3) of this section, the customer is\nprecluded from asserting against the bank:\n(a) The customer's unauthorized signature or any alteration on the item, if the\nbank also proves that it suffered a loss by reason of the failure; and\n(b) The customer's unauthorized signature or alteration by the same wrongdoer on\nany other item paid in good faith by the bank if the payment was made before\nthe bank received notice from the customer of the unauthorized signature or\nalteration and after the customer had been afforded a reasonable period of\ntime, not exceeding thirty (30) days, in whic h to examine the item or\nstatement of account and notify the bank.\n(5) If subsection (4) of this section applies and the customer proves that the bank failed\nto exercise ordinary care in paying the item and that the failure substantially\ncontributed to los s, the loss is allocated between the customer precluded and the\nbank asserting the preclusion according to the extent to which the failure of the\ncustomer to comply with subsection (3) of this section and the failure of the bank to\nexercise ordinary care c ontributed to the loss. If the customer proves that the bank\ndid not pay the item in good faith, the preclusion under subsection (4) of this section\ndoes not apply.\n(6) Without regard to care or lack of care of either the customer or the bank, a customer\nwho does not within one (1) year after the statement or items are made available to\nthe customer (subsection (1)) discover and report the customer's unauthorized\nsignature on or any alteration on the item is precluded from asserting against the\nbank the una uthorized signature or alteration. If there is a preclusion under this\nsubsection, the payor bank may not recover for breach of warranty under KRS\n355.4-208 with respect to the unauthorized signature or alteration to which the\npreclusion applies.","path":[],"source_url":"https://apps.legislature.ky.gov/law/statutes/statute.aspx?id=33549","current_through":"Includes enactments through the 2026 Regular Session","vintage":"09/05/2026","retrieved_at":"2026-09-05T20:58:45Z","sha256":"2de80631ee648868ebb95f5473080fc2677dacaf015b8d88799fad6c030507b6","source_id":"us-ky","stale":false,"prev":"us-ky/krs-355.4-405","next":"us-ky/krs-355.4-407"},"notice":"GroundRules: Original legal text. Not legal advice."}