84-4-104. Definitions and index of definitions. (a) In this article, unless the context otherwise requires:
(1) "Account" means any deposit or credit account with a bank, including a demand, time, savings, passbook, share draft, or like account, other than an account evidenced by a certificate of deposit;
(2) "Afternoon" means the period of a day between noon and midnight;
(3) "Banking day" means the part of a day on which a bank is open to the public for carrying on substantially all of its banking functions;
(4) "Clearing house" means an association of banks or other payors regularly clearing items;
(5) "Customer" means a person having an account with a bank or for whom a bank has agreed to collect items, including a bank that maintains an account at another bank;
(6) "Documentary draft" means a draft to be presented for acceptance or payment if specified documents, certificated securities K.S.A. 84-8-102, and amendments thereto, or instructions for uncertificated securities (K.S.A. 84-8-308, and amendments thereto), or other certificates, statements, or the like are to be received by the drawee or other payor before acceptance or payment of the draft;
(7) "Draft" means a draft as defined in K.S.A. 84-3-104, and amendments thereto, or an item, other than an instrument, that is an order.
(8) "Drawee" means a person ordered in a draft to make payment;
(9) "Item" means an instrument or a promise in order to pay money handled by a bank for collection or payment. The term does not include a payment order governed by article 4a, and amendments thereto, or a credit or debit card slip;
(10) "Midnight deadline" with respect to a bank is midnight on its next banking day following the banking day on which it receives the relevant item or notice or from which the time for taking action commences to run, whichever is later;
(11) "Settle" means to pay in cash, by clearing-house settlement, in a charge or credit or by remittance, or otherwise as agreed. A settlement may be either provisional or final;
(12) "Suspends payments" with respect to a bank means that it has been closed by order of the supervisory authorities, that a public officer has been appointed to take it over or that it ceases or refuses to make payments in the ordinary course of business.
(b) Other definitions applying to this article and the sections in which they appear are:
"Agreement for electronic presentment." |
84-4-110, and amendments thereto. |
"Bank." |
84-4-105, and amendments thereto. |
"Collecting bank." |
84-4-105, and amendments thereto. |
"Depository bank." |
84-4-105, and amendments thereto. |
"Intermediary bank." |
84-4-105, and amendments thereto. |
"Payor bank." |
84-4-105, and amendments thereto. |
"Presenting bank." |
84-4-105, and amendments thereto. |
"Presentment notice." |
84-4-110, and amendments thereto. |
(c) "Control" as provided in K.S.A. 2024 Supp. 84-7-106, and amendments thereto, and the following definitions in other articles apply to this article:
"Acceptance." |
84-3-410, and amendments thereto. |
"Alteration." |
84-3-407, and amendments thereto. |
"Cashier's check." |
84-3-104, and amendments thereto. |
"Certificate of deposit." |
84-3-104, and amendments thereto. |
"Certified check." |
84-3-409, and amendments thereto. |
"Check." |
84-3-104, and amendments thereto. |
"Draft." |
84-3-104, and amendments thereto. |
"Holder in due course." |
84-3-302, and amendments thereto. |
"Instrument." |
84-3-104, and amendments thereto. |
"Notice of dishonor." |
84-3-503, and amendments thereto. |
"Order." |
84-3-103, and amendments thereto. |
"Ordinary care." |
84-3-103, and amendments thereto. |
"Person entitled to enforce." |
84-3-301, and amendments thereto. |
"Presentment." |
84-3-504, and amendments thereto. |
"Promise." |
84-3-103, and amendments thereto. |
"Prove." |
84-3-103, and amendments thereto. |
"Teller's check." |
84-3-104, and amendments thereto. |
"Unauthorized signature." |
84-3-403, and amendments thereto. |
(d) In addition, article 1 of chapter 84 of the Kansas Statutes Annotated, and amendments thereto, contains general definitions and principles of construction and interpretation applicable throughout this article.
History: L. 1965, ch. 564, § 204; L. 1991, ch. 296, § 74; L. 1996, ch. 202, § 81; L. 2007, ch. 89, § 42; L. 2007, ch. 195, § 50; July 1, 2008.
KANSAS COMMENT, 1996
This section is identical to the 1995 Official Text. Several definitions have been amended, as noted below. The other amendments are primarily stylistic and are not meant to change the substantive law.
This section provides a number of key definitions which are central to an understanding of Article 4. Other internal definitions, many of which can be found by consulting the definitional cross reference table at the end of each section, are to be found in 84-1-201. As in any carefully drafted statute, internal definitions—"words of art"—are critical in solving problems under the UCC. Other important Article 4 definitions are found in the following sections.
It is useful to highlight several of the more important definitions found in this section. The definition of "account" has been amended and expanded to include credit accounts. The term "banking day" as set forth in paragraph (1)(c) becomes important in determining whether a drawee bank has acted on an item in a timely manner. See 84-4-301. The term "customer" as found in paragraph (a)(5) is significant in determining who has a cause of action for wrongful dishonor under 84-4-402, as well as who has a right to stop payment of a check under 84-4-403. With respect to wrongful dishonor, see Loucks v. Albuquerque National Bank, 418 P.2d 191 (N.M. 1966) and Kendall Yacht Corp. v. United California Bank, 123 Cal. Rptr. 848 (Cal. App. 1975). With respect to stop orders, only the "customer" has the right to stop payment, unless the drawer has died, in which case other interested parties may have the right. See 84-4-405. The term "documentary draft" as defined in paragraph (a)(6) is central to Part 5 of this Article, which sets forth special rules governing the collecting of drafts with documents of title attached. "Draft" is a new definition to expand on the Article 3 definition of drafts. The definition of "drawee" in paragraph (8) is new. The term "item" in paragraph (9) has been amended to broaden the definition of instruments. In Coleman v. Brotherhood State Bank, 3 K.A.2d 162, 592 P.2d 103 (1979), the Kansas Court of Appeals read the term's former definition broadly to include a savings account withdrawal order, so that a customer with both a savings and checking account at a bank is subject to all the forgery rules of Article 4 with respect to both accounts. In Coleman, the customer's failure to detect forgeries of her savings account withdrawal orders barred her from recovering from her bank under 84-4-406(2)(b). The word "item" (as well as the word "check") also refers to "presentment notice" under 84-4-110 in regard to electronic collections.
The term "midnight deadline" as defined in paragraph (a)(10), read together with the deferred posting rules found in 84-4-301 and 84-4-302, gives the drawee bank until midnight of the day following receipt of an item to make a decision whether to pay or dishonor it. The term "properly payable" has been omitted, and a definition is given in 84-4-401 for that section and for 84-4-402. The term "settle" has been amended to change the former term "instructed" to "agreed." The definitions of remitting bank," "protest" and "second party" have been deleted because they are no longer used in Article 4.
Revisor's Note:
Section was also amended by L. 2007, ch. 90, § 62, but that version was repealed by L. 2007, ch. 195, § 60.
CASE ANNOTATIONS
1. On certified question (K.S.A. 60-3201 et seq.) whether article 4 of Kansas U.C.C. applies to electronic fund transfers examined. Sinclair Oil Corp. v. Sylvan State Bank, 254 Kan. 836, 843, 869 P.2d 675 (1994).
2. Whether seller had standing to assert that buyer's bank had not made timely return of electronic debit examined. Sinclair Oil Corp. v. Sylvan State Bank, 894 F. Supp. 1470, 1473 (1995).
3. Where attorney forged client's endorsement, conversion action against insurer/nonbank drawees not prohibited. King v. White, 265 Kan. 627, 631, 962 P.2d 475 (1998).
4. Payor bank exercised good faith and ordinary care in processing nine-year old check. IBP, Inc. v. Mercantile Bank of Topeka, 6 F. Supp. 2d 1258, 1266 (1998).
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