Printable Format84-4-213. Medium and time of settlement by bank. (a) With respect to settlement by a bank, the medium and time of settlement may be prescribed by federal reserve regulations or circulars, clearing-house rules, and the like, or agreement. In the absence of such prescription:
(1) The medium of settlement is cash or credit to an account in a federal reserve bank of or specified by the person to receive settlement; and
(2) the time of settlement is:
(A) With respect to tender of settlement by cash, a cashier's check, or teller's check, when the cash or check is sent or delivered;
(B) with respect to tender of settlement by credit in an account in a federal reserve bank, when the credit is made;
(C) with respect to tender of settlement by a credit or debit to an account in a bank, when the credit or debit is made or, in the case of tender of settlement by authority to charge an account, when the authority is sent or delivered; or
(D) with respect to tender of settlement by a funds transfer, when payment is made pursuant to K.S.A. 84-4a-406(a) and amendments thereto to the person receiving settlement.
(b) If the tender of settlement is not by a medium authorized by subsection (a) or the time of settlement is not fixed by subsection (a), no settlement occurs until the tender of settlement is accepted by the person receiving settlement.
(c) If settlement for an item is made by cashier's check or teller's check and the person receiving settlement, before its midnight deadlines:
(1) Presents or forwards the check for collection, settlement is final when the check is finally paid; or
(2) fails to present or forward the check for collection, settlement is final at the midnight deadline of the person receiving settlement.
(d) If settlement for an item is made by giving authority to charge the account of the bank giving settlement in the bank receiving settlement, settlement is final when the charge is made by the bank receiving settlement if there are funds available in the account for the amount of the item.
History: L. 1965, ch. 564, § 220; L. 1991, ch. 296, § 94; February 1, 1992.
KANSAS COMMENT, 1996
This section is identical to the 1995 Official Text except that the lower case roman numerals were replaced by capital letters in the text of subsection (a). This is a new section derived from the Media of Remittance provisions of the former 84-4-211 with the other subsections expanded to cover other forms of settlement.
This section deals with settlements for items received by intermediary and payor banks. Settlement is defined in 84-4-104(a)(11), which is commonly done with credits from the settling bank's accounts. These settlements are usually provisional and become final under the terms of 84-4-215 if they are not revoked in time. Subsection (a) provides that a settlement following Federal Reserve regulations is proper and states various types of remittance instruments and credits which may be taken by a collecting bank without responsibility if the remittance does not pay out, provided the collecting bank acts within its midnight deadline under subsection (c). Subsections (c) and (d) define when a remittance or authorization becomes a final settlement, important under 84-4-201, 84-4-214, 84-4-215, and 84-4-216.
Revisor's Note:
In 1991 former section 84-4-213 was transferred to 84-4-215 as a conforming amendment in the revision of article 3 of the code and the number reassigned to former section 84-4-211.
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).