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.