(a)
(1) Status. A Reserve Bank that handles
an item shall act as agent or subagent of the owner with respect to
the item. This agency terminates when a Reserve Bank receives final
payment for the item in actually and finally collected funds, a Reserve
Bank makes the proceeds available for use by the sender, and the time
for commencing all actions against the Reserve Bank has expired.
(2) Limitations
on Reserve Bank liability. A Reserve Bank shall not have or assume
any liability with respect to an item or its proceeds except—
(i) For the Reserve Bank’s own lack
of good faith or failure to exercise ordinary care;
(ii) As provided in paragraph (b) of
this section;
(iii) As provided
in an operating circular issued in accordance with section 210.3(a)
regarding the sending of items; and
(iv) As provided in subparts C and D of part 229 of this chapter
(Regulation CC).
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(3) Reliance on routing designation appearing
on item. A Reserve Bank may present or send an item based on
the routing number or other designation of a paying bank or nonbank payor
appearing in any form on the item when the Reserve Bank receives it.
A Reserve Bank shall not be responsible for any delay resulting from
its acting on any designation, whether inscribed by magnetic ink or
by other means, and whether or not the designation acted on is consistent
with any other designation appearing on the item.
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(b) Warranties and liability. The following
provisions apply when a Reserve Bank presents or sends an item.
(1) Warranties for all items. The Reserve Bank warrants to a subsequent
collecting bank and to the paying bank and any other payor that—
(i) The Reserve Bank
is a person entitled to enforce the item (or is authorized to obtain
payment of the item on behalf of a person that is either entitled
to enforce the item or authorized to obtain payment on behalf of a
person entitled to enforce the item);
(ii) The item has not been altered;
and
(iii) The item bears all
indorsements applied by parties that previously handled the item for
forward collection or return.
(2) Warranties
and indemnities as set forth in Reserve Bank operating circulars. The Reserve Bank makes any warranties and indemnities regarding
the sending of items as set forth in an operating circular issued
in accordance with section 210.3(a).
(3) Warranties and indemnities as set forth
in Regulation CC and UCC. As applicable and unless otherwise
provided, the Reserve Bank makes all the warranties and indemnities
set forth in and subject to the terms of subparts C and D of part
229 of this chapter (Regulation CC) and article 4 of the UCC. The
Reserve Bank makes all the warranties set forth in and subject to
the terms of 4-207 of the UCC for an electronic check as if it were
an item subject to the UCC.
(4) Indemnity for substitute check created from
an electronic check.
(i) Except as provided in paragraph
(b)(4)(ii) of this section, the Reserve Bank shall indemnify the bank
to which it transfers or presents an electronic check (the recipient
bank) for the amount of any losses that the recipient bank incurs
under subpart D of part 229 of this chapter (Regulation CC) for an
indemnity that the recipient bank was required to make under subpart
D of part 229 of this chapter in connection with a substitute check
later created from the electronic check.
(ii) The Reserve Bank shall not be liable
under paragraph (b)(4)(i) of this section for any amount that the
recipient bank pays under subpart D of part 229 of this chapter that
is attributable to the lack of good faith or failure to exercise ordinary
care of the recipient bank or a person that handled the item, in any
form, after the recipient bank.
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(c) Time for commencing action against Reserve Bank.
(1) A claim against
a Reserve Bank for lack of good faith or failure to exercise ordinary
care shall be barred unless the action on the claim is commenced within
two years after the claim accrues. Such a claim accrues on the date
when a Reserve Bank’s alleged failure to exercise ordinary care or
to act in good faith first results in damages to the claimant.
(2) A claim that arises
under paragraph (b)(3) of this section shall be barred unless the
action on the claim is commenced within one year after the claim accrues.
Such a claim accrues as of the date on which the claimant first learns,
or by which the claimant reasonably should have learned, of the facts
and circumstances giving rise to the claim.
(3) This paragraph (c) does not alter the
time limit for claims under section 229.38(g) of this chapter (which
include claims for breach of warranty under section 229.34 of this
chapter) or subpart D of part 229 of this chapter.
