POSITIVE PAY, PAYEE POSITIVE PAY AND REVERSE POSITIVE PAY SERVICE TERMS

 

Section 1.  THE SERVICE.

These Positive Pay, Payee Positive Pay and Reverse Positive Pay Service Terms (the “Service Terms”) set forth the terms and conditions relating to Bank’s Positive Pay, Payee Positive Pay and Reverse Positive Pay offerings which are designed to help detect actual or potential check fraud by allowing Customer to designate and/or decision those Checks and/or payees that Bank may pay (the “Service”). The Service is also subject to the General Provisions of the Treasury Management Terms and Conditions Agreement (the “Agreement”) as if fully incorporated herein and all Applicable Laws. In the event of a conflict between these Service Terms and other terms in the Agreement, these Service Terms shall control. Unless otherwise defined herein, any capitalized terms shall have the meaning as set forth in the Agreement. Any reference to the Agreement herein shall be deemed to include these Service Terms. 

 

Section 2.  IMPLEMENTATION.

Customer agrees to provide Bank with test data (including, but not limited to, voided sample Checks from each Account, Check Issue Files, and other transmissions requested by Bank) relating to the Service in order for Bank to undertake validation and implementation actions.  Such information must be provided at least two (2) weeks prior to the implementation of the Service.  

 

Section 3.  POSITIVE PAY AND PAYEE POSITIVE PAY.

(a)  Check Issue File.  In accordance with the applicable Operational Instructions, prior to placing Checks in circulation that are to be drawn on the Account(s), Customer shall provide Bank with a written record containing such information required by Bank for the performance of the Service (a “Check Issue File”) that Bank will match against Checks presented to be drawn on the Account(s).  The term “Check Issue File” includes any current or previous Check Issue File submitted to Bank by Customer.  For Positive Pay, Customer shall include the Check serial number and exact dollar amount for each Check in the Check Issue File submitted to Bank.  Bank may pay and charge to the Account(s) each presented Check that matches both the Check serial number and dollar amount of a Check shown in a Check Issue File.  For Payee Positive Pay, in addition to the Check serial number and exact dollar amount for each Check, Customer shall include the payee name in the Check Issue File submitted to Bank.  Bank may pay and charge to the Account(s) each presented Check that matches the Check serial number, dollar amount, and payee name of a Check shown in a Check Issue File.  Customer assumes full responsibility for the timely and accurate submission of Check Issue Files and associated data to Bank.  

(b)  Reliance on Check Issue File; Void, Lost or Stolen Checks.  Bank may rely upon the contents of each Check Issue File and is not responsible for detecting any Customer error contained in any Check Issue File.  Customer shall be solely liable for all Losses relating to any untimely or inaccurate information contained in any Check Issue File submitted to Bank by Customer.  Customer authorizes Bank to pay any Check presented that is listed in the Check Issue File and to charge the applicable Account(s) for the amount of each such Check.  If Customer determines that a Check listed in the Check Issue File should now be considered void, Customer may place a void or cancel request on such Check.  If a Check listed in the Check Issue File is lost, missing, or stolen or otherwise cannot be accounted for, Customer should place a void request on such Check in the Check Issue File and Customer must also place a timely stop payment order on such Check in accordance with the terms of the Rules Governing Deposit Accounts.  Unless Customer places a timely stop payment order on a lost, stolen or missing Check that is listed in the Check Issue File, Bank is not liable for any such Check that is paid from the Account(s).    

(c)  Exception Checks; Exception Reports.  Checks presented to Bank that are drawn on the Account(s) and either do not exactly match, or appear to be a duplicate of, a Check included in a Check Issue File for such Account(s) (each, an “Exception Check”) will be identified by Bank and detailed in a report describing such Exception Checks (an “Exception Report”).  Checks presented to Bank that match a Check Customer has marked as void in the Check Issue File will also be identified as Exception Checks.  For Payee Positive Pay, Checks that include the terms “Attention” or “Care of” (or any similar phrases or abbreviations thereof) in the payee field will not be considered an Exception Check.  Bank will notify Customer of the availability of the Exception Report in the manner indicated in the applicable Operational Instructions, then Customer can review the Exception Report and provide instructions as to how to disposition such Exception Checks.  Customer’s failure to receive notice regarding availability of the Exception Report for any reason does not relieve Customer of its responsibility to make the appropriate Pay Request or Return Request by the Cutoff Time as described below.

(d)  Decisioning Exception Checks; Default Selections.  Bank will pay (and charge to the Account(s)) or return (to the depository bank) each Exception Check pursuant to Customer’s instructions.  Customer may either instruct Bank to “Pay Request” or to “Return Request” for each Exception Check.  Customer will also designate one of the following default selections for all Exception Checks: (i) “Return Default,” meaning that Bank will return all Exception Checks automatically to the depository bank; or (ii) “Pay Default,” meaning that Bank will pay all Exception Checks drawn on the Account(s) and charge Customer’s Account(s) for the amount of such Exception Checks.  Customer’s default selection of “Pay Request” or “Return Request” will apply to all of Customer’s Accounts enrolled in the Service, regardless of how many Accounts Customer maintains.  If the Return Default option is selected, Bank will return to the depository bank any Exception Checks drawn on the Account(s), unless Customer issues a timely Pay Request to Bank relating to any particular Exception Check in the manner prescribed in the applicable Operational Instructions.  If the Pay Default option is selected, Bank will pay and charge to Customer’s Account(s) any Exception Check drawn on the Account(s), unless the Customer issues a timely Return Request to Bank relating to any particular Exception Check in the manner prescribed in the applicable Operational Instructions.  If Customer does not issue a Pay Request or Return Request by the Cutoff Time specified in the applicable Operational Instructions, Bank will use the default option as specified by Customer.  

(e)  Cutoff Time; Errors.  Bank shall not be obligated to comply with any Pay Request or Return Request received after the Cutoff Time, or in a format, medium, or place not designated in the applicable Operational Instructions, and shall be entitled treat such a Pay Request or Return Request as though it had not been received by Bank.  Customer assumes full responsibility for the timely and accurate submission of Pay Requests and Return Requests to Bank.  Bank may rely upon Customer’s Pay Request and Return Request and is not responsible for detecting any Customer error contained in any Pay Request or Return Request sent by Customer to Bank.  Customer shall be solely liable for all Losses relating to any untimely or inaccurate Pay Requests or Return Requests. 

 

(f)  Change to Payee Positive Pay Not Retroactive.  In the event any Customer using Positive Pay elects to implement Payee Positive Pay, Bank will only be able to provide payee verification with respect to Checks issued by Customer and listed in the Check Issue File after the date Payee Positive Pay is activated.  Customer understands that any Checks listed in the Check Issue File prior to activation of Payee Positive Pay (“Pre-Existing Checks”) will be processed without payee verification, even if they are presented for payment after Payee Positive Pay has been activated.  Customer should not make a new entry on the Check Issue File for a Pre-Existing Check with the payee name added following activation of Payee Positive Pay because a Check with the same serial number as another Check listed on the Check Issue File may be rejected as a duplicate.  Customer agrees that Bank will not be liable for any Losses arising from Bank’s processing of Pre-Existing Checks in accordance with standard Positive Pay (i.e., based solely on Check serial number and dollar amount) without payee verification.

(g)  Checks Presented Over-the-Counter for Cash or Deposit.  Checks presented over-the-counter for cash will be verified by Bank at the time of presentment, and Checks presented over-the-counter for deposit will be verified by Bank after the close of business on the date of presentment.  If a Check is presented over-the-counter before Bank has received and processed a Check Issue File listing such Check, Customer understands that Bank may be unable to verify the Check at the time of presentment and it may not be cashed.  If a Check is presented over-the-counter before Bank has received and processed a Check Issue File indicating such Check is void, the Check may appear to be a match at the time Bank verifies it and it may be paid.  Customer understands that it must list each Check it issues on the Check Issue File before the Check is put into circulation so that it can be properly verified, and any Check listed on the Check Issue File that Customer requests to void could be paid over-the-counter before Bank has received and had an opportunity to process the void request.  For Payee Positive Pay, Customer acknowledges that Bank may be unable to verify the payee name when a Check is presented over-the-counter for cash in some situations (for example, if Checks with the same serial number and dollar amount but different payee name are identified in two different Check Issue Files).  In those situations, Customer agrees that Bank will conduct the standard Positive Pay verification process and only the serial number and dollar amount of the Check will be verified at the time of presentment.    Customer agrees that Bank will not be liable for any Losses arising from any of the foregoing.

(h)  Checks with Encoding Errors.  If the bank of first deposit has not properly encoded the information on a Check: (i) there could be a delay between when the Check is presented to Bank and when it is posted to Customer’s Account and processed through the Service; (ii) the Check could be incorrectly identified as an Exception Check or as a match for a Check in the Check Issue File; and/or (iii) there could be a delay in processing the return of the Check and resulting credit to Customer’s Account, in the event Customer makes a timely Return Request or has elected the Return Default option.  Customer acknowledges that Bank is not responsible for encoding errors made by the bank of first deposit and will not be liable for any Losses resulting from delays in processing or returning any such Check through the Service or in crediting Customer’s Account for the returned item, or from improper processing of any such Check through the Service.

(i)  Handwritten Checks.  Handwritten Checks may not be processed through the Service due to legibility issues, and such Checks will generally be identified as Exception Checks even if the information on the handwritten Check matches a Check included in the Check Issue File.  Customer agrees not to issue handwritten Checks from an Account enrolled in Payee Positive Pay or standard Positive Pay.  Bank shall not be liable for any Losses arising in connection with handwritten Checks processed through the Service, including errors, delays, wrongful dishonor, improper payment, or Fees charged with respect to any handwritten Check that is identified as an Exception Check even though it matches a Check included in a Check Issue File.  

 

Section 4.  REVERSE POSITIVE PAY.

(a)  Paid Items Report.  Bank will send Customer a Reverse Positive Pay Paid Items Report detailing all Checks presented to Bank for payment from Customer’s Account(s) (the “Paid Items Report”).  Customer shall review the Paid Items Report and communicate to Bank, in a manner acceptable to Bank, its decision on whether to “Pay” or “Do Not Pay and Return” such Checks.  If Customer fails to communicate its decision prior to the Cutoff Time, Bank will automatically pay the Checks in the Paid Items Report.  

(b)  Cutoff Time; Errors.  Bank is not responsible for detecting any Customer error contained in any “Pay” request or “Do Not Pay and Return” request sent by Customer to Bank.  Customer shall be solely liable for all Losses relating to any untimely or inaccurate “Pay” request or “Do Not Pay and Return” request submitted to Bank by Customer.  

(c)  Checks Presented Over-the-Counter for Cash or Deposit.  For Customers who enroll in Reverse Positive Pay, Checks presented over-the-counter for cash or deposit will be identified in the Paid Items Report for Customer to review.  For Checks presented over-the-counter for deposit, Customer shall review the Paid Items Report and timely communicate its “Pay” or “Do Not Pay and Return” decision to Bank, otherwise any Checks presented over-the-counter for deposit will automatically be paid.  For Checks presented over-the-counter for cash, Customer does not have the ability to decision the Checks using Reverse Positive Pay.  Checks presented over-the-counter for cash will be paid if Bank’s standard protocols are met, and the only way a Customer enrolled in Reverse Positive Pay can prevent a Check it has issued from being cashed over-the-counter is to place a stop payment order on that Check before it is presented for payment.

 

Section 5.  LIMITATION OF LIABILITY.

(a)  Wrongful Dishonor.  Notwithstanding anything herein to the contrary, Bank shall have no liability to Customer for wrongful dishonor when Bank, acting in good faith, returns a Check if: (i) Bank reasonably believed the Check was not properly payable; (ii) there are insufficient Available Funds on deposit in the Account(s); (iii) Bank is required to do so by Applicable Laws; or (iv) Bank acted in accordance with these Service Terms, including acting upon any Return Request, Return Default option or “Do Not Pay and Return” request submitted by Customer (irrespective of whether such request was submitted erroneously), in which case such dishonor shall be proper, and Customer waives any right Customer may have to assert that the return was improper.

(b)  Improper Payment.  Bank shall have no liability to Customer for paying a Check if Bank acted in accordance with these Service Terms, including acting upon any Pay Request, Pay Default option or “Pay” request submitted by Customer (irrespective of whether such request was submitted erroneously), in which case such payment shall be proper, and Customer waives any right Customer may have to assert that the Check was not properly payable.

(c)  Over-the-Counter Checks, Checks with Encoding Errors.  In no event shall Bank be liable for any Losses incurred by Customer arising out of or related to: (i) any Check paid over-the-counter if, at the time the Check was reviewed by the teller, it did not appear as an Exception Check; (ii) any Check not paid over-the-counter because it appeared to be an Exception Check when the Check was reviewed by the teller; (iii) any Check paid over-the-counter on any day for which Customer requested Bank to remove the Service; or (iv) any delay in processing or returning a Check or improper processing of a Check through the Service due to an encoding error made by the bank of first deposit.

(d)  Assignment of Claim.  If Customer suffers Losses in connection with the Service, Bank assigns to Customer any claim that Bank has against a depository or collecting bank to recover the loss, including any claim for breach of warranty under the applicable provisions of Article 4 of the UCC.