K.S.A. § 84-4-301 (2026)
Deferred posting; recovery of payment by return of items; time of dishonor; return of items by payor bank
84-4-301. Deferred posting; recovery of payment by return of items; time of dishonor; return of items by payor bank. (a) If a payor bank settles for a demand item other than a documentary draft presented otherwise than for immediate payment over the counter before midnight of the banking day of receipt, the payor bank may revoke the settlement and recover the settlement if, before it has made final payment and before its midnight deadline, it:
(1) Returns the item; or
(2) sends written notice of dishonor or nonpayment if the item is unavailable for return.
(b) If a demand item is received by a payor bank for credit on its books, it may return the item or send notice of dishonor and may revoke any credit given or recover the amount thereof withdrawn by its customer, if it acts within the time limit and in the manner specified in subsection (a).
(c) Unless previous notice of dishonor has been sent, an item is dishonored at the time when for purposes of dishonor it is returned or notice sent in accordance with this section.
(d) An item is returned:
(1) As to an item presented through a clearing house, when it is delivered to the presenting or last collecting bank or to the clearing house or is sent or delivered in accordance with its rules; or
(2) in all other cases, when it is sent or delivered to the bank's customer or transferor or pursuant to instructions.
History: L. 1965, ch. 564, § 224; L. 1991, ch. 296, § 98; February 1, 1992.
KANSAS COMMENT, 1996
This section is identical to the 1995 Official Text. The section is derived from, and is very similar to the former 84-4-301. References to authorized settlement have been deleted since the settlement must be proper to be a settlement. Settlement has been substituted for payment and the cross references have been deleted. Finally, protest has been removed from Article 4, and so has the reference to protest in this section. The other amendments are stylistic and are not meant to change the substantive law.
This section authorizes deferred posting, but only if the bank has settled for the item before midnight of the day of receipt. Documentary drafts are excluded and handled separately in Part 5 of this Article. The key to deferred posting is that if the bank has settled for the item on the day of receipt, the bank is permitted to return the item before the drawee bank's midnight deadline (defined in 84-4-104(a)(10)). If it has not given a settlement on the day of receipt, or does not return the item by the midnight deadline where it has given a settlement, the bank is "accountable" for them under the next section. The drawee bank is given until midnight of the business day following receipt of the item within which to revoke any provisional settlement and recover payment from collecting banks. The item can be returned, or notice of dishonor may be sent if the item is unavailable for return. Subsection (d) contemplates the common practice of returning dishonored items through a clearing house.
Official Comment 4 to 84-4-215 reiterates the practice of deferred posting: "The underlying theory and reason for deferred posting statutes . . . is to require a settlement on the date of receipt of an item but to keep that settlement provisional with the right to revoke prior to the midnight deadline." The authorization for deferred posting found in this section means that the process of posting is not normally complete until the day after the bank receives the item. The need for such an extra day of grace has been apparent since bulk handling of items became the rule. The modern practice of computer posting on the night of receipt, followed by verification of signatures on the following day, dovetails neatly with the midnight deadline granted by deferred posting practice under the UCC.
The leading Kansas decision on the drawee bank's duty to return an item by the midnight deadline is Leaderbrand v. Central State Bank, 202 K. 450, 450 P.2d 1 (1969), which is analyzed in Kansas Comment 1996 to the next section.
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, 1472 (1995).