Ky. Rev. Stat. » Chapter 355
Kentucky Revised Statutes

Ky. Rev. Stat. § 355.4-406 (2026)

Customer's duty to discover and report unauthorized signature or

✓ current as of May 2026
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alteration.

(1) A bank that sends or makes available to a customer a statement of account showing payment of items for the account shall either return or make available to the customer the items paid or provide information in the statement of account sufficient to allow the customer reasonably to identify the items paid. The statement of account provides sufficient information if the item is described by item number, amount, and date of payment.

(2) If the items are not returned to the customer, the person retaining the items shall either retain the items or, if the items are destroyed, maintain the capacity to furnish legible copies of the items until the expiration of seven (7) years after receipt of the items. A customer may request an item from the bank that paid the item, and that bank must provide in a reasonable time either the item or, if the item has been destroyed or is not otherwise obtainable, a legible copy of the item.

(3) If a bank sends or makes available a statement of account or items pursuant to subsection (1) of this section, the customer must exercise reasonable promptness in examining the statement or the items to determine whether any payment was not authorized because of an alteration of an item or because a purported signature by or on behalf of the customer was not authorized. If, based on the statement or items provided, the customer should reasonably have discovered the unauthorized payment, the customer must promptly notify the bank of the relevant facts.

(4) If the bank proves that the customer failed, with respect to an item, to comply with the duties imposed on the customer by subsection (3) of this section, the customer is precluded from asserting against the bank:

(a) The customer's unauthorized signature or any alteration on the item, if the bank also proves that it suffered a loss by reason of the failure; and

(b) The customer's unauthorized signature or alteration by the same wrongdoer on any other item paid in good faith by the bank if the payment was made before the bank received notice from the customer of the unauthorized signature or alteration and after the customer had been afforded a reasonable period of time, not exceeding thirty (30) days, in which to examine the item or statement of account and notify the bank.

(5) If subsection (4) of this section applies and the customer proves that the bank failed to exercise ordinary care in paying the item and that the failure substantially contributed to loss, the loss is allocated between the customer precluded and the bank asserting the preclusion according to the extent to which the failure of the customer to comply with subsection (3) of this section and the failure of the bank to exercise ordinary care contributed to the loss. If the customer proves that the bank did not pay the item in good faith, the preclusion under subsection (4) of this section does not apply.

(6) Without regard to care or lack of care of either the customer or the bank, a customer who does not within one (1) year after the statement or items are made available to the customer (subsection (1)) discover and report the customer's unauthorized signature on or any alteration on the item is precluded from asserting against the bank the unauthorized signature or alteration. If there is a preclusion under this subsection, the payor bank may not recover for breach of warranty under KRS 355.4-208 with respect to the unauthorized signature or alteration to which the preclusion applies. Effective: January 1, 1997 History: Amended 1996 Ky. Acts ch. 130, sec. 106, effective January 1, 1997. -- Created 1958 Ky. Acts ch. 77, sec. 4-406, effective July 1, 1960.

Notes of Decisions
Cited in 6 cases (1 in the last 5 years), 1965–2024 · leading case: Mark D. Dean, P.S.C. v. Commonwealth Bank & Trust Co., 434 S.W.3d 489 (Ky. 2014).
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Mark D. Dean, P.S.C. v. Commonwealth Bank & Trust Co., 434 S.W.3d 489 (Ky. 2014). · cites it 28× “The questions presented by this case are whether those claims are barred either by the one-year repose period of KRS 355.4-406, as determined by the Court of Appeals, or alternatively by the three-year statute of limitations under KRS 355.”
Concrete Materials Corp. v. Bank of Danville & Trust Co., 938 S.W.2d 254 (Ky. 1997). · cites it 18× “The outcome of the case turned on application of KRS 355.4-406 entitled "Customer's Duty to Discover and Report Unauthorized Signature or Alteration.”
Bullitt Cnty. Bank v. Publishers Printing Co., 684 S.W.2d 289 (Ky. Ct. App. 1984). · cites it 2× “I would extend KRS 355.4-406 to include such an act as Young committed because this extends beyond the alteration of an instrument for it is an alteration of an account by depletion.”
Ousley v. First Commonwealth Bank of Prestonsburg, 8 S.W.3d 45 (Ky. Ct. App. 1999). “4-406 of the UCC, a bank is not required to send a periodic statement of account to the customer, but if it does not, the customer does not have a duty to reasonably discover any unauthorized payment and the bank cannot avail itself of the one-year statute of limitation for any…”
Northcutt & Son Home for Funerals, Inc. v. U.S. Bank Nat'l Ass'n (E.D. Ky. 2024). · cites it 6× “Bank argues that Summary Judgment should be granted against Northcutt with respect to the statutory conversion claim because Northcutt failed to satisfy its obligations, under both KRS § 355.4-406 and the Deposit Account Agreement (the “Agreement”), to “examine its account…”
Wuest Bros., Inc. v. Liberty Nat'l Bank & Trust Co., 388 S.W.2d 364 (Ky. Ct. App. 1965). “* * *” *366 These principles are in harmony with those incorporated in KRS 355.4-406(1), (2) (a), (b) and (3) of the Uniform Commercial Code, which became effective July 1, 1960, and which now unquestionably determine the liability of a bank to a depositor in a forgery case like…”
Ky. Rev. Stat. § 355.4-406(1): 1 case
Wuest Bros., Inc. v. Liberty Nat'l Bank & Trust Co., 388 S.W.2d 364 (Ky. Ct. App. 1965). “* * *” *366 These principles are in harmony with those incorporated in KRS 355.4-406(1), (2) (a), (b) and (3) of the Uniform Commercial Code, which became effective July 1, 1960, and which now unquestionably determine the liability of a bank to a depositor in a forgery case like…”
Ky. Rev. Stat. § 355.4-406(4): 1 case
Concrete Materials Corp. v. Bank of Danville & Trust Co., 938 S.W.2d 254 (Ky. 1997). “The outcome of the case turned on application of KRS 355.4-406 entitled "Customer's Duty to Discover and Report Unauthorized Signature or Alteration.”
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