Michigan Compiled Laws

Mich. Comp. Laws § 440.4103 (2026)

Variation by agreement; measure of damages; action constituting ordinary care.

✓ current as of July 2026

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UNIFORM COMMERCIAL CODE

Act 174 of 1962

440.4103 Variation by agreement; measure of damages; action constituting ordinary care.

Sec. 4103.

(1) The effect of the provisions of this article may be varied by agreement but the parties to the agreement cannot disclaim a bank's responsibility for its lack of good faith or failure to exercise ordinary care or limit the measure of damages for the lack or failure. However, the parties may determine by agreement the standards by which the bank's responsibility is to be measured if those standards are not manifestly unreasonable.

(2) Federal Reserve regulations and operating circulars, 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 circulars is 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, is prima facie the exercise of ordinary care.

(4) The specification or approval of certain procedures by this article is not 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 that could not have been realized by the exercise of ordinary care. If there is also bad faith, it includes any other damages the party suffered as a proximate consequence.

History: 1962, Act 174, Eff. Jan. 1, 1964 ;-- Am. 1993, Act 130, Eff. Sept. 30, 1993

Notes of Decisions

Cited in 4 cases, 1967–1991 · leading case: Colorado Nat'l Bank v. First Nat'l Bank & Trust Co., 459 F. Supp. 1366 (W.D. Mich. 1978).

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Colorado Nat'l Bank v. First Nat'l Bank & Trust Co., 459 F. Supp. 1366 (W.D. Mich. 1978). · cites it 2× “§ 440.4103(1), and that “Federal Reserve Regulations and Operating letters, clearinghouse rules, and the like, have the effect of agreements.”

Check Reporting Servs., Inc v. Michigan Nat'l Bank-Lansing, 478 N.W.2d 893 (Mich. Ct. App. 1991). “Under § 4-103, MCL 440.4103; MSA 19.4103, a bank may not disclaim, by agreement, its responsibility for its failure to exercise ordinary care.”

Stanek v. Nat'l Bank, 430 N.W.2d 819 (Mich. Ct. App. 1988). “Defendant maintains that, even in the event of negligence on its part, any lack of ordinary care is excused for a period of one full banking day by virtue of the exculpatory language on the stop payment order.”

Newman v. Mfrs. Nat'l Bank, 152 N.W.2d 564 (Mich. Ct. App. 1967). “PA 1962, No 174, §4103 (CL 1948, § 440.4103 [Stat Ann 1964 Rev § 19.4103]) provides in part as follows: .”

— Mich. Comp. Laws § 440.4103(1) — 2 cases

Colorado Nat'l Bank v. First Nat'l Bank & Trust Co., 459 F. Supp. 1366 (W.D. Mich. 1978). “§ 440.4103(1), and that “Federal Reserve Regulations and Operating letters, clearinghouse rules, and the like, have the effect of agreements.”

— Mich. Comp. Laws § 440.4103(2) — 1 case

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