Common use of Positive Pay Clause in Contracts

Positive Pay. You agree that you will utilize the Positive Pay system (or any subsequent system providing similar or better protection against fraud within a reasonable time after it is offered to you) we have offered to you. in the event that we pay any Fraudulent Item that has not been verified by you pursuant to the Positive Pay system: (1) you shall bear any direct loss if you failed to properly utilize the Positive Pay system and we will not be required to re-credit your account or otherwise have any liability for paying such items; (2) we shall bear any direct loss if you properly utilized the Positive Pay system but we honored such Fraudulent Item contrary to the Positive Pay preferences you have established with us in writing. The apportionment of liability herein applies solely to Fraudulent Items (as defined on Section 12 above) and does not affect any other type of loss addressed elsewhere in this Agreement. The foregoing notwithstanding, the foregoing loss allocation rules specifically shall not apply to losses caused by forged endorsement(s) or, until such time as Positive Pay or a successor system is able to detect altered payee names, to altered payee names, each of which shall continue to be governed by the provisions of the Uniform Commercial Code as though this section 19 did not exist.