Common use of Wrongful Honor Clause in Contracts

Wrongful Honor. It shall constitute wrongful honor by the Bank if the Bank pays an Exception Check submitted in a timely and un-revoked Positive Pay Return Items File submitted in accordance with this Agreement. In the event that there is wrongful honor the Bank may, subject to the defenses set forth in this Agreement, be liable to the Customer for the lesser of the amount of the wrongfully paid Exception Check or the Customer’s actual damages resulting from the Bank’s payment of the Exception Check, but for no other damages suffered as a result of the wrongful honor. Notwithstanding the improper payment of an Exception Check, the Bank expressly reserves the right to assert that the Customer is liable for the amount of the wrongfully honored Exception Check on the grounds that the Exception Check was properly payable under Section 4-401(a). The Bank retains the right to assert the Customer's failure to exercise reasonable care under Sections 3-406(a) and 4-406(c). The Bank’s improper payment shall not in and of itself constitute a failure of the Bank to have exercised ordinary care under the loss allocation provisions of Sections 3-406(b) and 4-406(e). The Bank retains the right to assert the defense that the Customer has sustained no actual damages because the Bank's honor of the Exception Check discharged for value an indebtedness of the Customer.