The sender's liability for warranties and indemnities that a Reserve Bank makes for a substitute check is subject to the following conditions and limitations EXCEPT:
A.
The sender of an original check is not liable for amounts paid by the Reserve Bank absent the sender's agreement to the contrary
B.
The sender's liability under Regulation CC is not altered by the Regulation J provisions
C.
Failure of sender to have authority to make the required warranties and agreements
D.
A sender of an electronic item that is not a substitute check is not liable for any amount paid by a Reserve Bank that is attributable to the Reserve Bank's own lack of good faith or failure to exercise ordinary care
The correct answer is D. A sender of an electronic item that is not substitute check is not liable for any amount paid by a Reserve Bank that is attributable to the Reserve Bank's own lack of good faith or failure to exercise ordinary care. This statement outlines the principle that liability for losses or errors in the processing of electronic items does not fall on the sender if the loss or error results from the Reserve Bank's failure to act in good faith or to exercise the level of care that is ordinarily required under the circumstances. This provision is designed to allocate responsibility appropriately and ensure that the parties involved in the transaction process adhere to standards of care and good faith.
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