Common use of Compliance with the Security Procedures Clause in Contracts

Compliance with the Security Procedures. (a) If an entry (or a request for cancellation or amendment of an entry) received by the Financial Institution purports to have been transmitted or authorized by the Originator, it will be deemed effective as the Originator's entry and the Originator shall be obligated to pay the Financial Institution the amount of such entry even though the entry was not authorized by the Originator, provided the Financial Institution acted in compliance with the security procedure referenced in Schedule (A). If signature comparison is to be used as a part of that security procedure, the Financial Institution shall be deemed to have complied with that part of such procedure if it compares the signature accompanying a file of entries with the signature of an authorized representative of the Originator and, on the basis of such comparison, believes the signature to be that of such authorized representative. (b) If an entry received by the Financial Institution was transmitted or authorized by the Originator, the Originator shall be obligated to pay the amount of the entry as provided herein, whether or not the Financial Institution complied with the security procedure referred to in Schedule [A] and whether or not that entry was erroneous in any respect or that error would have been detected if the Financial Institution had complied with such procedure.