860                               LAWS OF MARYLAND                        [CH. 538

(2) The liability of a bank for action or non-action with respect
to any item handled by it for purposes of presentment, payment or
collection is governed by the law of the place where the bank is lo-
cated. In the case of action or non-action by or at a branch or sepa-
rate office of a bank, its liability is governed by the law of the place
where the branch or separate office is located.

4—103. Variation by Agreement; Measure of Damages; Certain
Action Constituting Ordinary Care.

(1)  The effect of the provisions of this Sub-title may be varied by
agreement except that no agreement can disclaim a bank's responsi-
bility for its own lack of good faith or failure to exercise ordinary
care or can limit the measure of damages for such lack or failure;
but the parties may by agreement determine the standards by which
such responsibility is to be measured if such standards are not mani-
festly unreasonable.

(2)  Federal Reserve regulations and operating letters, clearing
house rules, and the like, have the effect of agreements under sub-
section (1), whether or not specifically assented to by all parties
interested in items handled.

(3)  Action or non-action approved by this Sub-title or pursuant
to Federal Reserve regulations or operating letters constitutes 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 Sub-
title, prima facie constitutes the exercise of ordinary care.

(4) The specification or approval of certain procedures by this
Sub-title does not constitute 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
which could not have been realized by the use of ordinary care, and
where there is bad faith it includes other damages, if any, suffered
by the party as a proximate consequence.

4—104. Definitions and Index of Definitions.

(1) In this Sub-title unless the context otherwise requires

(a)  "Account" means any account with a bank and includes a
checking, time, interest or savings account;

(b)  "Afternoon" means the period of a day between noon and
midnight;

(c)  "Banking day" means that part of any day on which a bank
is open to the public for carrying on substantially all of its banking
functions;

(d)  "Clearing house" means any association of banks or other
payors regularly clearing items;

(e)  "Customer" means any person having an account with a bank
or for whom a bank has agreed to collect items and includes a bank
carrying an account with another bank;

(f)  "Documentary draft" means any negotiable or non-negotiable