(a) If an item is presented to and received by a payor bank, the bank is accountable for the amount of:(1) A demand item, other than a documentary draft, whether properly payable or not, if the bank, in any case in which it is not also the deposit[o]ry bank, retains the item beyond midnight of the banking day of receipt without settling for it or, whether or not it is also the deposit[o]ry bank, does not pay or return the item or send notice of dishonor until after its midnight deadline, or(2) any other properly payable item unless, within the time allowed for acceptance or payment of that item, the bank either accepts or pays the item or returns it and accompanying documents.(b) The liability of a payor bank to pay an item pursuant to subsection (a) of this section is subject to defenses based on breach of a presentment warranty (§ 858 of this title) or proof that the person seeking enforcement of the liability presented or transferred the item for the purpose of defrauding the payor bank. History —Aug. 17, 1995, No. 208, § 3-302; Aug. 31, 1996, No. 176, § 3.