concurring in judgment. While I am in agreement with several conclusions reached in the majority opinion, as well as the judgment which reverses the judgment of the court of appeals, I cannot accept a number of the majority’s views or findings as to the bank’s practices at issue, application of the UCC to the facts of this case, or application of common law to the UCC.
I fully agree that R.C. 1303.41(A)(2) precludes appellee from asserting any claim based on forged endorsements contained in those instruments. It seems apparent that the employee never intended the named payee to have an interest in the instrument and that these check endorsements had been forged by the dishonest employee who signed “as or on behalf of a maker or drawer.” Also, there is little dispute that appellee can make no claim for funds which were merely transferred to another of appellee’s accounts, since payment is an affirmative defense. See R.C. 1304.03(E) and its Official Comment. Unfortunately, what is given with one hand is taken away by the other.
R.C. 1304.29 states:
“(A) When a bank sends to its customer a statement of account accompanied by items paid in good faith in support of the debit entries * * *, the customer must exercise reasonable care and promptness to examine the statement and items to discover his unauthorized signature or any alteration on an item and must notify the bank promptly after discovery thereof.
“(B) If the bank establishes that the customer failed with respect to an item to comply with the duties imposed on the customer by division (A) of this section, the customer is precluded from asserting against the bank:
“(1) his unauthorized signature or any alteration on the item if the bank also establishes that it suffered a loss by reason of such failure; and
“(2) an unauthorized signature or alteration by the same wrongdoer on any other item paid in good faith by the bank after the first item and statement was [sic] available to the customer for a reasonable period not exceeding fourteen calendar days and before the bank receives notification from the customer of any such unauthorized signature or alteration.
“(C) The preclusion under division (B) of this section does not apply if the customer establishes lack of ordinary care on the part of the bank in paying the item.”
As a matter of law, appellant has established that appellee failed to detect the unauthorized signatures. The issue thus narrows to whether the appellant failed to exercise “ordinary care * * * in paying the item.” This is the primary issue in the case before us.
The majority found that appellant “breached the duties imposed by the *239UCC” and that appellee effectively had shown “the drawee bank’s negligence by demonstrating that it paid checks ‘* * * which ordinary banking standards would require it to refuse * * *.’ ” Accordingly, it is asserted that the “bank is precluded from raising the customer’s negligence as an estoppel.” The majority would then allow appellee to receive damages from appellant under the rubric of consequential damages of R.C. 1304.03(E) or “ ‘the old common law rule of Hadley v. Baxendale, 156 Eng. Rep. 145 (1854).’ ” By such reasoning, the majority has missed the major point of this appeal.
Even a cursory glance at the various amici briefs reveals that this case calls into question a widespread banking practice which is done out of necessity to comply with federal and state regulations requiring deposits to be processed by midnight of the date of deposit. Amicus brief of Ohio Bankers Association, at 4. Banks ordinarily verify the authorized signature on any instrument which requires a transfer either of cash or electronic funds to an entity different from the drafter. Even when the drafter and payee are the same person, the bank checks the signature whenever the instrument directs that cash be paid across the counter.
However, when the drafter and recipient are the same entity, and the instrument requires only that electronic funds be moved from one account owned by the entity to another account owned by the same entity, then banks customarily do not check the signatures. The reason is obviously that no one receives any of the depositor’s money from the bank and there is no risk to anyone’s funds, as in the case here.
It must now be determined whether the bank’s above practice violated the standard of ordinary care required by R.C. 1304.29(C). Ordinary care is expressly defined in such circumstances by R.C. 1304.03(C) which states in pertinent part: “* * * action or non-action consistent with clearing house rules and the like or with a general banking usage * * * prima facie constitutes the exercise of ordinary care.” (Emphasis added.) The Official Comment to that section states, in pertinent part:
“The term ‘general banking usage’ is not defined but should be taken to mean a general usage common to banks in the area concerned. See R.C. § 1301.11(B) [UCC 1-205(2)]. Where the adjective ‘general’ is used, the intention is to require a usage broader than a mere practice between two or three banks but it is not intended to require anything as broad as a country-wide usage. A usage followed generally throughout a state, a substantial portion of a state, a metropolitan area or the like would certainly be sufficient. Consistently with the principle of R.C. § 1301.11(C) [UCC 1-205(3)], action or non-action consistent with clearing house rules or the like or with such banking usages prima facie constitutes the exercise of ordinary care.”
Because the practice at issue is nearly a universal practice among banking institutions, there is no disputing that the UCC considers it an *240exercise of ordinary care, more so when the practice is necessary for conformance with federal reserve regulations, as here.
Great confusion could result from the indiscriminate and mistaken use of the term “negligence” in the context of the statutes here at issue. This the majority fails to realize. As pointed out above, the standard of ordinary care is a separate and distinct UCC concept, especially in R.C. 1304.01 et seq., where the term is expressly linked to federal reserve regulations, operating letters, clearing house rules and, of course, general banking usages. See R.C. 1304.03(C) and Official Comments 3 and 4. Any action involving such transactions must utilize this section’s ordinary care standard, which differs markedly from the law of negligence.
Because the standard of ordinary care was not violated, R.C. 1304.29(C) is inapplicable. Also, as previously shown, appellant did not “pay * * * the item” but merely transferred electronic funds among appel-lee’s accounts. Therefore, under subsections (A) and (B), appellee’s failure to exercise “reasonable care,” as defined therein, precludes appellee from asserting against the bank that measure of ordinary damages set forth in R.C. 1304.03(E).
It has also been asserted that R.C. 1304.03(E) would allow appellee to receive consequential damages. The relied-upon text states: “[a]nd where there is bad faith * * * [the measure of damages] includes other damages, if any, suffered by the party as a proximate consequence.” Since a finding of bad faith is prerequisite to such award, it becomes most obvious that appellee cannot possibly prove consequential damages. The first reason is that no basis exists upon which to predicate consequential damages because appellant exercised ordinary care in the transactions. Secondly, there was not, nor could there have been under the facts before us, any assertion that bad faith entered into appellant’s concerns during the course of the disputed transactions. It is noteworthy that nowhere does appellee allege that the processing of appellee’s checks by appellant was anything other than in the customary manner. This same analysis is applicable to the majority’s resort to the common-law rule of Hadley v. Bax-endale, supra, with the addition that such rules are entirely subject to the UCC definitions and provisions for damages.
Accordingly, I would also reverse the judgment of the court of appeals and therefore I concur in the judgment.
Wright, J., concurs in the foregoing opinion.