Source: http://www.wvlegislature.gov/WVCODE/Code.cfm?chap=46&art=4A
Timestamp: 2018-09-23 09:53:44
Document Index: 272806835

Matched Legal Cases: ['§46', '§46', '§46', '§46', '§46', '§46', '§46', '§46', '§46', '§46', '§46', '§46', '§46', '§46', '§46', '§46', '§46', '§46', '§46', '§46', '§46', '§46', '§46', '§46', '§46', '§46', '§46', '§46', '§46', '§46', '§46', '§46', '§46', '§46', '§46', '§46', '§46']

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Part I. Subject Matter And Definitions.
§46-4A-101. Short title.
This article may be cited as Uniform Commercial Code - Funds Transfer.
§46-4A-102. Subject matter.
Except as otherwise provided in section one hundred eight of this article, this article applies to funds transfers defined in section one hundred four of this article.
§46-4A-103. Payment order -- Definitions.
(1) "Payment order" means an instruction of a sender to a receiving bank, transmitted orally, electronically or in writing, to pay, or to cause another bank to pay, a fixed or determinable amount of money to a beneficiary if:
(A) The instruction does not state a condition to payment to the beneficiary other than time of payment;
(b) If an instruction complying with subdivision (1), subsection (a) of this section is to make more than one payment to a beneficiary, the instruction is a separate payment order with respect to each payment.
§46-4A-104. Funds transfer -- Definitions.
(4) "Originator's bank" means (A) the receiving bank to which the payment order of the originator is issued if the originator is not a bank or (B) the originator if the originator is a bank.
§46-4A-107. Federal reserve regulations and operating circulars.
Part II. Issue And Acceptance Of Payment Order.
§46-4A-201. Security procedure.
"Security procedure" means a procedure established by agreement of a customer and a receiving bank for the purpose of (1) verifying that a payment order or communication amending or canceling a payment order is that of the customer or (2) detecting error in the transmission or the content of the payment order or communication. A security procedure may require the use of algorithms or other codes, identifying words or numbers, encryption, callback procedures or similar security devices. Comparison of a signature on a payment order or communication with an authorized specimen signature of the customer is not by itself a security procedure.
§46-4A-202. Authorized and verified payment orders.
(b) If a bank and its customer have agreed that the authenticity of payment orders issued to the bank in the name of the customer as sender will be verified pursuant to a security procedure, a payment order received by the receiving bank is effective as the order of the customer, whether or not authorized, if (1) the security procedure is a commercially reasonable method of providing security against unauthorized payment orders and (2) the bank proves that it accepted the payment order in good faith and in compliance with the security procedure and any written agreement or instruction of the customer restricting acceptance of payment orders issued in the name of the customer. The bank is not required to follow an instruction that violates a written agreement with the customer or notice of which is not received at a time and in a manner affording the bank a reasonable opportunity to act on it before the payment order is accepted.
(c) Commercial reasonableness of a security procedure is a question of law to be determined by considering the wishes of the customer expressed to the bank, the circumstances of the customer known to the bank, including the size, type and frequency of payment orders normally issued by the customer to the bank, alternative security procedures offered to the customer and security procedures in general use by customers and receiving banks similarly situated. A security procedure is deemed to be commercially reasonable if (1) the security procedure was chosen by the customer after the bank offered, and the customer refused, a security procedure that was commercially reasonable for that customer and (2) the customer expressly agreed in writing to be bound by any payment order, whether or not authorized, issued in its name, and accepted by the bank in compliance with the security procedure chosen by the customer.
(d) The term "sender" in this article includes the customer in whose name a payment order is issued if the order is the authorized order of the customer under subsection (a) of this section, or it is effective as the order of the customer under subsection (b) of this section.
(f) Except as provided in this section and in subdivision (1), subsection (a), section two hundred three of this article, rights and obligations arising under this section or section two hundred three of this article may not be varied by agreement.
§46-4A-203. Unenforceability of certain verified payment orders.
(a) If an accepted payment order is not, under subsection (a), section two hundred two of this article, an authorized order of a customer identified as sender, but is effective as an order of the customer pursuant to subsection (b), section two hundred two of this article, the following rules apply:
(1) By express written agreement, the receiving bank may limit the extent to which it is entitled to enforce or retain payment of the payment order; or
(2) The receiving bank is not entitled to enforce or retain payment of the payment order if the customer proves that the order was not caused, directly or indirectly, by a person (A) entrusted at any time with duties to act for the customer with respect to payment orders or the security procedure or (B) who obtained access to transmitting facilities of the customer or who obtained, from a source controlled by the customer and without authority of the receiving bank, information facilitating breach of the security procedure, regardless of how the information was obtained or whether the customer was at fault. Information includes any access device, computer software or the like.
§46-4A–204. Refund of payment and duty of customer to report with respect to unauthorized payment order.
(a) If a receiving bank accepts a payment order issued in the name of its customer as sender which is: (1) Not authorized and not effective as the order of the customer under §46-4A-202; or (2) not enforceable, in whole or in part, against the customer under §46-4A-203, the bank shall refund any payment of the payment order received from the customer to the extent the bank is not entitled to enforce payment, and shall pay interest on the refundable amount calculated from the date the bank received payment to the date of the refund. However, the customer is not entitled to interest from the bank on the amount to be refunded if the customer fails to exercise ordinary care to determine that the order was not authorized by the customer and to notify the bank of the relevant facts within a reasonable time not exceeding ninety days after the date the customer received notification from the bank that the order was accepted or that the customer's account was debited with respect to the order. The bank is not entitled to any recovery from the customer on account of a failure by the customer to give notification as stated in this section.
(b) Reasonable time under subsection (a) of this section may be fixed by agreement as stated in section 1-302(b), but the obligation of a receiving bank to refund payment as stated in subsection (a) of this section may not otherwise be varied by agreement.
§46-4A-205. Erroneous payment orders.
(a) (1) If an accepted payment order was transmitted pursuant to a security procedure for the detection of error and the payment order (A) erroneously instructed payment to a beneficiary not intended by the sender, (B) erroneously instructed payment in an amount greater than the amount intended by the sender or (C) was an erroneously transmitted duplicate of a payment order previously sent by the sender, the following rules apply:
(2) If the sender proves that the sender or a person acting on behalf of the sender pursuant to section two hundred six of this article complied with the security procedure and that the error would have been detected if the receiving bank had also complied, the sender is not obliged to pay the order to the extent stated in subdivisions (3) and (4) of this subsection;
(3) If the funds transfer is completed on the basis of an erroneous payment order described in paragraph (A) or (C) of subdivision (1), the sender is not obliged to pay the order and the receiving bank is entitled to recover from the beneficiary any amount paid to the beneficiary to the extent allowed by the law governing mistake and restitution; or
(4) If the funds transfer is completed on the basis of a payment order described in paragraph (B) of subdivision (1), the sender is not obliged to pay the order to the extent the amount received by the beneficiary is greater than the amount intended by the sender. In that case, the receiving bank is entitled to recover from the beneficiary the excess amount received to the extent allowed by the law governing mistake and restitution.
(b) If (1) the sender of an erroneous payment order described in subdivision (1) of subsection (a) is not obliged to pay all or part of the order and (2) the sender receives notification from the receiving bank that the order was accepted by the bank or that the sender's account was debited with respect to the order, the sender has a duty to exercise ordinary care, on the basis of information available to the sender, to discover the error with respect to the order and to advise the bank of the relevant facts within a reasonable time not exceeding ninety days after the bank's notification was received by the sender. If the bank proves that the sender failed to perform that duty, the sender is liable to the bank for the loss the bank proves it incurred as a result of the failure, but the liability of the sender may not exceed the amount of the sender's order.
§46-4A-206. Transmission of payment order through funds transfer or other communication system.
§46-4A-207. Misdescription of beneficiary.
(a) Subject to subsection (b) of this section, if, in a payment order received by the beneficiary's bank, the name, bank account number or other identification of the beneficiary refers to a nonexistent or unidentifiable person or account, no person has rights as a beneficiary of the order and acceptance of the order cannot occur.
(1) Except as otherwise provided in subsection (c) of this section, if the beneficiary's bank does not know that the name and number refer to different persons, it may rely on the number as the proper identification of the beneficiary of the order. The beneficiary's bank need not determine whether the name and number refer to the same person; or
(c) If a payment order described in subsection (b) of this section is accepted, the originator's payment order described the beneficiary inconsistently by name and number, and the beneficiary's bank pays the person identified by number as permitted by subdivision (1), subsection (b) of this section, the following rules apply:
(1) If the originator is a bank, the originator is obliged to pay its order; or
(d) In a case governed by subdivision (1), subsection (b) of this section, if the beneficiary's bank rightfully pays the person identified by number and that person was not entitled to receive payment from the originator, the amount paid may be recovered from that person to the extent allowed by the law governing mistake and restitution as follows:
(1) If the originator is obliged to pay its payment order as stated in subsection (c) of this section, the originator has the right to recover; or
§46-4A-208. Misdescription of intermediary bank or beneficiary's bank.
(a) This subsection applies to a payment order identifying an intermediary bank or beneficiary's bank only by an identifying number.
(1) The receiving bank may rely on the number as the proper identification of the intermediary or beneficiary's bank and need not determine whether the number identifies the bank.
(2) If the sender is not a bank and the receiving bank proves that the sender, before the payment order was accepted, had notice that the receiving bank might rely on the number as the proper identification of the intermediary or beneficiary's bank even if it identifies a person different from the bank identified by name, the rights and obligations of the sender and the receiving bank are governed by subdivision (1) of this subsection, as though the sender were a bank. Proof of notice may be made by any admissible evidence. The receiving bank satisfies the burden of proof if it proves that the sender, before the payment order was accepted, signed a writing stating the information to which the notice relates.
(4) If the receiving bank knows that the name and number identify different persons, reliance on either the name or the number in executing the sender's payment order is a breach of the obligation stated in subdivision (1), subsection (a), section three hundred two of this article.
§46-4A-209. Acceptance of payment order.
(a) Subject to subsection (d) of this section, a receiving bank other than the beneficiary's bank accepts a payment order when it executes the order.
(1) When the bank (A) pays the beneficiary as stated in subsection (a), section four hundred five of this article or subsection (b), section four hundred five of this article or (B) notifies the beneficiary of receipt of the order or that the account of the beneficiary has been credited with respect to the order unless the notice indicates that the bank is rejecting the order or that funds with respect to the order may not be withdrawn or used until receipt of payment from the sender of the order;
(2) When the bank receives payment of the entire amount of the sender's order pursuant to subdivision (1), subsection (a), section four hundred three of this article or subdivision (2), subsection (a), section four hundred three of this article; or
(3) The opening of the next funds-transfer business day of the bank following the payment date of the order if, at that time, the amount of the sender's order is fully covered by a withdrawable credit balance in an authorized account of the sender or the bank has otherwise received full payment from the sender, unless the order was rejected before that time or is rejected within (A) one hour after that time or (B) one hour after the opening of the next business day of the sender following the payment date if that time is later. If notice of rejection is received by the sender after the payment date and the authorized account of the sender does not bear interest, the bank is obliged to pay interest to the sender on the amount of the order for the number of days elapsing after the payment date to the day the sender receives notice or learns that the order was not accepted, counting that day as an elapsed day. If the withdrawable credit balance during that period falls below the amount of the order, the amount of interest payable is reduced accordingly.
(c) Acceptance of a payment order cannot occur before the order is received by the receiving bank. Acceptance does not occur under subdivision (2), subsection (b) of this section or subdivision (3), subsection (b) of this section if the beneficiary of the payment order does not have an account with the receiving bank, the account has been closed or the receiving bank is not permitted by law to receive credits for the beneficiary's account.
(d) A payment order issued to the originator's bank cannot be accepted until (1) the payment date if the bank is the beneficiary's bank or (2) the execution date if the bank is not the beneficiary's bank. If the originator's bank executes the originator's payment order before the execution date or pays the beneficiary of the originator's payment order before the payment date and the payment order is subsequently cancelled pursuant to subsection (b), section two hundred eleven of this article, the bank may recover from the beneficiary any payment received to the extent allowed by the law governing mistake and restitution.
§46-4A-210. Rejection of payment order.
(a) A payment order is rejected by the receiving bank by a notice of rejection transmitted to the sender orally, electronically or in writing. A notice of rejection need not use any particular words and is sufficient if it indicates that the receiving bank is rejecting the order or will not execute or pay the order. Rejection is effective when the notice is given if transmission is by a means that is reasonable in the circumstances. If notice of rejection is given by a means that is not reasonable, rejection is effective when the notice is received. If an agreement of the sender and receiving bank establishes the means to be used to reject a payment order, (1) any means complying with the agreement is reasonable and (2) any means not complying is not reasonable unless no significant delay in receipt of the notice resulted from the use of the noncomplying means.
(b) This subsection applies if a receiving bank other than the beneficiary's bank fails to execute a payment order despite existence on the execution date of a withdrawable credit balance in an authorized account of the sender sufficient to cover the order. If the sender does not receive notice of rejection of the order on the execution date and the authorized account of the sender does not bear interest, the bank is obliged to pay interest to the sender on the amount of the order for the number of days elapsing after the execution date to the earlier of the day the order is canceled pursuant to subsection (d), section two hundred eleven of this article or the day the sender receives notice or learns that the order was not executed, counting the final day of the period as an elapsed day. If the withdrawable credit balance during that period falls below the amount of the order, the amount of interest is reduced accordingly.
§46-4A-211. Cancellation and amendment of payment order.
(a) A communication of the sender of a payment order cancelling or amending the order may be transmitted to the receiving bank orally, electronically or in writing. If a security procedure is in effect between the sender and the receiving bank, the communication is not effective to cancel or amend the order unless the communication is verified pursuant to the security procedure or the bank agrees to the cancellation or amendment.
(2) With respect to a payment order accepted by the beneficiary's bank, cancellation or amendment is not effective unless the order was issued in execution of an unauthorized payment order, or because of a mistake by a sender in the funds transfer which resulted in the issuance of a payment order (A) that is a duplicate of a payment order previously issued by the sender, (B) that orders payment to a beneficiary not entitled to receive payment from the originator or (C) that orders payment in an amount greater than the amount the beneficiary was entitled to receive from the originator. If the payment order is canceled or amended, the beneficiary's bank is entitled to recover from the beneficiary any amount paid to the beneficiary to the extent allowed by the law governing mistake and restitution.
(g) A payment order is not revoked by death or legal incapacity of the sender unless the receiving bank knows of the death or of an adjudication of incapacity by a court of competent jurisdiction and has reasonable opportunity to act before acceptance of the order.
(h) A funds-transfer system rule is not effective to the extent it conflicts with subdivision (2), subsection (c) of this section.
§46-4A-212. Liability and duty of receiving bank regarding unaccepted payment order.
If a receiving bank fails to accept a payment order that it is obliged by express agreement to accept, the bank is liable for breach of the agreement to the extent provided in the agreement or in this article, but does not otherwise have any duty to accept a payment order or, before acceptance, to take any action, or refrain from taking action, with respect to the order except as provided in this article or by express agreement. Liability based on acceptance arises only when acceptance occurs as stated in section two hundred nine of this article, and liability is limited to that provided in this article. A receiving bank is not the agent of the sender or beneficiary of the payment order it accepts, or of any other party to the funds transfer, and the bank owes no duty to any party to the funds transfer except as provided in this article or by express agreement.
Part III. Execution Of Sender’s Payment Order By Receiving Bank
§46-4A-301. Execution and execution date.
§46-4A-302. Obligations of receiving bank in execution of payment order.
(a) Except as provided in subsections (b) through (d) of this section, if the receiving bank accepts a payment order pursuant to subsection (a), section two hundred nine of this article, the bank has the following obligations in executing the order:
(1) The receiving bank is obliged to issue, on the execution date, a payment order complying with the sender's order and to follow the sender's instructions concerning (A) any intermediary bank or funds-transfer system to be used in carrying out the funds transfer or (B) the means by which payment orders are to be transmitted in the funds transfer. If the originator's bank issues a payment order to an intermediary bank, the originator's bank is obliged to instruct the intermediary bank according to the instruction of the originator. An intermediary bank in the funds transfer is similarly bound by an instruction given to it by the sender of the payment order it accepts; and
(b) Unless otherwise instructed, a receiving bank executing a payment order may (1) use any funds-transfer system if use of that system is reasonable in the circumstances and (2) issue a payment order to the beneficiary's bank or to an intermediary bank through which a payment order conforming to the sender's order can expeditiously be issued to the beneficiary's bank if the receiving bank exercises ordinary care in the selection of the intermediary bank. A receiving bank is not required to follow an instruction of the sender designating a funds-transfer system to be used in carrying out the funds transfer if the receiving bank, in good faith, determines that it is not feasible to follow the instruction or that following the instruction would unduly delay completion of the funds transfer.
(c) Unless subdivision (2), subsection (a) of this section applies or the receiving bank is otherwise instructed, the bank may execute a payment order by transmitting its payment order by first class mail or by any means reasonable in the circumstances. If the receiving bank is instructed to execute the sender's order by transmitting its payment order by a particular means, the receiving bank may issue its payment order by the means stated or by any means as expeditious as the means stated.
(d) Unless instructed by the sender, (1) the receiving bank may not obtain payment of its charges for services and expenses in connection with the execution of the sender's order by issuing a payment order in an amount equal to the amount of the sender's order less the amount of the charges and (2) may not instruct a subsequent receiving bank to obtain payment of its charges in the same manner.
§46-4A-303. Erroneous execution of payment order.
(a) A receiving bank that (1) executes the payment order of the sender by issuing a payment order in an amount greater than the amount of the sender's order or (2) issues a payment order in execution of the sender's order and then issues a duplicate order, is entitled to payment of the amount of the sender's order under subsection (c), section four hundred two of this article if that subsection is otherwise satisfied. The bank is entitled to recover from the beneficiary of the erroneous order the excess payment received to the extent allowed by the law governing mistake and restitution.
(b) A receiving bank that executes the payment order of the sender by issuing a payment order in an amount less than the amount of the sender's order is entitled to payment of the amount of the sender's order under subsection (c), section four hundred two of this article if (1) that subsection is otherwise satisfied and (2) the bank corrects its mistake by issuing an additional payment order for the benefit of the beneficiary of the sender's order. If the error is not corrected, the issuer of the erroneous order is entitled to receive or retain payment from the sender of the order it accepted only to the extent of the amount of the erroneous order. This subsection does not apply if the receiving bank executes the sender's payment order by issuing a payment order in an amount less than the amount of the sender's order for the purpose of obtaining payment of its charges for services and expenses pursuant to instruction of the sender.
§46-4A-304. Duty of sender to report erroneously executed payment order.
If the sender of a payment order that is erroneously executed as stated in section three hundred three of this article receives notification from the receiving bank that the order was executed or that the sender's account was debited with respect to the order, the sender has a duty to exercise ordinary care to determine, on the basis of information available to the sender, that the order was erroneously executed and to notify the bank of the relevant facts within a reasonable time not exceeding ninety days after the notification from the bank was received by the sender. If the sender fails to perform that duty, the bank is not obliged to pay interest on any amount refundable to the sender under subsection (d), section four hundred two of this article for the period before the bank learns of the execution error. The bank is not entitled to any recovery from the sender on account of a failure by the sender to perform the duty stated in this section.
§46-4A-305. Liability for late or improper execution or failure to execute payment order.
(a) If a funds transfer is completed but execution of a payment order by the receiving bank in breach of section three hundred two of this article results in delay in payment to the beneficiary, the bank is obliged to pay interest to either the originator or the beneficiary of the funds transfer for the period of delay caused by the improper execution. Except as provided in subsection (c) of this section, additional damages are not recoverable.
(b) If execution of a payment order by a receiving bank in breach of section three hundred two of this article results in (1) noncompletion of the funds transfer, (2) failure to use an intermediary bank designated by the originator or (3) issuance of a payment order that does not comply with the terms of the payment order of the originator, the bank is liable to the originator for its expenses in the funds transfer and for incidental expenses and interest losses, to the extent not covered by subsection (a) of this section resulting from the improper execution. Except as provided in subsection (c) of this section, additional damages are not recoverable.
Part Iv. Payment.
§46-4A-401. Payment date.
§46-4A-402. Obligation of sender to pay receiving bank.
(a) This section is subject to sections two hundred five and two hundred seven of this article.
(c) This subsection is subject to subsection (e) of this section and to section three hundred three of this article. With respect to a payment order issued to a receiving bank other than the beneficiary's bank, acceptance of the order by the receiving bank obliges the sender to pay the bank the amount of the sender's order. Payment by the sender is not due until the execution date of the sender's order. The obligation of that sender to pay its payment order is excused if the funds transfer is not completed by acceptance by the beneficiary's bank of a payment order instructing payment to the beneficiary of that sender's payment order.
(d) If the sender of a payment order pays the order and was not obliged to pay all or part of the amount paid, the bank receiving payment is obliged to refund payment to the extent the sender was not obliged to pay. Except as provided in section two hundred four and section three hundred four of this article, interest is payable on the refundable amount from the date of payment.
(e) If a funds transfer is not completed as stated in subsection (c) of this section and an intermediary bank is obliged to refund payment as stated in subsection (d) of this section but is unable to do so because not permitted by applicable law or because the bank suspends payments, a sender in the funds transfer that executed a payment order in compliance with an instruction, as stated in subdivision (1), subsection (a), section three hundred two of this article, to route the funds transfer through that intermediary bank is entitled to receive or retain payment from the sender of the payment order that it accepted. The first sender in the funds transfer that issued an instruction requiring routing through that intermediary bank is subrogated to the right of the bank that paid the intermediary bank to refund as stated in subsection (d) of this section.
§46-4A-403. Payment by sender to receiving bank.
(a) Payment of the sender's obligation under section four hundred two of this article to pay the receiving bank occurs as follows:
(1) If the sender is a bank, payment occurs when the receiving bank receives final settlement of the obligation through a federal reserve bank or through a funds-transfer system;
(2) If the sender is a bank and the sender (A) credited an account of the receiving bank with the sender or (B) caused an account of the receiving bank in another bank to be credited, payment occurs when the credit is withdrawn or, if not withdrawn, at midnight of the day on which the credit is withdrawable and the receiving bank learns of that fact; or
(c) If two banks transmit payment orders to each other under an agreement that settlement of the obligations of each bank to the other under section four hundred two of this article will be made at the end of the day or other period, the total amount owed with respect to all orders transmitted by one bank shall be set off against the total amount owed with respect to all orders transmitted by the other bank. To the extent of the setoff, each bank has made payment to the other.
(d) In a case not covered by subsection (a) of this section, the time when payment of the sender's obligation under subsection (b), section four hundred two or subsection (c), section four hundred two of this article occurs is governed by applicable principles of law that determine when an obligation is satisfied.
§46-4A-404. Obligation of beneficiary's bank to pay and give notice to beneficiary.
(a) Subject to subsection (e), section two hundred eleven, subsection (d), section four hundred five, and subsection (e), section four hundred five of this article, if a beneficiary's bank accepts a payment order, the bank is obliged to pay the amount of the order to the beneficiary of the order. Payment is due on the payment date of the order, but if acceptance occurs on the payment date after the close of the funds-transfer business day of the bank, payment is due on the next funds-transfer business day. If the bank refuses to pay after demand by the beneficiary and receipt of notice of particular circumstances that will give rise to consequential damages as a result of nonpayment, the beneficiary may recover damages resulting from the refusal to pay to the extent the bank had notice of the damages, unless the bank proves that it did not pay because of a reasonable doubt concerning the right of the beneficiary to payment.
(c) The right of a beneficiary to receive payment and damages as stated in subsection (a) of this section may not be varied by agreement or a funds-transfer system rule. The right of a beneficiary to be notified as stated in subsection (b) of this section may be varied by agreement of the beneficiary or by a funds-transfer system rule if the beneficiary is notified of the rule before initiation of the funds transfer.
§46-4A-405. Payment by beneficiary's bank to beneficiary.
(a) If the beneficiary's bank credits an account of the beneficiary of a payment order, payment of the bank's obligation under subsection (a), section four hundred four of this article occurs when and to the extent (1) the beneficiary is notified of the right to withdraw the credit, (2) the bank lawfully applies the credit to a debt of the beneficiary or (3) funds with respect to the order are otherwise made available to the beneficiary by the bank.
(b) If the beneficiary's bank does not credit an account of the beneficiary of a payment order, the time when payment of the bank's obligation under subsection (a), section four hundred four of this article occurs is governed by principles of law that determine when an obligation is satisfied.
(d) A funds-transfer system rule may provide that payments made to beneficiaries of funds transfers made through the system are provisional until receipt of payment by the beneficiary's bank of the payment order it accepted. A beneficiary's bank that makes a payment that is provisional under the rule is entitled to refund from the beneficiary if (1) the rule requires that both the beneficiary and the originator be given notice of the provisional nature of the payment before the funds transfer is initiated, (2) the beneficiary, the beneficiary's bank and the originator's bank agreed to be bound by the rule and (3) the beneficiary's bank did not receive payment of the payment order that it accepted. If the beneficiary is obliged to refund payment to the beneficiary's bank, acceptance of the payment order by the beneficiary's bank is nullified and no payment by the originator of the funds transfer to the beneficiary occurs under section four hundred six of this article.
(e) (1) This subsection applies to a funds transfer that includes a payment order transmitted over a funds-transfer system that (A) nets obligations multilaterally among participants and (B) has in effect a loss-sharing agreement among participants for the purpose of providing funds necessary to complete settlement of the obligations of one or more participants that do not meet their settlement obligations.
(2) If the beneficiary's bank in the funds transfer accepts a payment order and the system fails to complete settlement pursuant to its rules with respect to any payment order in the funds transfer, (A) the acceptance by the beneficiary's bank is nullified and no person has any right or obligation based on the acceptance, (B) the beneficiary's bank is entitled to recover payment from the beneficiary, (C) no payment by the originator to the beneficiary occurs under section four hundred six of this article and (D) subject to subsection (e), section four hundred two of this article, each sender in the funds transfer is excused from its obligation to pay its payment order under subsection (c), section four hundred two of this article because the funds transfer has not been completed.
§46-4A-406. Payment by originator to beneficiary; discharge of underlying obligation.
(a) Subject to subsection (e), section two hundred eleven, subsection (d), section four hundred five, and subsection (e), section four hundred five of this article, the originator of a funds transfer pays the beneficiary of the originator's payment order (1) at the time a payment order for the benefit of the beneficiary is accepted by the beneficiary's bank in the funds transfer and (2) in an amount equal to the amount of the order accepted by the beneficiary's bank, but not more than the amount of the originator's order.
(b) If payment under subsection (a) of this section is made to satisfy an obligation, the obligation is discharged to the same extent discharge would result from payment to the beneficiary of the same amount in money, unless (1) the payment under subsection (a) of this section was made by a means prohibited by the contract of the beneficiary with respect to the obligation, (2) the beneficiary, within a reasonable time after receiving notice of receipt of the order by the beneficiary's bank, notified the originator of the beneficiary's refusal of the payment, (3) funds with respect to the order were not withdrawn by the beneficiary or applied to a debt of the beneficiary and (4) the beneficiary would suffer a loss that could reasonably have been avoided if payment had been made by a means complying with the contract. If payment by the originator does not result in discharge under this section, the originator is subrogated to the rights of the beneficiary to receive payment from the beneficiary's bank under subsection (a), section four hundred four of this article.
Part V. Miscellaneous Provisions.
§46-4A-501. Variation by agreement and effect of funds-transfer system rule.
(b) "Funds-transfer system rule" means a rule of an association of banks, (1) governing transmission of payment orders by means of a funds-transfer system of the association or rights and obligations with respect to those orders or (2) to the extent the rule governs rights and obligations between banks that are parties to a funds transfer in which a federal reserve bank, acting as an intermediary bank, sends a payment order to the beneficiary's bank. Except as otherwise provided in this article, a funds-transfer system rule governing rights and obligations between participating banks using the system may be effective even if the rule conflicts with this article and indirectly affects another party to the funds transfer who does not consent to the rule. A funds-transfer system rule may also govern rights and obligations of parties other than participating banks using the system to the extent stated in subsection (c), section four hundred four, subsection (d), section four hundred five, and subsection (c), section five hundred seven of this article.
§46-4A-502. Creditor process served on receiving bank; setoff by beneficiary's bank.
(a) As used in this section, "creditor process" means levy, attachment, garnishment, notice of lien, sequestration or similar process issued by or on behalf of a creditor or other claimant with respect to an account.
(1) The bank may credit the beneficiary's account. The amount credited may be set off against an obligation owed by the beneficiary to the bank or may be applied to satisfy creditor process served on the bank with respect to the account;
(2) The bank may credit the beneficiary's account and allow withdrawal of the amount credited unless creditor process with respect to the account is served at a time and in a manner affording the bank a reasonable opportunity to act to prevent withdrawal; or
§46-4A-503. Injunction or restraining order with respect to funds transfer.
For proper cause and in compliance with applicable law, a court may restrain (1) a person from issuing a payment order to initiate a funds transfer, (2) an originator's bank from executing the payment order of the originator or (3) the beneficiary's bank from releasing funds to the beneficiary or the beneficiary from withdrawing the funds. A court may not otherwise restrain a person from issuing a payment order, paying or receiving payment of a payment order or otherwise acting with respect to a funds transfer.
§46-4A-504. Order in which items and payment orders may be charged to account; order of withdrawals from account.
§46-4A-505. Preclusion of objection to debit of customer's account.
§46-4A-506. Rate of interest.
(a) If, under this article, a receiving bank is obliged to pay interest with respect to a payment order issued to the bank, the amount payable may be determined (1) by agreement of the sender and receiving bank or (2) by a funds-transfer system rule if the payment order is transmitted through a funds-transfer system.
(b) If the amount of interest is not determined by an agreement or rule as stated in subsection (a) of this section, the amount is calculated by multiplying the applicable federal funds rate by the amount on which interest is payable, and then multiplying the product by the number of days for which interest is payable. The applicable federal funds rate is the average of the federal funds rates published by the Federal Reserve Bank of New York for each of the days for which interest is payable divided by three hundred sixty. The federal funds rate for any day on which a published rate is not available is the same as the published rate for the next preceding day for which there is a published rate. If a receiving bank that accepted a payment order is required to refund payment to the sender of the order because the funds transfer was not completed, but the failure to complete was not due to any fault by the bank, the interest payable is reduced by a percentage equal to the reserve requirement on deposits of the receiving bank.
§46-4A-507. Choice of law.
(1) The rights and obligations between the sender of a payment order and the receiving bank are governed by the law of the jurisdiction in which the receiving bank is located;
(2) The rights and obligations between the beneficiary's bank and the beneficiary are governed by the law of the jurisdiction in which the beneficiary's bank is located; and
(c) (1) A funds-transfer system rule may select the law of a particular jurisdiction to govern (A) rights and obligations between participating banks with respect to payment orders transmitted or processed through the system or (B) the rights and obligations of some or all parties to a funds transfer any part of which is carried out by means of the system.
(2) A choice of law made pursuant to paragraph (A) of subdivision (1) is binding on participating banks.
(3) A choice of law made pursuant to paragraph (B) of subdivision (1) is binding on the originator, other sender, or a receiving bank having notice that the funds-transfer system might be used in the funds transfer and of the choice of law by the system when the originator, other sender, or receiving bank issued or accepted a payment order.
(4) The beneficiary of a funds transfer is bound by the choice of law if, when the funds transfer is initiated, the beneficiary has notice that the funds-transfer system might be used in the funds transfer and of the choice of law by the system. The law of a jurisdiction selected pursuant to this subsection may govern, whether or not that law bears a reasonable relation to the matter in issue.