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2023 Iowa Code › Title XIII - COMMERCE › Chapter 554 - UNIFORM COMMERCIAL CODE › Section 554.12104 - Funds transfer — definitions.

554.12104 Funds transfer — definitions.
In this Article unless the context otherwise requires:
1. “Funds transfer” means the series of transactions, beginning with the originator’s payment order, made for the purpose of making payment to the beneficiary of the order. The term includes any payment order issued by the originator’s bank or an intermediary bank intended to carry out the originator’s payment order. A funds transfer is completed by acceptance by the beneficiary’s bank of a payment order for the benefit of the beneficiary of the originator’s payment order.
2. “Intermediary bank” means a receiving bank other than the originator’s bank or the beneficiary’s bank.
3. “Originator” means the sender of the first payment order in a funds transfer.
4. “Originator’s bank” means the receiving bank to which the payment order of the originator is issued if the originator is not a bank, or the originator if the originator is a bank.
92 Acts, ch 1146, §4
Referred to in §554.12102, 554.12105
2023 Iowa Code › Title XIII - COMMERCE › Chapter 554 - UNIFORM COMMERCIAL CODE › Section 554.12105 - Other definitions.

554.12105 Other definitions.
1. In this Article unless the context otherwise requires:
a. “Authorized account” means a deposit account of a customer in a bank designated by the customer as a source of payment of payment orders issued by the customer to the bank. If a customer does not so designate an account, any account of the customer is an authorized account if payment of a payment order from that account is not inconsistent with a restriction on the use of that account.
b. “Bank” means a person engaged in the business of banking and includes a savings bank, savings and loan association, credit union, and trust company. A branch or separate office of a bank is a separate bank for purposes of this Article.
c. “Customer” means a person, including a bank, having an account with a bank or from whom a bank has agreed to receive payment orders.
d. “Funds-transfer business day” of a receiving bank means the part of a day during which the receiving bank is open for the receipt, processing, and transmittal of payment orders, and cancellations and amendments of payment orders.
e. “Funds-transfer system” means a wire transfer network, automated clearing house, or other communication system of a clearing house or other association of banks through which a payment order by a bank may be transmitted to the bank to which the order is addressed.
f. Reserved.
g. “Prove” with respect to a fact means to meet the burden of establishing the fact as defined in section 554.1201, subsection 2, paragraph “h”.
2. Other definitions applying to this Article and the sections in which they appear are:
a. “Acceptance” Section 554.12209
b. “Beneficiary” Section 554.12103
c. “Beneficiary’s bank” Section 554.12103
d. “Executed” Section 554.12301
e. “Execution date” Section 554.12301
f. “Funds transfer” Section 554.12104
g. “Funds-transfer system rule” Section 554.12501
h. “Governing law” Section 554.12507
i. “Intermediary bank” Section 554.12104
j. “Originator” Section 554.12104
k. “Originator’s bank” Section 554.12104
l. “Payment by beneficiary’s
bank to beneficiary” Section 554.12405
m. “Payment by originator
to beneficiary” Section 554.12406
n. “Payment by sender to
receiving bank” Section 554.12403
o. “Payment date” Section 554.12401
p. “Payment order” Section 554.12103
q. “Receiving bank” Section 554.12103
r. “Security procedure” Section 554.12201
s. “Sender” Section 554.12103
3. The following definitions in Article 4 apply to this Article:
a. “Clearing house” Section 554.4104
b. “Item” Section 554.4104
c. “Suspends payments” Section 554.4104
4. In addition, Article 1 contains general definitions and principles of construction and interpretation applicable throughout this Article.
92 Acts, ch 1146, §5; 2000 Acts, ch 1058, §49; 2007 Acts, ch 41, §31, 32; 2012 Acts, ch 1023, §157
2023 Iowa Code › Title XIII - COMMERCE › Chapter 554 - UNIFORM COMMERCIAL CODE › Section 554.12106 - Time payment order is received.

554.12106 Time payment order is received.
1. The time of receipt of a payment order or communication canceling or amending a payment order is determined by the rules applicable to receipt of a notice stated in section 554.1202. A receiving bank may establish a cut-off time or times on a funds-transfer business day for the receipt and processing of payment orders, and communications canceling or amending payment orders. Different cut-off times may apply to payment orders, cancellations, or amendments, or to different categories of payment orders, cancellations, or amendments. A cut-off time may apply to senders generally, or different cut-off times may apply to different senders or categories of payment orders. If a payment order or communication canceling or amending a payment order is received after the close of a funds-transfer business day or after the appropriate cut-off time on a funds-transfer business day, the receiving bank may treat the payment order or communication as received at the opening of the next funds-transfer business day.
2. Unless otherwise provided, if this Article refers to an execution date or payment date or states a day on which a receiving bank is required to take action, and the date or day does not fall on a funds-transfer business day, the next day that is a funds-transfer business day is treated as the date or day stated.
92 Acts, ch 1146, §6; 2007 Acts, ch 41, §33
2023 Iowa Code › Title XIII - COMMERCE › Chapter 554 - UNIFORM COMMERCIAL CODE › Section 554.12107 - Federal reserve regulations and operating circulars.

554.12107 Federal reserve regulations and operating circulars.
Regulations of the board of governors of the federal reserve system and operating circulars of the federal reserve banks as of July 1, 1991, supersede any inconsistent provision of this Article to the extent of the inconsistency.
92 Acts, ch 1146, §7; 2022 Acts, ch 1032, §96
Section amended
2023 Iowa Code › Title XIII - COMMERCE › Chapter 554 - UNIFORM COMMERCIAL CODE › Section 554.12108 - Relationship to Electronic Fund Transfer Act.

554.12108 Relationship to Electronic Fund Transfer Act.
1. Except as provided in subsection 2, this Article does not apply to a funds transfer any part of which is governed by the Electronic Fund Transfer Act of 1978, 15 U.S.C. §1693 et seq.
2. This Article applies to a funds transfer that is a remittance transfer as defined in the Electronic Fund Transfer Act, 15 U.S.C. §1693o-1, unless the remittance transfer is an electronic fund transfer as defined in the Electronic Fund Transfer Act, 15 U.S.C. §1693a.
3. In a funds transfer to which this Article applies, in the event of an inconsistency between an applicable provision of this Article and an applicable provision of the Electronic Fund Transfer Act, the provision of the Electronic Fund Transfer Act governs to the extent of the inconsistency.
92 Acts, ch 1146, §8; 2013 Acts, ch 73, §1, 2
Referred to in §554.12102
2023 Iowa Code › Title XIII - COMMERCE › Chapter 554 - UNIFORM COMMERCIAL CODE › Section 554.12201 - Security procedure.

554.12201 Security procedure.
“Security procedure” means a procedure established by agreement between a customer and a receiving bank for the purpose of verifying that a payment order or communication amending or canceling a payment order is that of the customer, or 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.
92 Acts, ch 1146, §9
Referred to in §554.12105
2023 Iowa Code › Title XIII - COMMERCE › Chapter 554 - UNIFORM COMMERCIAL CODE › Section 554.12202 - Authorized and verified payment orders.

554.12202 Authorized and verified payment orders.
1. A payment order received by the receiving bank is the authorized order of the person identified as sender if that person authorized the order or is otherwise bound by it under the law of agency.
2. 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 the security procedure is a commercially reasonable method of providing security against unauthorized payment orders, and 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.
3. 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 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 the customer expressly agreed in writing to be bound by any payment order, whether or not authorized, issued in the customer’s name and accepted by the bank in compliance with the security procedure chosen by the customer.
4. 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 1, or it is effective as the order of the customer under subsection 2.
5. This section applies to amendments and cancellations of payment orders in the same manner it applies to payment orders.
6. Except as provided in this section and section 554.12203, rights and obligations arising under this section or section 554.12203 may not be varied by agreement.
92 Acts, ch 1146, §10
Referred to in §554.12203, 554.12204
2023 Iowa Code › Title XIII - COMMERCE › Chapter 554 - UNIFORM COMMERCIAL CODE › Section 554.12203 - Unenforceability of certain verified payment orders.

554.12203 Unenforceability of certain verified payment orders.
If an accepted payment order is not an authorized order of a customer identified as sender pursuant to section 554.12202, subsection 1, but is effective as an order of the customer pursuant to section 554.12202, subsection 2, 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.
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 entrusted at any time with the authority to act for the customer with respect to payment orders or the security procedure, or 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 similar items.
3. This section applies to amendments of payment orders in the same manner it applies to payment orders.
92 Acts, ch 1146, §11
Referred to in §554.12202, 554.12204
2023 Iowa Code › Title XIII - COMMERCE › Chapter 554 - UNIFORM COMMERCIAL CODE › Section 554.12204 - Refund of payment and duty of customer to report with respect to unauthorized payment order.

554.12204 Refund of payment and duty of customer to report with respect to unauthorized payment order.
1. If a receiving bank accepts a payment order issued in the name of its customer as sender which is not authorized and not effective as the order of the customer under section 554.12202, or which is not enforceable, in whole or in part, against the customer under section 554.12203, the bank shall refund any payment related to 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 as a result of a failure by the customer to give notification as stated in this section.
2. Reasonable time under subsection 1 may be fixed by agreement as provided in section 554.1302, subsection 2, but the obligation of a receiving bank to refund payment as stated in subsection 1 may not otherwise be varied by agreement.
92 Acts, ch 1146, §12; 2007 Acts, ch 41, §34
Referred to in §554.12402
2023 Iowa Code › Title XIII - COMMERCE › Chapter 554 - UNIFORM COMMERCIAL CODE › Section 554.12205 - Erroneous payment orders.

554.12205 Erroneous payment orders.
1. If an accepted payment order was transmitted pursuant to a security procedure for the detection of error and the payment order (i) erroneously instructed payment to a beneficiary not intended by the sender, (ii) erroneously instructed payment in an amount greater than the amount intended by the sender, or (iii) was an erroneously transmitted duplicate of a payment order previously sent by the sender, the following rules apply:
a. If the sender proves that the sender or a person acting on behalf of the sender pursuant to section 554.12206 complied with the security procedure and that the error would have been detected if the receiving bank had also complied, the sender is not obligated to pay the order to the extent stated in subsections 2 and 3.
b. If the funds transfer is completed on the basis of an erroneous payment order described in (i) or (iii) of subsection 1, the sender is not obligated 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.
c. If the funds transfer is completed on the basis of a payment order described in (ii) of subsection 1, the sender is not obligated 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.
2. If the sender of an erroneous payment order described in subsection 1 is not obligated to pay all or part of the order, and 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 this duty, the sender is liable to the bank for the loss the bank proves it incurred as a result of the failure, not to exceed the amount of the sender’s order.
3. This section applies to amendments to payment orders in the same manner it applies to payment orders.
92 Acts, ch 1146, §13
Referred to in §554.12402
2023 Iowa Code › Title XIII - COMMERCE › Chapter 554 - UNIFORM COMMERCIAL CODE › Section 554.12206 - Transmission of payment order through funds-transfer or other communication system.

554.12206 Transmission of payment order through funds-transfer or other communication system.
1. If a payment order addressed to a receiving bank is transmitted to a funds-transfer system or other third-party communication system for transmittal to the bank, the system is deemed to be an agent of the sender for the purpose of transmitting the payment order to the bank. If there is a discrepancy between the terms of the payment order transmitted to the system by the sender and the terms of the payment order transmitted by the system to the bank, the terms of the payment order of the sender are deemed to be those transmitted by the system. This section does not apply to a funds-transfer system of the federal reserve banks.
2. This section applies to cancellations and amendments of payment orders in the same manner it applies to payment orders.
92 Acts, ch 1146, §14; 2020 Acts, ch 1062, §94
Referred to in §554.12205
2023 Iowa Code › Title XIII - COMMERCE › Chapter 554 - UNIFORM COMMERCIAL CODE › Section 554.12208 - Misdescription of intermediary bank or beneficiary’s bank.

554.12208 Misdescription of intermediary bank or beneficiary’s bank.
1. This subsection applies to a payment order identifying an intermediary bank or the beneficiary’s bank only by an identifying number.
a. 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 a bank.
b. The sender shall compensate the receiving bank for any loss and expenses incurred by the receiving bank as a result of the receiving bank’s reliance on the number in executing or attempting to execute the order.
2. This subsection applies to a payment order identifying an intermediary bank or the beneficiary’s bank both by name and an identifying number if the name and number identify different persons.
a. If the sender is a bank, the receiving bank may rely on the number as the proper identification of the intermediary or beneficiary’s bank if the receiving bank, when it executes the sender’s order, does not know that the name and number identify different persons. The receiving bank need not determine whether the name and number refer to the same person or whether the number refers to a bank. The sender shall compensate the receiving bank for any loss and expenses incurred by the receiving bank as a result of the receiving bank’s reliance on the number in executing or attempting to execute the order.
b. 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 paragraph “a”, 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.
c. Regardless of whether the sender is a bank, the receiving bank may rely on the name as the proper identification of the intermediary or beneficiary’s bank if the receiving bank, at the time the receiving bank executes the sender’s order, does not know that the name and number identify different persons. The receiving bank need not determine whether the name and number refer to the same person.
d. 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 section 554.12302, subsection 1, paragraph “a”.
92 Acts, ch 1146, §16
2023 Iowa Code › Title XIII - COMMERCE › Chapter 554 - UNIFORM COMMERCIAL CODE › Section 554.12209 - Acceptance of payment order.

554.12209 Acceptance of payment order.
1. Subject to subsection 4, a receiving bank other than the beneficiary’s bank accepts a payment order when it executes the order.
2. Subject to subsections 3 and 4, a beneficiary’s bank accepts a payment order at the earliest of the following times:
a. When the bank pays the beneficiary as stated in section 554.12405, subsection 1 or 2, or 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;
b. When the bank receives payment of the entire amount of the sender’s order pursuant to section 554.12403, subsection 1, paragraph “a” or “b”; or
c. 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 one hour after that time, or one hour after the opening of the next business day of the sender following the payment date if the 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 shall 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 the day that notice is received 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.
3. Acceptance of a payment order cannot occur before the order is received by the receiving bank. Acceptance does not occur under subsection 2, paragraph “b” or “c”, 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.
4. A payment order issued to the originator’s bank cannot be accepted until the payment date if the bank is the beneficiary’s bank, or 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 canceled pursuant to section 554.12211, subsection 2, the bank may recover from the beneficiary any payment received to the extent allowed by the law governing mistake and restitution.
92 Acts, ch 1146, §17
Referred to in §554.12105, 554.12212, 554.12302
2023 Iowa Code › Title XIII - COMMERCE › Chapter 554 - UNIFORM COMMERCIAL CODE › Section 554.12210 - Rejection of payment order.

554.12210 Rejection of payment order.
1. 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 the notice 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 under 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, any means complying with the agreement is reasonable and any means not complying is not reasonable unless no significant delay in receipt of the notice resulted from the use of the noncomplying means.
2. This subsection applies if a receiving bank other than the beneficiary’s bank fails to execute a payment order despite the 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 shall 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 section 554.12211, subsection 4, 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.
3. If a receiving bank suspends payments, all unaccepted payment orders issued to the receiving bank are deemed rejected at the time the bank suspends payments.
4. Acceptance of a payment order precludes a later rejection of the order. Rejection of a payment order precludes a later acceptance of the order.
92 Acts, ch 1146, §18
2023 Iowa Code › Title XIII - COMMERCE › Chapter 554 - UNIFORM COMMERCIAL CODE › Section 554.12212 - Liability and duty of receiving bank regarding unaccepted payment order.

554.12212 Liability and duty of receiving bank regarding unaccepted payment order.
If a receiving bank fails to accept a payment order that it is obligated 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 554.12209, 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.
92 Acts, ch 1146, §20
2023 Iowa Code › Title XIII - COMMERCE › Chapter 554 - UNIFORM COMMERCIAL CODE › Section 554.12301 - Execution and execution date.

554.12301 Execution and execution date.
1. A payment order is executed by the receiving bank when the receiving bank issues a payment order intended to carry out the payment order received by the bank. A payment order received by the beneficiary’s bank can be accepted but cannot be executed.
2. “Execution date” of a payment order means the day on which the receiving bank may properly issue a payment order in execution of the sender’s order. The execution date may be determined by instruction of the sender but cannot be earlier than the day the order is received and, unless otherwise determined, is the day the order is received. If the sender’s instruction states a payment date, the execution date is the payment date or an earlier date on which execution is reasonably necessary to allow payment to the beneficiary on the payment date.
92 Acts, ch 1146, §21
Referred to in §554.12105
2023 Iowa Code › Title XIII - COMMERCE › Chapter 554 - UNIFORM COMMERCIAL CODE › Section 554.12303 - Erroneous execution of payment order.

554.12303 Erroneous execution of payment order.
1. A receiving bank that 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 that 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 section 554.12402, subsection 3, if the provisions of that subsection are 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.
2. 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 section 554.12402, subsection 3, if the provisions of that subsection are otherwise satisfied and the bank corrects the error 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 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 the receiving bank’s charges for services and expenses pursuant to instruction of the sender.
3. If a receiving bank executes the payment order of the sender by issuing a payment order to a beneficiary different from the beneficiary of the sender’s order and the funds transfer is completed on the basis of that error, the sender of the payment order that was erroneously executed and all previous senders in the funds transfer are not obligated to pay the payment orders they issued. The issuer of the erroneous order is entitled to recover from the beneficiary of the payment order issued the payment received to the extent allowed by the law governing mistake and restitution.
92 Acts, ch 1146, §23
Referred to in §554.12304, 554.12402
2023 Iowa Code › Title XIII - COMMERCE › Chapter 554 - UNIFORM COMMERCIAL CODE › Section 554.12304 - Duty of sender to report erroneously executed payment order.

554.12304 Duty of sender to report erroneously executed payment order.
If the sender of a payment order that is erroneously executed as stated in section 554.12303 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 is received by the sender. If the sender fails to perform that duty, the bank is not obligated to pay interest on any amount refundable to the sender under section 554.12402, subsection 4, for the period before the bank learns of the execution error. The bank is not entitled to any recovery from the sender as a result of the failure by the sender to perform the duty stated in this section.
92 Acts, ch 1146, §24
Referred to in §554.12402
2023 Iowa Code › Title XIII - COMMERCE › Chapter 554 - UNIFORM COMMERCIAL CODE › Section 554.12305 - Liability for late or improper execution or failure to execute payment order.

554.12305 Liability for late or improper execution or failure to execute payment order.
1. If a funds transfer is completed, but execution of a payment order by the receiving bank in breach of section 554.12302 results in delay in payment to the beneficiary, the bank is obligated 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 3, additional damages are not recoverable.
2. If execution of a payment order by a receiving bank in breach of section 554.12302 results in noncompletion of the funds transfer, failure to use an intermediary bank designated by the originator, or 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 the originator’s expenses in the funds transfer and for incidental expenses and interest losses, to the extent not covered by subsection 1, resulting from the improper execution. Except as provided in subsection 3, additional damages are not recoverable.
3. In addition to the amounts payable under subsections 1 and 2, damages, including consequential damages, are recoverable to the extent provided in an express written agreement of the receiving bank.
4. If a receiving bank fails to execute a payment order that the receiving bank was obligated by express agreement to execute, the receiving bank is liable to the sender for the sender’s expenses in the transaction and for incidental expenses and interest losses resulting from the failure to execute. Additional damages, including consequential damages, are recoverable to the extent provided in an express written agreement of the receiving bank, but are not otherwise recoverable.
5. Reasonable attorney’s fees are recoverable if demand for compensation under subsection 1 or 2 is made and refused before an action is brought on the claim. If a claim is made for breach of an agreement under subsection 4 and the agreement does not provide for damages, reasonable attorney’s fees are recoverable if demand for compensation under subsection 4 is made and refused before an action is brought on the claim.
6. Except as stated in this section, the liability of a receiving bank under subsections 1 and 2 may not be varied by agreement.
92 Acts, ch 1146, §25
2023 Iowa Code › Title XIII - COMMERCE › Chapter 554 - UNIFORM COMMERCIAL CODE › Section 554.12401 - Payment date.

554.12401 Payment date.
“Payment date” of a payment order means the day on which the amount of the order is payable to the beneficiary by the beneficiary’s bank. The payment date may be determined by instruction of the sender but cannot be earlier than the day the order is received by the beneficiary’s bank and, unless otherwise determined, is the day the order is received by the beneficiary’s bank.
92 Acts, ch 1146, §26
Referred to in §554.12105
2023 Iowa Code › Title XIII - COMMERCE › Chapter 554 - UNIFORM COMMERCIAL CODE › Section 554.12402 - Obligation of sender to pay receiving bank.

554.12402 Obligation of sender to pay receiving bank.
1. This section is subject to sections 554.12205 and 554.12207.
2. With respect to a payment order issued to the beneficiary’s bank, acceptance of the order by the bank obligates the sender to pay the bank the amount of the order, but payment is not due until the payment date of the order.
3. This subsection is subject to subsection 5 and to section 554.12303. 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 obligates 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 the sender to pay the sender’s payment order is excused if the funds transfer is not completed by acceptance by the beneficiary’s bank of the payment order instructing payment to the beneficiary of the sender’s payment order.
4. If the sender of a payment order pays the order and was not obligated to pay all or part of the amount paid, the bank receiving payment shall refund payment to the extent the sender was not obligated to pay. Except as provided in sections 554.12204 and 554.12304, interest is payable on the refundable amount from the date of payment.
5. If a funds transfer is not completed as stated in subsection 3 and an intermediary bank is obligated to refund payment as stated in subsection 4 but is unable to do so because the intermediary bank is 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 section 554.12302, subsection 1, paragraph “a”, to route the funds transfer through the 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 4.
6. The right of the sender of a payment order to be excused from the obligation to pay the order as stated in subsection 3 or to receive refund under subsection 4 may not be varied by agreement.
92 Acts, ch 1146, §27
Referred to in §554.12303, 554.12304, 554.12403, 554.12405
2023 Iowa Code › Title XIII - COMMERCE › Chapter 554 - UNIFORM COMMERCIAL CODE › Section 554.12403 - Payment by sender to receiving bank.

554.12403 Payment by sender to receiving bank.
1. Payment of the sender’s obligation under section 554.12402 to pay the receiving bank occurs as follows:
a. 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.
b. If the sender is a bank and the sender credited an account of the receiving bank with the sender, or 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 knows of that fact.
c. If the receiving bank debits an account of the sender with the receiving bank, payment occurs when the debit is made to the extent the debit is covered by a withdrawable credit balance in the account.
2. a. If the sender and receiving bank are members of a funds-transfer system that nets obligations multilaterally among participants, the receiving bank receives final settlement when settlement is complete in accordance with the rules of the system.
b. The obligation of the sender to pay the amount of a payment order transmitted through the funds-transfer system may be satisfied, to the extent permitted by the rules of the system, by setting off and applying against the sender’s obligation the right of the sender to receive payment from the receiving bank of the amount of any other payment order transmitted to the sender by the receiving bank through the funds-transfer system.
c. The aggregate balance of obligations owed by each sender to each receiving bank in the funds-transfer system may be satisfied, to the extent permitted by the rules of the system, by setting off and applying against that balance the aggregate balance of obligations owed to the sender by other members of the system. The aggregate balance is determined after the right of setoff stated in paragraph “b” has been exercised.
3. 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 554.12402 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.
4. In a case not covered by subsection 1, the time when payment of the sender’s obligation occurs under section 554.12402, subsection 2 or 3, is governed by applicable principles of law that determine when an obligation is satisfied.
92 Acts, ch 1146, §28; 2010 Acts, ch 1061, §73
Referred to in §554.12105, 554.12209
2023 Iowa Code › Title XIII - COMMERCE › Chapter 554 - UNIFORM COMMERCIAL CODE › Section 554.12404 - Obligation of beneficiary’s bank to pay and give notice to beneficiary.

554.12404 Obligation of beneficiary’s bank to pay and give notice to beneficiary.
1. Subject to sections 554.12211, subsection 5, and 554.12405, subsections 4 and 5, if a beneficiary’s bank accepts a payment order, the beneficiary bank shall 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 beneficiary’s bank, payment is due on the next funds-transfer business day. If the beneficiary’s bank refuses to pay upon 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 beneficiary’s bank had notice of the damages, unless the beneficiary’s bank proves that it did not pay because of a reasonable doubt concerning the right of the beneficiary to payment.
2. If a payment order accepted by the beneficiary’s bank instructs payment to an account of the beneficiary, the bank shall notify the beneficiary of receipt of the order before midnight of the next funds-transfer business day following the payment date. If the payment order does not instruct payment to an account of the beneficiary, the beneficiary’s bank is required to notify the beneficiary only if notice is required by the order. Notice may be given by first class mail or any other means reasonable in the circumstances. If the beneficiary’s bank fails to give the required notice, the bank shall pay interest to the beneficiary on the amount of the payment order from the day notice should have been given until the day the beneficiary learned of receipt of the payment order by the beneficiary’s bank. No other damages are recoverable. Reasonable attorney’s fees are also recoverable if demand for interest is made and refused before an action is brought on the claim.
3. The right of a beneficiary to receive payment and damages as stated in subsection 1 may not be varied by agreement or a funds-transfer system rule. The right of a beneficiary to be notified as stated in subsection 2 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.
92 Acts, ch 1146, §29
Referred to in §554.12405, 554.12406, 554.12501
2023 Iowa Code › Title XIII - COMMERCE › Chapter 554 - UNIFORM COMMERCIAL CODE › Section 554.12406 - Payment by originator to beneficiary — discharge of underlying obligation.

554.12406 Payment by originator to beneficiary — discharge of underlying obligation.
1. Subject to section 554.12211, subsection 5, and section 554.12405, subsections 4 and 5, the originator of a funds transfer pays the beneficiary of the originator’s payment order at the time a payment order for the benefit of the beneficiary is accepted by the beneficiary’s bank in the funds transfer and 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.
2. If payment under subsection 1 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 the payment under subsection 1 was made by a means prohibited by the contract of the beneficiary with respect to the obligation, 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, funds with respect to the order were not withdrawn by the beneficiary or applied to a debt of the beneficiary, or 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 section 554.12404, subsection 1.
3. For the purpose of determining whether discharge of an obligation occurs under subsection 2, if the beneficiary’s bank accepts a payment order in an amount equal to the amount of the originator’s payment order less charges of one or more receiving banks in the funds transfer, payment to the beneficiary is deemed to be in the amount of the originator’s order unless upon demand by the beneficiary the originator does not pay the beneficiary the amount of the deducted charges.
4. Rights of the originator or of the beneficiary of a funds transfer under this section may be varied only by agreement of the originator and the beneficiary.
92 Acts, ch 1146, §31
Referred to in §554.4213, 554.12105, 554.12405
2023 Iowa Code › Title XIII - COMMERCE › Chapter 554 - UNIFORM COMMERCIAL CODE › Section 554.12501 - Variation by agreement and effect of funds-transfer system rule.

554.12501 Variation by agreement and effect of funds-transfer system rule.
1. Except as otherwise provided in this Article, the rights and obligations of a party to a funds transfer may be varied by agreement of the affected party.
2. “Funds-transfer system rule” means a rule of an association of banks 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 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 the rights and obligations of parties other than participating banks using the system to the extent stated in section 554.12404, subsection 3, section 554.12405, subsection 4, and section 554.12507, subsection 3.
92 Acts, ch 1146, §32
Referred to in §554.12105