- Consolidated Laws - Uniform Commercial Code
PART 3
EXECUTION OF SENDER`S PAYMENT ORDER BY RECEIVING BANK
Section 4-A-301. Execution and Execution Date
Section 4-A-302. Obligation of Receiving Bank in Execution of Payment
Order
Section 4-A-303. Erroneous Execution of Payment Order
Section 4-A-304. Duty of Sender to Report Erroneously Executed Payment
Order
Section 4-A-305. Liability for Late or Improper Execution or Failure to
Execute Payment Order
Section 4-A-301. Execution and Execution Date.
(1) A payment order is "executed" by the receiving bank when it 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.
Section 4-A-302. Obligations of Receiving Bank in Execution of Payment
Order.
(1) Except as provided in subsections (2) through (4); if the
receiving bank accepts a payment order pursuant to subsection (1) of
Section 4-A-209, the bank has the following obligations in executing the
order:
(a) 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 (i) any
intermediary bank or funds-transfer system to be used in
carrying out the funds transfer, or (ii) 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.
(b) If the sender`s instruction states that the funds transfer is
to be carried out telephonically or by wire transfer or
otherwise indicates that the funds transfer is to be carried
out by the most expeditious means, the receiving bank is
obliged to transmit its payment order by the most expeditious
available means, and to instruct any intermediary bank
accordingly. If a sender`s instruction states a payment date,
the receiving bank is obliged to transmit its payment order
at a time and by means reasonably necessary to allow payment
to the beneficiary on the payment date or as soon thereafter
as is feasible.
(2) Unless otherwise instructed, a receiving bank executing a payment
order may (i) use any funds-transfer system if use of that system is
reasonable in the circumstances, and (ii) 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.
(3) Unless paragraph (b) of subsection (1) 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.
(4) Unless instructed by the sender (i) 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 (ii) may not instruct a subsequent receiving bank to
obtain payment of its charges in the same manner.
Section 4-A-303. Erroneous Execution of Payment Order.
(1) A receiving bank that (i) 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 (ii) 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 (3) of Section
4-A-402 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.
(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 subsection (3) of Section 4-A-402 if (i) that subsection is
otherwise satisfied and (ii) 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.
(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 obliged
to pay the payment orders they issued. The issuer of the erroneous order
is entitled to recover from the beneficiary of the order the payment
received to the extent allowed by the law governing mistake and
restitution.
Section 4-A-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 4-A-303 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 (4) of Section
4-A-402 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.
Section 4-A-305. 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 4-A-302 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 (3), additional damages are not recoverable.
(2) If execution of a payment order by a receiving bank in breach of
Section 4-A-302 results in (i) noncompletion of the funds transfer, (ii)
failure to use an intermediary bank designated by the originator, or
(iii) 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
(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 it was
obliged by express agreement to execute, the receiving bank is liable to
the sender for its 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.
