UCC Article 4A - Funds Transfers

A payment order is not binding if the originator was not a bank and the beneficiary was not entitled to receive payment, unless the originator's bank proves the originator was aware that the beneficiary's bank might accept the order using an identifying number even if it does not match the named beneficiary's.

If an originator's bank mistakenly pays a beneficiary who isn't entitled to receive payment, the bank can recover the funds from the beneficiary under mistake and restitution laws.

When a payment order identifies an intermediary bank or beneficiary's bank by number only, the receiving bank can rely on that number for identification.

If a payment order identifies an intermediary or beneficiary bank by both name and number, and those differ indicating distinct entities, the sender of the order is obligated to cover any losses or expenses incurred by the receiving bank due to reliance on the number.

When a receiving bank fails to execute a payment order correctly, they are liable to the originator for expenses, incidental expenses, and interest losses. This applies to situations like noncompletion of the funds transfer, not using the designated intermediary bank, or issuing a payment order that doesn't follow the originator's instructions.

If a receiving bank fails to execute a payment order as outlined in an express agreement, the receiving bank is liable for expenses, incidental expenses, and interest losses.

Additional damages, including consequential damages, can be recovered from a receiving bank when there's a breach of an express written agreement.

Reasonable attorney's fees can be recovered if the receiving bank refuses to compensate for a breach after a demand has been made.

The liability of a receiving bank for incorrect execution can't be changed through agreements.

The day when the beneficiary's bank makes the funds payable to the beneficiary.

A payment order is considered "executed" when the receiving bank issues a new payment order to carry out the original order.

The "execution date" of a payment order is the day when the receiving bank can properly issue a new payment order to fulfill the original order.

The execution date can be determined by the sender's instructions, but it cannot be earlier than the day the order was received.

If the sender specifies a payment date, the execution date must be on or before that date. The bank needs time to process the payment before the actual payment date.

If the sender instructs the receiving bank to execute the order on a specific date, and it does not do so, the bank may be liable for breach of contract.

The receiving bank is responsible for correctly executing the sender's payment order, and for any errors or delays that occur during the process.

If the receiving bank fails to execute the sender's payment order, the bank is liable for breach of contract to the extent specified in the agreement.

The receiving bank is not the agent of the sender or beneficiary of the payment order. This means the bank doesn't owe them any duties beyond what's specified in the agreement.

If a payment satisfies an obligation, it discharges the obligation to the same extent as if the beneficiary received the same amount in money. This applies unless certain conditions are met.

The payment was made using a method specifically prohibited by the beneficiary's contract with respect to the obligation.

Beneficiary rejects the payment within a reasonable timeframe after receiving notice of the payment's arrival at their bank.

The beneficiary has not withdrawn the funds or used them to cover their debt.

The beneficiary would have avoided a loss if the payment had been made through a method allowed by the contract.

If the originator's payment doesn't fully discharge the obligation, they gain the rights to receive payment from the beneficiary's bank.

Payment considered equal to the originator's amount, minus bank charges, is considered to be the original amount for the purpose of discharge, unless the originator fails to pay the deducted fees.

Rights and obligations within a funds transfer can only be changed by agreement between the originator and the beneficiary.

A rule established by a bank association that governs how payment orders are transmitted through their funds-transfer system.

A payment order is accepted by a bank when it agrees to pay the order and undertakes to perform its obligations.

When a bank receives a payment order, the account balance of the sender is considered reduced by the payment amount, even if the bank hasn't yet received payment.

A beneficiary's bank can credit the beneficiary's account with the payment amount, even if the recipient owes money to the bank or has creditor process against them.

Creditor Process refers to legal actions initiated by a creditor to claim money from a debtor. Examples include levies, attachments, garnishments, and liens.

If creditor process is served on receiving bank before it accepts a payment order, the bank has to act before accepting the order.

A beneficiary's bank, while crediting the account, can use the payment to offset debts owed by the beneficiary or satisfy creditor process claims on the account.

The bank may credit the beneficiary's account, even if there's a debt or legal claim, but the bank must be able to act before accepting the payment order.

When two banks exchange multiple payment orders, the total amount owed by one bank to the other is calculated and the difference is considered settled. This means that each bank has effectively made payment to the other up to the amount of the setoff.

If two banks have a pre-arranged agreement to settle their payment orders at the end of a specific period, the total amount owed by one bank to the other is calculated at that time, and any difference is considered settled. This means that each bank has paid the other the net amount due.

The time when a sender's payment obligation is considered fulfilled depends on legal principles that define when a debt is considered discharged. This is usually determined based on the terms of the payment order and relevant payment practices.

A beneficiary bank is obliged to pay the beneficiary the amount of the payment order they accepted, subject to certain conditions. Payment is typically due on the payment date.

If a beneficiary bank accepts a payment order instructing payment to an account, they must notify the beneficiary of this receipt within a specified time frame.

If the beneficiary bank refuses to pay the beneficiary after a demand is made, and if the beneficiary can prove potential damages, the beneficiary may claim compensation from the bank for any losses incurred due to nonpayment.

The beneficiary bank is supposed to notify the beneficiary that they have received the order, unless the payment order specifically states otherwise.

The bank can use various methods for delivering the notification such as first class mail or other reasonable means depending on the circumstances.