§ 4-3-418 — Payment or acceptance by mistake

(a) Except as provided in
subsection (c) of this section, if the drawee of a draft pays or accepts the draft and
the drawee acted on the mistaken belief that (i) payment of the draft had not been
stopped pursuant to section 4-4-403 or (ii) the signature of the drawer of the draft
was authorized, the drawee may recover the amount of the draft from the person to
whom or for whose benefit payment was made or, in the case of acceptance, may
revoke the acceptance. Rights of the drawee under this subsection are not affected
by failure of the drawee to exercise ordinary care in paying or accepting the draft.

(b) Except as provided in subsection (c) of this section, if an instrument has
been paid or accepted by mistake and the case is not covered by subsection (a) of
this section, the person paying or accepting may, to the extent permitted by the law
governing mistake and restitution, (i) recover the payment from the person to whom
or for whose benefit payment was made or (ii) in the case of acceptance, may
revoke the acceptance.

(c) The remedies provided by subsection (a) or (b) of this section may not be
asserted against a person who took the instrument in good faith and for value or
who in good faith changed position in reliance on the payment or acceptance. This
subsection does not limit remedies provided by section 4-3-417 or 4-4-407.

(d) Notwithstanding section 4-4-215, if an instrument is paid or accepted by
mistake and the payor or acceptor recovers payment or revokes acceptance under
subsection (a) or (b) of this section, the instrument is deemed not to have been paid
or accepted and is treated as dishonored, and the person from whom payment is
recovered has rights as a person entitled to enforce the dishonored instrument.

Legislative History

Source: L. 94: Entire article R&RE, p. 871, � 1, effective January 1, 1995.