§ 4-4.5-207 — Misdescription of beneficiary

Colorado § 4-4.5-207

• Jurisdiction: Colorado
• Title 04: Uniform
• Art.: Funds Transfers

Text

(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.

(b) If a payment order received by the beneficiary's bank identifies the
beneficiary both by name and by an identifying or bank account number and the
name and number identify different persons, the following rules apply:

(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.

(2) If the beneficiary's bank pays the person identified by name or knows that
the name and number identify different persons, no person has rights as beneficiary
except the person paid by the beneficiary's bank if that person was entitled to
receive payment from the originator of the funds transfer. If no person has rights as
beneficiary, acceptance of the order cannot occur.

(c) If (i) a payment order described in subsection (b) of this section is
accepted, (ii) the originator's payment order described the beneficiary
inconsistently by name and number, and (iii) the beneficiary's bank pays the person
identified by number as permitted by subsection (b)(1) of this section, the following
rules apply:

(1) If the originator is a bank, the originator is obliged to pay its order.

(2) If the originator is not a bank and proves that the person identified by
number was not entitled to receive payment from the originator, the originator is
not obliged to pay its order unless the originator's bank proves that the originator,
before acceptance of the originator's order, had notice that payment of a payment
order issued by the originator might be made by the beneficiary's bank on the basis
of an identifying or bank account number even if it identifies a person different
from the named beneficiary. Proof of notice may be made by any admissible
evidence. The originator's bank satisfies the burden of proof if it proves that the
originator, before the payment order was accepted, signed a record stating the
information to which the notice relates.

(d) In a case governed by subsection (b)(1) 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.

(2) If the originator is not a bank and is not obliged to pay its payment order,
the originator's bank has the right to recover.

Legislative History

Source: L. 90: Entire article added, p. 348, � 1, effective January 1, 1991. L. 2023: (c)(2) amended, (SB 23-090), ch. 136, p. 533, � 28, effective August 7.