§ 554.12302 — Obligations of receiving bank in execution of payment order

Iowa § 554.12302

• Jurisdiction: Iowa
• Title XIII: COMMERCE
• Ch. 554: UNIFORM COMMERCIAL CODE

Text

1. Except as provided in subsections 2 through 4, if the receiving bank accepts a payment
order pursuant to section 554.12209, subsection 1, the bank has the following obligations in
executing the order:
a. The receiving bank is obligated to issue, on the execution date, a payment order
complying with the sender’s order and to follow the sender’s instructions concerning any
intermediary bank or funds-transfer system to be used in carrying out the funds transfer,
or 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
shall 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 obligated 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 shall
transmit the receiving bank’s 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 use
any funds-transfer system if use of that system is reasonable under the circumstances,
and 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 subsection 1, paragraph “b”, applies or the receiving bank is otherwise
instructed, the receiving bank may execute a payment order by transmitting the receiving
bank’spaymentorderbyfirstclassmailorbyanymeansreasonableunderthecircumstances.
If the receiving bank is instructed to execute the sender’s order by transmitting the receiving
bank’s payment order by a particular means, the receiving bank may issue the payment
order by the means stated or by any means as expeditious as the means stated.
4. Unless instructed by the sender, 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 may not instruct a subsequent receiving bank to obtain payment
of its charges in the same manner.