§ 554.12402 — Obligation of sender to pay receiving bank

Iowa § 554.12402

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

Text

1. This section is subject to sections 554.12205 and 554.12207.
2. With respect to a payment order issued to the beneficiary’s bank, acceptance of the
order by the bank obligates the sender to pay the bank the amount of the order, but payment
is not due until the payment date of the order.
3. This subsection is subject to subsection 5 and to section 554.12303. With respect to a
paymentorderissuedtoareceivingbankotherthanthebeneficiary’sbank, acceptanceofthe

order by the receiving bank obligates the sender to pay the bank the amount of the sender’s
order. Payment by the sender is not due until the execution date of the sender’s order. The
obligation of the sender to pay the sender’s payment order is excused if the funds transfer
is not completed by acceptance by the beneficiary’s bank of the payment order instructing
payment to the beneficiary of the sender’s payment order.
4. If the sender of a payment order pays the order and was not obligated to pay all or part
oftheamountpaid, thebankreceivingpaymentshallrefundpaymenttotheextentthesender
was not obligated to pay. Except as provided in sections 554.12204 and 554.12304, interest is
payable on the refundable amount from the date of payment.
5. If a funds transfer is not completed as stated in subsection 3 and an intermediary
bank is obligated to refund payment as stated in subsection 4 but is unable to do so because
the intermediary bank is not permitted by applicable law or because the bank suspends
payments, a sender in the funds transfer that executed a payment order in compliance with
an instruction, as stated in section 554.12302, subsection 1, paragraph “a”, to route the
funds transfer through the intermediary bank is entitled to receive or retain payment from
the sender of the payment order that it accepted. The first sender in the funds transfer that
issued an instruction requiring routing through that intermediary bank is subrogated to the
right of the bank that paid the intermediary bank to refund as stated in subsection 4.
6. The right of the sender of a payment order to be excused from the obligation to pay the
order as stated in subsection 3 or to receive refund under subsection 4 may not be varied by
agreement.