Iowa § 554.12406 Payment by originator to beneficiary — discharge of underlying obligation

Iowa Statutes

§ 554.12406 — Payment by originator to beneficiary — discharge of underlying obligation

Iowa § 554.12406

Title XIIICOMMERCE

Ch. 554UNIFORM COMMERCIAL CODE

This text of Iowa § 554.12406 (Payment by originator to beneficiary — discharge of underlying obligation) is published on Counsel Stack Legal Research, covering Iowa primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook

Iowa Code § 554.12406 (2026).

Text

1.Subject to section 554.12211, subsection 5, and section 554.12405, subsections 4 and 5, the originator of a funds transfer pays the beneficiary of the originator’s payment order at the time a payment order for the benefit of the beneficiary is accepted by the beneficiary’s bank in the funds transfer and in an amount equal to the amount of the order accepted by the beneficiary’s bank, but not more than the amount of the originator’s order.

2.If payment under subsection 1 is made to satisfy an obligation, the obligation is discharged to the same extent discharge would result from payment to the beneficiary of the same amount in money, unless the payment under subsection 1 was made by a means prohibited by the contract of the beneficiary with respect to the obligation, the beneficiary, wi

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1. Subject to section 554.12211, subsection 5, and section 554.12405, subsections 4 and
5, the originator of a funds transfer pays the beneficiary of the originator’s payment order at
the time a payment order for the benefit of the beneficiary is accepted by the beneficiary’s
bank in the funds transfer and in an amount equal to the amount of the order accepted by the
beneficiary’s bank, but not more than the amount of the originator’s order.
2. If payment under subsection 1 is made to satisfy an obligation, the obligation is
discharged to the same extent discharge would result from payment to the beneficiary of
the same amount in money, unless the payment under subsection 1 was made by a means
prohibited by the contract of the beneficiary with respect to the obligation, the beneficiary,
within a reasonable time after receiving notice of receipt of the order by the beneficiary’s
bank, notified the originator of the beneficiary’s refusal of the payment, funds with respect to
the order were not withdrawn by the beneficiary or applied to a debt of the beneficiary, or the
beneficiary would suffer a loss that could reasonably have been avoided if payment had been
made by a means complying with the contract. If payment by the originator does not result
in discharge under this section, the originator is subrogated to the rights of the beneficiary
to receive payment from the beneficiary’s bank under section 554.12404, subsection 1.
3. For the purpose of determining whether discharge of an obligation occurs under
subsection 2, if the beneficiary’s bank accepts a payment order in an amount equal to the
amount of the originator’s payment order less charges of one or more receiving banks in the
funds transfer, payment to the beneficiary is deemed to be in the amount of the originator’s
order unless upon demand by the beneficiary the originator does not pay the beneficiary the
amount of the deducted charges.
4. Rights of the originator or of the beneficiary of a funds transfer under this section may
be varied only by agreement of the originator and the beneficiary.