Indiana § 26-1-4.1-205 Erroneous payment orders

Indiana Statutes

§ 26-1-4.1-205 — Erroneous payment orders

Indiana § 26-1-4.1-205

Title 26COMMERCIAL LAW

Art. 1UNIFORM COMMERCIAL CODE

Ch. 4.1Fund Transfers

This text of Indiana § 26-1-4.1-205 (Erroneous payment orders) is published on Counsel Stack Legal Research, covering Indiana primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook

Ind. Code § 26-1-4.1-205 (2026).

Text

(a)If an accepted payment order was transmitted pursuant to a security procedure for the detection of error and the payment order (i) erroneously instructed payment to a beneficiary not intended by the sender, (ii) erroneously instructed payment in an amount greater than the amount intended by the sender, or (iii) was an erroneously transmitted duplicate of a payment order previously sent by the sender, the following rules apply:

(1)If the sender proves that the sender or a person acting on behalf of the sender pursuant to IC 26-1-4.1-206 complied with the security procedure and that the error would have been detected if the receiving bank had also complied, the sender is not obligated to pay the order to the extent stated in subdivisions (2) and (3).

(2)If the funds transfer is complet

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(a) If an accepted payment order was
transmitted pursuant to a security procedure for the detection of error
and the payment order (i) erroneously instructed payment to a
beneficiary not intended by the sender, (ii) erroneously instructed
payment in an amount greater than the amount intended by the sender,
or (iii) was an erroneously transmitted duplicate of a payment order
previously sent by the sender, the following rules apply:
(1) If the sender proves that the sender or a person acting on
behalf of the sender pursuant to IC 26-1-4.1-206 complied with
the security procedure and that the error would have been
detected if the receiving bank had also complied, the sender is not
obligated to pay the order to the extent stated in subdivisions (2)
and (3).
(2) If the funds transfer is completed on the basis of an erroneous
payment order described in clause (i) or (iii) of subsection (a), the
sender is not obliged to pay the order and the receiving bank is
entitled to recover from the beneficiary any amount paid to the
beneficiary to the extent allowed by the law governing mistake
and restitution.
(3) If the funds transfer is completed on the basis of a payment
order described in clause (ii) of subsection (a), the sender is not
obligated to pay the order to the extent the amount received by the
beneficiary is greater than the amount intended by the sender. In
that case, the receiving bank is entitled to recover from the
beneficiary the excess amount received to the extent allowed by
the law governing mistake and restitution.
(b) If (i) the sender of an erroneous payment order described in
subsection (a) is not obligated to pay all or part of the order, and (ii) the
sender receives notification from the receiving bank that the order was
accepted by the bank or that the sender's account was debited with
respect to the order, the sender has a duty to exercise ordinary care, on
the basis of information available to the sender, to discover the error
with respect to the order and to advise the bank of the relevant facts
within a reasonable time, not exceeding ninety (90) days, after the
bank's notification was received by the sender. If the bank proves that
the sender failed to perform that duty, the sender is liable to the bank
for the loss the bank proves it incurred as a result of the failure, but the
liability of the sender may not exceed the amount of the sender's order.
(c) This section applies to amendments to payment orders to the
same extent it applies to payment orders.