§ 26-1-4.1-207 — Misdescription of beneficiary

Indiana § 26-1-4.1-207

• Jurisdiction: Indiana
• Title 26: COMMERCIAL LAW
• Art. 1: UNIFORM COMMERCIAL CODE
• Ch. 4.1: Fund Transfers

Text

(a) Subject to subsection (b), 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), 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) 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), 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), 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), 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

As added by P.L.189-1991, SEC.4. Amended by P.L.199-2023, SEC.26.