§ 26-1-4.1-302 — Obligations of receiving bank in execution of payment order

Indiana § 26-1-4.1-302

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

Text

(a) Except as provided in subsections (b)
through (d), if the receiving bank accepts a payment order pursuant to
IC 26-1-4.1-209(a), the bank has the following obligations in executing
the order:
(1) The receiving bank is obliged to issue, on the execution date,
a payment order complying with the sender's order and to follow
the sender's instructions concerning:
(i) any intermediary bank or funds-transfer system to be used in
carrying out the funds transfer; or
(ii) 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 is obliged to 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.
(2) 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 obliged 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 is obliged to
transmit its 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.
(b) Unless otherwise instructed, a receiving bank executing a
payment order may (i) use any funds-transfer system if use of that
system is reasonable in the circumstances, and (ii) 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.
(c) Unless subsection (a)(2) applies or the receiving bank is
otherwise instructed, the bank may execute a payment order by
transmitting its payment order by first class mail or by any means
reasonable in the circumstances. If the receiving bank is instructed to
execute the sender's order by transmitting its payment order by a
particular means, the receiving bank may issue its payment order by the
means stated or by any means as expeditious as the means stated.
(d) Unless instructed by the sender, (i) 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 (ii) may not instruct a subsequent receiving bank to
obtain payment of its charges in the same manner.

Legislative History

As added by P.L.189-1991, SEC.4.