§ 26-1-4.1-403 — Payment by sender to receiving bank

Indiana § 26-1-4.1-403

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

Text

(a) Payment of the sender's obligation
under IC 26-1-4.1-402 to pay the receiving bank occurs as follows:
(1) If the sender is a bank, payment occurs when the receiving
bank receives final settlement of the obligation through a Federal
Reserve Bank or through a funds-transfer system.
(2) If the sender is a bank and the sender:
(i) credited an account of the receiving bank with the sender; or
(ii) caused an account of the receiving bank in another bank to
be credited;
payment occurs when the credit is withdrawn or, if not
withdrawn, at midnight of the day on which the credit is
withdrawable and the receiving bank learns of that fact.
(3) If the receiving bank debits an account of the sender with the
receiving bank, payment occurs when the debit is made to the
extent the debit is covered by a withdrawable credit balance in the
account.
(b) If the sender and receiving bank are members of a funds-transfer
system that nets obligations multilaterally among participants, the
receiving bank receives final settlement when settlement is complete
in accordance with the rules of the system. The obligation of the sender
to pay the amount of a payment order transmitted through the
funds-transfer system may be satisfied, to the extent permitted by the
rules of the system, by setting off and applying against the sender's
obligation the right of the sender to receive payment from the receiving
bank of the amount of any other payment order transmitted to the
sender by the receiving bank through the funds-transfer system. The
aggregate balance of obligations owed by each sender to each receiving
bank in the funds-transfer system may be satisfied, to the extent
permitted by the rules of the system, by setting off and applying against
that balance the aggregate balance of obligations owed to the sender by
other members of the system. The aggregate balance is determined
after the right of setoff stated in the second sentence of this subsection
has been exercised.
(c) If two banks transmit payment orders to each other under an
agreement that settlement of the obligations of each bank to the other
under IC 26-1-4.1-402 will be made at the end of the day or other
period, the total amount owed with respect to all orders transmitted by
one bank shall be set off against the total amount owed with respect to
all orders transmitted by the other bank. To the extent of the setoff,
each bank has made payment to the other.
(d) In a case not covered by subsection (a), the time when payment
of the sender's obligation under IC 26-1-4.1-402(b) or IC 26-1-4.1-402(c) occurs is governed by applicable principles of law that
determine when an obligation is satisfied.

Legislative History

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