This text of Indiana § 26-1-4.1-405 (Payment by beneficiary's bank to beneficiary) 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.
(a)If the beneficiary's bank credits an
account of the beneficiary of a payment order, payment of the bank's
obligation under IC 26-1-4.1-404(a) occurs when and to the extent (i)
the beneficiary is notified of the right to withdraw the credit, (ii) the
bank lawfully applies the credit to a debt of the beneficiary, or (iii)
funds with respect to the order are otherwise made available to the
beneficiary by the bank.
(b)If the beneficiary's bank does not credit an account of the
beneficiary of a payment order, the time when payment of the bank's
obligation under IC 26-1-4.1-404(a) occurs is governed by principles
of law that determine when an obligation is satisfied.
(c)Except as stated in subsections (d) and (e), if the beneficiary's
bank pays the beneficiary of a payment order under a co
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(a) If the beneficiary's bank credits an
account of the beneficiary of a payment order, payment of the bank's
obligation under IC 26-1-4.1-404(a) occurs when and to the extent (i)
the beneficiary is notified of the right to withdraw the credit, (ii) the
bank lawfully applies the credit to a debt of the beneficiary, or (iii)
funds with respect to the order are otherwise made available to the
beneficiary by the bank.
(b) If the beneficiary's bank does not credit an account of the
beneficiary of a payment order, the time when payment of the bank's
obligation under IC 26-1-4.1-404(a) occurs is governed by principles
of law that determine when an obligation is satisfied.
(c) Except as stated in subsections (d) and (e), if the beneficiary's
bank pays the beneficiary of a payment order under a condition to
payment or agreement of the beneficiary giving the bank the right to
recover payment from the beneficiary if the bank does not receive
payment of the order, the condition to payment or agreement is not
enforceable.
(d) A funds-transfer system rule may provide that payments made
to beneficiaries of funds transfers made through the system are
provisional until receipt of payment by the beneficiary's bank of the
payment order it accepted. A beneficiary's bank that makes a payment
that is provisional under the rule is entitled to refund from the
beneficiary if (i) the rule requires that both the beneficiary and the
originator be given notice of the provisional nature of the payment
before the funds transfer is initiated, (ii) the beneficiary, the
beneficiary's bank and the originator's bank agreed to be bound by the
rule, and (iii) the beneficiary's bank did not receive payment of the
payment order that it accepted. If the beneficiary is obliged to refund
payment to the beneficiary's bank, acceptance of the payment order by
the beneficiary's bank is nullified and no payment by the originator of
the funds transfer to the beneficiary occurs under IC 26-1-4.1-406.
(e) This subsection applies to a funds transfer that includes a
payment order transmitted over a funds-transfer system that (i) nets
obligations multilaterally among participants, and (ii) has in effect a
loss-sharing agreement among participants for the purpose of providing
funds necessary to complete settlement of the obligations of one or
more participants that do not meet their settlement obligations. If the
beneficiary's bank in the funds transfer accepts a payment order and the
system fails to complete settlement pursuant to its rules with respect to
any payment order in the funds transfer, (i) the acceptance by the
beneficiary's bank is nullified and no person has any right or obligation
based on the acceptance, (ii) the beneficiary's bank is entitled to
recover payment from the beneficiary, (iii) no payment by the
originator to the beneficiary occurs under IC 26-1-4.1-406, and (iv)
subject to IC 26-1-4.1-402(e), each sender in the funds transfer is
excused from its obligation to pay its payment order under IC 26-1-4.1-402(c) because the funds transfer has not been completed.