§ 10:4A-202 — Authorized and verified payment orders

Louisiana § 10:4A-202

• Jurisdiction: Louisiana
• Title 10: Commercial Laws

Text

§4A-202. Authorized and verified payment orders
(a) A payment order received by the receiving bank is the authorized order of the
person identified as sender if that person authorized the order or is otherwise bound by it
under the law of agency.
(b) If a bank and its customer have agreed that the authenticity of payment orders
issued to the bank in the name of the customer as sender will be verified pursuant to a
security procedure, a payment order received by the receiving bank is effective as the order
of the customer, whether or not authorized, if (i) the security procedure is a commercially
reasonable method of providing security against unauthorized payment orders, and (ii) the
bank proves that it accepted the payment order in good faith and in compliance with the
bank's obligations under the security procedure and any agreement or instruction of the
customer, evidenced by a record, restricting acceptance of payment orders issued in the name
of the customer. The bank is not required to follow an instruction that violates an agreement
with the customer, evidenced by a record, or notice of which is not received at a time and in
a manner affording the bank a reasonable opportunity to act on it before the payment order
is accepted.
(c) Commercial reasonableness of a security procedure is a question of law to be
determined by considering the wishes of the customer expressed to the bank, the
circumstances of the customer known to the bank, including the size, type, and frequency of
payment orders normally issued by the customer to the bank, alternative security procedures
offered to the customer, and security procedures in general use by customers and receiving
banks similarly situated. A security procedure is deemed to be commercially reasonable if
(i) the security procedure was chosen by the customer after the bank offered, and the
customer refused, a security procedure that was commercially reasonable for that customer,
and (ii) the customer expressly agreed in a record to be bound by any payment order, whether
or not authorized, issued in its name and accepted by the bank in compliance with the bank's
obligations under the security procedure chosen by the customer.
(d) The term "sender" in this Chapter includes the customer in whose name a
payment order is issued if the order is the authorized order of the customer under Subsection
(a), or it is effective as the order of the customer under Subsection (b).
(e) This Section applies to amendments and cancellations of payment orders to the
same extent it applies to payment orders.
(f) Except as provided in this Section and in R.S. 10:4A-203(a)(1), rights and
obligations arising under this Section or R.S. 10:4A-203 may not be varied by agreement.

Legislative History

Added by Acts 1990, No. 1079, §4, eff. Sept. 1, 1990; Acts 2024, No. 773, §1.