§ 4-A-302 — Obligations of Receiving Bank in Execution of Payment Order

New York § 4-A-302

• Jurisdiction: New York
• Law UCC: Uniform Commercial Code
• Part 3: Execution of Sender's Payment Order By Receiving Bank
• Art. 4-A: Funds Transfers

Text

Section 4-A-302. Obligations of Receiving Bank in Execution of Payment\n Order.\n (1) Except as provided in subsections (2) through (4); if the\nreceiving bank accepts a payment order pursuant to subsection (1) of\nSection 4-A-209, the bank has the following obligations in executing the\norder:\n (a) The receiving bank is obliged to issue, on the execution\n date, a payment order complying with the sender's order and\n to follow the sender's instructions concerning (i) any\n intermediary bank or funds-transfer system to be used in\n carrying out the funds transfer, or (ii) the means by which\n payment orders are to be transmitted in the funds transfer.\n If the originator's bank issues a payment order to an\n intermediary bank, the originator's bank is obliged to\n instruct the intermediary bank according to the instruction\n of the originator. An intermediary bank in the funds transfer\n is similarly bound by an instruction given to it by the\n sender of the payment order it accepts.\n (b) If the sender's instruction states that the funds transfer is\n to be carried out telephonically or by wire transfer or\n otherwise indicates that the funds transfer is to be carried\n out by the most expeditious means, the receiving bank is\n obliged to transmit its payment order by the most expeditious\n available means, and to instruct any intermediary bank\n accordingly. If a sender's instruction states a payment date,\n the receiving bank is obliged to transmit its payment order\n at a time and by means reasonably necessary to allow payment\n to the beneficiary on the payment date or as soon thereafter\n as is feasible.\n (2) Unless otherwise instructed, a receiving bank executing a payment\norder may (i) use any funds-transfer system if use of that system is\nreasonable in the circumstances, and (ii) issue a payment order to the\nbeneficiary's bank or to an intermediary bank through which a payment\norder conforming to the sender's order can expeditiously be issued to\nthe beneficiary's bank if the receiving bank exercises ordinary care in\nthe selection of the intermediary bank. A receiving bank is not required\nto follow an instruction of the sender designating a funds-transfer\nsystem to be used in carrying out the funds transfer if the receiving\nbank, in good faith, determines that it is not feasible to follow the\ninstruction or that following the instruction would unduly delay\ncompletion of the funds transfer.\n (3) Unless paragraph (b) of subsection (1) applies or the receiving\nbank is otherwise instructed, the bank may execute a payment order by\ntransmitting its payment order by first class mail or by any means\nreasonable in the circumstances. If the receiving bank is instructed to\nexecute the sender's order by transmitting its payment order by a\nparticular means, the receiving bank may issue its payment order by the\nmeans stated or by any means as expeditious as the means stated.\n (4) Unless instructed by the sender (i) the receiving bank may not\nobtain payment of its charges for services and expenses in connection\nwith the execution of the sender's order by issuing a payment order in\nan amount equal to the amount of the sender's order less the amount of\nthe charges, and (ii) may not instruct a subsequent receiving bank to\nobtain payment of its charges in the same manner.\n