§ 4-A-405 — Payment by Beneficiary's Bank to Beneficiary

Section 4-A-405. Payment by Beneficiary's Bank to Beneficiary.\n (1) If the beneficiary's bank credits an account of the beneficiary of\na payment order, payment of the bank's obligation under subsection (1)\nof Section 4-A-404 occurs when and to the extent (i) the beneficiary is\nnotified of the right to withdraw the credit, (ii) the bank lawfully\napplies the credit to a debt of the beneficiary, or (iii) funds with\nrespect to the order are otherwise made available to the beneficiary by\nthe bank.\n (2) If the beneficiary's bank does not credit an account of the\nbeneficiary of a payment order, the time when payment of the bank's\nobligation under subsection (1) of Section 4-A-404 occurs is governed by\nprinciples of law that determine when an obligation is satisfied.\n (3) Except as stated in subsections (4) and (5), if the beneficiary's\nbank pays the beneficiary of a payment order under a condition to\npayment or agreement of the beneficiary giving the bank the right to\nrecover payment from the beneficiary if the bank does not receive\npayment of the order, the condition to payment or agreement is not\nenforceable.\n (4) A funds-transfer system rule may provide that payments made to\nbeneficiaries of funds transfers made through the system are provisional\nuntil receipt of payment by the beneficiary's bank of the payment order\nit accepted. A beneficiary's bank that makes a payment that is\nprovisional under the rule is entitled to refund from the beneficiary if\n(i) the rule requires that both the beneficiary and the originator be\ngiven notice of the provisional nature of the payment before the funds\ntransfer is initiated, (ii) the beneficiary, the beneficiary's bank and\nthe originator's bank agreed to be bound by the rule, and (iii) the\nbeneficiary's bank did not receive payment of the payment order that it\naccepted. If the beneficiary is obliged to refund payment to the\nbeneficiary's bank, acceptance of the payment order by the beneficiary's\nbank is nullified and no payment by the originator of the funds transfer\nto the beneficiary occurs under Section 4-A-406.\n (5) This subsection applies to a funds transfer that includes a\npayment order transmitted over a funds-transfer system that (i) nets\nobligations multilaterally among participants, and (ii) has in effect a\nloss-sharing agreement among participants for the purpose of providing\nfunds necessary to complete settlement of the obligations of one or more\nparticipants that do not meet their settlement obligations. If the\nbeneficiary's bank in the funds transfer accepts a payment order and the\nsystem fails to complete settlement pursuant to its rules with respect\nto any payment order in the funds transfer, (i) the acceptance by the\nbeneficiary's bank is nullified and no person has any right or\nobligation based on the acceptance, (ii) the beneficiary's bank is\nentitled to recover payment from the beneficiary, (iii) no payment by\nthe originator to the beneficiary occurs under Section 4-A-406, and (iv)\nsubject to subsection (5) of Section 4-A-402, each sender in the funds\ntransfer is excused from its obligation to pay its payment order under\nsubsection (3) of Section 4-A-402 because the funds transfer has not\nbeen completed.\n