11401-11406

COMMERCIAL CODE
SECTION 11401-11406




11401.  "Payment date" of a payment order means the day on which the
amount of the order is payable to the beneficiary by the beneficiary'
s bank. The payment date may be determined by instruction of the
sender but cannot be earlier than the day the order is received by
the beneficiary's bank and, unless otherwise determined, is the day
the order is received by the beneficiary's bank.



11402.  (a) This section is subject to Sections 11205 and 11207.
   (b) With respect to a payment order issued to the beneficiary's
bank, acceptance of the order by the bank obliges the sender to pay
the bank the amount of the order, but payment is not due until the
payment date of the order.
   (c) This subdivision is subject to subdivision (e) and to Section
11303. With respect to a payment order issued to a receiving bank
other than the beneficiary's bank, acceptance of the order by the
receiving bank obliges the sender to pay the bank the amount of the
sender's order. Payment by the sender is not due until the execution
date of the sender's order. The obligation of that sender to pay its
payment order is excused if the funds transfer is not completed by
acceptance by the beneficiary's bank of a payment order instructing
payment to the beneficiary of that sender's payment order.
   (d) If the sender of a payment order pays the order and was not
obliged to pay all or part of the amount paid, the bank receiving
payment is obliged to refund payment to the extent the sender was not
obliged to pay. Except as provided in Sections 11204 and 11304,
interest is payable on the refundable amount from the date of
payment.
   (e) If a funds transfer is not completed as stated in subdivision
(c) and an intermediary bank is obliged to refund payment as stated
in subdivision (d) but is unable to do so because it is not permitted
by applicable law or because the bank suspends payments, a sender in
the funds transfer that executed a payment order in compliance with
an instruction, as stated in paragraph (1) of subdivision (a) of
Section 11302, to route the funds transfer through that intermediary
bank is entitled to receive or retain payment from the sender of the
payment order that it accepted. The first sender in the funds
transfer that issued an instruction requiring routing through that
intermediary bank is subrogated to the right of the bank that paid
the intermediary bank to refund as stated in subdivision (d).
   (f) The right of the sender of a payment order to be excused from
the obligation to pay the order as stated in subdivision (c) or to
receive refund under subdivision (d) may not be varied by agreement.




11403.  (a) Payment of the sender's obligation under Section 11402
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 subdivision 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 Section 11402 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 subdivision (a), the time when
payment of the sender's obligation under subdivision (b) or (c) of
Section 11402 occurs is governed by applicable principles of law that
determine when an obligation is satisfied.



11404.  (a) Subject to subdivision (e) of Section 11211, and
subdivisions (d) and (e) of Section 11405, if a beneficiary's bank
accepts a payment order, the bank is obliged to pay the amount of the
order to the beneficiary of the order. Payment is due on the payment
date of the order, but if acceptance occurs on the payment date
after the close of the funds-transfer business day of the bank,
payment is due on the next funds-transfer business day. If the bank
refuses to pay after demand by the beneficiary and receipt of notice
of particular circumstances that will give rise to consequential
damages as a result of nonpayment, the beneficiary may recover
damages resulting from the refusal to pay to the extent the bank had
notice of the damages, unless the bank proves that it did not pay
because of a reasonable doubt concerning the right of the beneficiary
to payment.
   (b) If a payment order accepted by the beneficiary's bank
instructs payment to an account of the beneficiary, the bank is
obliged to notify the beneficiary of receipt of the order before
midnight of the next funds-transfer business day following the
payment date. If the payment order does not instruct payment to an
account of the beneficiary, the bank is required to notify the
beneficiary only if notice is required by the order. Notice may be
given by first-class mail or any other means reasonable in the
circumstances. If the bank fails to give the required notice, the
bank is obliged to pay interest to the beneficiary on the amount of
the payment order from the day notice should have been given until
the day the beneficiary learned of receipt of the payment order by
the bank. No other damages are recoverable. Reasonable attorney's
fees are also recoverable if demand for interest is made and refused
before an action is brought on the claim.
   (c) The right of a beneficiary to receive payment and damages as
stated in subdivision (a) may not be varied by agreement or a
funds-transfer system rule. The right of a beneficiary to be notified
as stated in subdivision (b) may be varied by agreement of the
beneficiary or by a funds-transfer system rule if the beneficiary is
notified of the rule before initiation of the funds transfer.



11405.  (a) If the beneficiary's bank credits an account of the
beneficiary of a payment order, payment of the bank's obligation
under subdivision (a) of Section 11404 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 subdivision (a) of Section 11404 occurs is governed
by principles of law that determine when an obligation is satisfied.
   (c) Except as stated in subdivisions (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 Section 11406.
   (e) This subdivision 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 Section 11406, and (iv) subject to subdivision (e) of
Section 11402, each sender in the funds transfer is excused from its
obligation to pay its payment order under subdivision (c) of Section
11402 because the funds transfer has not been completed.



11406.  (a) Subject to subdivision (e) of Section 11211 and
subdivisions (d) and (e) of Section 11405, the originator of a funds
transfer pays the beneficiary of the originator's payment order (i)
at the time a payment order for the benefit of the beneficiary is
accepted by the beneficiary's bank in the funds transfer and (ii) in
an amount equal to the amount of the order accepted by the
beneficiary's bank, but not more than the amount of the originator's
order.
   (b) If payment under subdivision (a) is made to satisfy an
obligation, the obligation is discharged to the same extent discharge
would result from payment to the beneficiary of the same amount in
money, unless (i) the payment under subdivision (a) was made by a
means prohibited by the contract of the beneficiary with respect to
the obligation, (ii) the beneficiary, within a reasonable time after
receiving notice of receipt of the order by the beneficiary's bank,
notified the originator of the beneficiary's refusal of the payment,
(iii) funds with respect to the order were not withdrawn by the
beneficiary or applied to a debt of the beneficiary, and (iv) the
beneficiary would suffer a loss that could reasonably have been
avoided if payment had been made by a means complying with the
contract. If payment by the originator does not result in discharge
under this section, the originator is subrogated to the rights of the
beneficiary to receive payment from the beneficiary's bank under
subdivision (a) of Section 11404.
   (c) For the purpose of determining whether discharge of an
obligation occurs under subdivision (b), if the beneficiary's bank
accepts a payment order in an amount equal to the amount of the
originator's payment order less charges of one or more receiving
banks in the funds transfer, payment to the beneficiary is deemed to
be in the amount of the originator's order unless upon demand by the
beneficiary the originator does not pay the beneficiary the amount of
the deducted charges.
   (d) Rights of the originator or of the beneficiary of a funds
transfer under this section may be varied only by agreement of the
originator and the beneficiary.