400.4A-405. Payment by beneficiary's bank to beneficiary.
Payment by beneficiary's bank to beneficiary.
400.4A-405. (a) If the beneficiary's bank credits anaccount of the beneficiary of a payment order, payment of thebank's obligation under section 400.4A-404(a), occurs when and tothe extent (i) the beneficiary is notified of the right towithdraw the credit, (ii) the bank lawfully applies the credit toa debt of the beneficiary, or (iii) funds with respect to theorder are otherwise made available to the beneficiary by thebank.
(b) If the beneficiary's bank does not credit an account ofthe beneficiary of a payment order, the time when payment of thebank's obligation under section 400.4A-404(a) occurs is governedby principles of law that determine when an obligation issatisfied.
(c) Except as stated in subsections (d) and (e), if thebeneficiary's bank pays the beneficiary of a payment order undera condition to payment or agreement of the beneficiary giving thebank the right to recover payment from the beneficiary if thebank does not receive payment of the order, the condition topayment or agreement is not enforceable.
(d) A funds-transfer system rule may provide that paymentsmade to beneficiaries of funds transfers made through the systemare provisional until receipt of payment by the beneficiary'sbank of the payment order it accepted. A beneficiary's bankthat makes a payment that is provisional under the rule isentitled to refund from the beneficiary if (i) the rule requiresthat both the beneficiary and the originator be given notice ofthe provisional nature of the payment before the funds transferis initiated, (ii) the beneficiary, the beneficiary's bank andthe originator's bank agreed to be bound by the rule, and (iii)the beneficiary's bank did not receive payment of the paymentorder that it accepted. If the beneficiary is obliged to refundpayment to the beneficiary's bank, acceptance of the paymentorder by the beneficiary's bank is nullified and no payment bythe originator of the funds transfer to the beneficiary occursunder section 400.4A-406.
(e) This subsection applies to a funds transfer thatincludes a payment order transmitted over a funds-transfer systemthat (i) nets obligations multilaterally among participants, and(ii) has in effect a loss-sharing agreement among participantsfor the purpose of providing funds necessary to completesettlement of the obligations of one or more participants that donot meet their settlement obligations. If the beneficiary's bankin the funds transfer accepts a payment order and the systemfails to complete settlement pursuant to its rules with respectto any payment order in the funds transfer, (i) the acceptance bythe beneficiary's bank is nullified and no person has any rightor obligation based on the acceptance, (ii) the beneficiary'sbank is entitled to recover payment from the beneficiary, (iii)no payment by the originator to the beneficiary occurs undersection 400.4A-406, and (iv) subject to section 400.4A-402(e),each sender in the funds transfer is excused from its obligationto pay its payment order under section 400.4A-402(c) because thefunds transfer has not been completed.
(L. 1992 S.B. 448)