400.4A-406. Payment by originator to beneficiary--discharge of underlying obligation.
Payment by originator to beneficiary--discharge of underlyingobligation.
400.4A-406. (a) Subject to section 400.4A-211(e) andsection 400.4A-405(d) and section 400.4A-405(e), the originatorof a funds transfer pays the beneficiary of the originator'spayment order (i) at the time a payment order for the benefit ofthe beneficiary is accepted by the beneficiary's bank in thefunds transfer and (ii) in an amount equal to the amount of theorder accepted by the beneficiary's bank, but not more than theamount of the originator's order.
(b) If payment under subsection (a) is made to satisfy anobligation, the obligation is discharged to the same extentdischarge would result from payment to the beneficiary of thesame amount in money, unless (i) the payment under subsection (a)was made by a means prohibited by the contract of the beneficiarywith respect to the obligation, (ii) the beneficiary, within areasonable time after receiving notice of receipt of the order bythe beneficiary's bank, notified the originator of thebeneficiary's refusal of the payment, (iii) funds with respect tothe order were not withdrawn by the beneficiary or applied to adebt of the beneficiary, and (iv) the beneficiary would suffer aloss that could reasonably have been avoided if payment had beenmade by a means complying with the contract. If payment by theoriginator does not result in discharge under this section, theoriginator is subrogated to the rights of the beneficiary toreceive payment from the beneficiary's bank under section400.4A-404(a).
(c) For the purpose of determining whether discharge of anobligation occurs under subsection (b), if the beneficiary's bankaccepts a payment order in an amount equal to the amount of theoriginator's payment order less charges of one or more receivingbanks in the funds transfer, payment to the beneficiary is deemedto be in the amount of the originator's order unless upon demandby the beneficiary the originator does not pay the beneficiarythe amount of the deducted charges.
(d) Rights of the originator or of the beneficiary of afunds transfer under this section may be varied only by agreementof the originator and the beneficiary.
(L. 1992 S.B. 448)