CHAPTER 4A. FUNDS TRANSFERS

BUSINESS AND COMMERCE CODE

TITLE 1. UNIFORM COMMERCIAL CODE

CHAPTER 4A. FUNDS TRANSFERS

SUBCHAPTER A. SUBJECT MATTER AND DEFINITIONS

Sec. 4A.101. SHORT TITLE. This chapter may be cited as Uniform

Commercial Code--Funds Transfers.

Added by Acts 1993, 73rd Leg., ch. 570, Sec. 7, eff. Sept. 1,

1993.

Sec. 4A.102. SUBJECT MATTER. Except as otherwise provided in

Section 4A.108, this chapter applies to funds transfers defined

in Section 4A.104.

Added by Acts 1993, 73rd Leg., ch. 570, Sec. 7, eff. Sept. 1,

1993.

Sec. 4A.103. PAYMENT ORDER--DEFINITIONS. (a) In this chapter:

(1) "Payment order" means an instruction of a sender to a

receiving bank, transmitted orally, electronically, or in

writing, to pay, or to cause another bank to pay, a fixed or

determinable amount of money to a beneficiary if:

(A) the instruction does not state a condition of payment to the

beneficiary other than the time of payment;

(B) the receiving bank is to be reimbursed by debiting an

account of, or otherwise receiving payment from, the sender; and

(C) the instruction is transmitted by the sender directly to the

receiving bank or to an agent, funds transfer system, or

communication system for transmittal to the receiving bank.

(2) "Beneficiary" means the person to be paid by the

beneficiary's bank.

(3) "Beneficiary's bank" means the bank identified in a payment

order in which an account of the beneficiary is to be credited

pursuant to the order or which otherwise is to make payment to

the beneficiary if the order does not provide for payment to an

account.

(4) "Receiving bank" means the bank to which the sender's

instruction is addressed.

(5) "Sender" means the person giving the instruction to the

receiving bank.

(b) If an instruction complying with Subsection (a)(1) is to

make more than one payment to a beneficiary, the instruction is a

separate payment order with respect to each payment.

(c) A payment order is issued when it is sent to the receiving

bank.

Added by Acts 1993, 73rd Leg., ch. 570, Sec. 7, eff. Sept. 1,

1993.

Sec. 4A.104. FUNDS TRANSFER--DEFINITIONS. In this chapter:

(1) "Funds transfer" means the series of transactions, beginning

with the originator's payment order, made for the purpose of

making payment to the beneficiary of the order. The term includes

any payment order issued by the originator's bank or an

intermediary bank intended to carry out the originator's payment

order. A funds transfer is completed by acceptance by the

beneficiary's bank of a payment order for the benefit of the

beneficiary of the originator's payment order.

(2) "Intermediary bank" means a receiving bank other than the

originator's bank or the beneficiary's bank.

(3) "Originator" means the sender of the first payment order in

a funds transfer.

(4) "Originator's bank" means:

(A) the receiving bank to which the payment order of the

originator is issued if the originator is not a bank; or

(B) the originator if the originator is a bank.

Added by Acts 1993, 73rd Leg., ch. 570, Sec. 7, eff. Sept. 1,

1993.

Sec. 4A.105. OTHER DEFINITIONS. (a) In this chapter:

(1) "Authorized account" means a deposit account of a customer

in a bank designated by the customer as a source of payment of

payment orders issued by the customer to the bank. If a customer

does not so designate an account, any account of the customer is

an authorized account if payment of a payment order from that

account is not inconsistent with a restriction on the use of that

account.

(2) "Bank" means a person engaged in the business of banking and

includes a savings bank, savings and loan association, credit

union, and trust company. A branch or separate office of a bank

is a separate bank for purposes of this chapter.

(3) "Customer" means a person, including a bank, having an

account with a bank or from whom a bank has agreed to receive

payment orders.

(4) "Funds transfer business day" of a receiving bank means the

part of a day during which the receiving bank is open for the

receipt, processing, and transmittal of payment orders and

cancellations and amendments of payment orders.

(5) "Funds transfer system" means a wire transfer network,

automated clearinghouse, or other communication system of a

clearinghouse or other association of banks through which a

payment order by a bank may be transmitted to the bank to which

the order is addressed.

(6) Reserved.

(7) "Prove" with respect to a fact means to meet the burden of

establishing the fact (Section 1.201(b)(8)).

(b) Other definitions applying to this chapter and the sections

in which they appear are:

(1) "Acceptance." Section 4A.209.

(2) "Beneficiary." Section 4A.103.

(3) "Beneficiary's bank." Section 4A.103.

(4) "Executed." Section 4A.301.

(5) "Execution date." Section 4A.301.

(6) "Funds transfer." Section 4A.104.

(7) "Funds transfer system rule." Section 4A.501.

(8) "Intermediary bank." Section 4A.104.

(9) "Originator." Section 4A.104.

(10) "Originator's bank." Section 4A.104.

(11) "Payment by beneficiary's bank to beneficiary." Section

4A.405.

(12) "Payment by originator to beneficiary." Section 4A.406.

(13) "Payment by sender to receiving bank." Section 4A.403.

(14) "Payment date." Section 4A.401.

(15) "Payment order." Section 4A.103.

(16) "Receiving bank." Section 4A.103.

(17) "Security procedure." Section 4A.201.

(18) "Sender." Section 4A.103.

(c) The following definitions in Chapter 4 apply to this

chapter:

(1) "Clearinghouse." Section 4.104.

(2) "Item." Section 4.104.

(3) "Suspends payments." Section 4.104.

(d) In addition, Chapter 1 contains general definitions and

principles of construction and interpretation applicable

throughout this chapter.

Added by Acts 1993, 73rd Leg., ch. 570, Sec. 7, eff. Sept. 1,

1993. Amended by Acts 2003, 78th Leg., ch. 542, Sec. 13, eff.

Sept. 1, 2003.

Sec. 4A.106. TIME PAYMENT ORDER IS RECEIVED. (a) The time of

receipt of a payment order or communication cancelling or

amending a payment order is determined by the rules applicable to

receipt of a notice stated in Section 1.202. A receiving bank may

fix a cutoff time or times on a funds transfer business day for

the receipt and processing of payment orders and communications

cancelling or amending payment orders. Different cutoff times may

apply to payment orders, cancellations, or amendments, or to

different categories of payment orders, cancellations, or

amendments. A cutoff time may apply to senders generally or

different cutoff times may apply to different senders or

categories of payment orders. If a payment order or communication

cancelling or amending a payment order is received after the

close of a funds transfer business day or after the appropriate

cutoff time on a funds transfer business day, the receiving bank

may treat the payment order or communication as received at the

opening of the next funds transfer business day.

(b) If this chapter refers to an execution date or payment date

or states a day on which a receiving bank is required to take

action, and the date or day does not fall on a funds transfer

business day, the next day that is a funds transfer business day

is treated as the date or day stated, unless the contrary is

stated in this chapter.

Added by Acts 1993, 73rd Leg., ch. 570, Sec. 7, eff. Sept. 1,

1993. Amended by Acts 2003, 78th Leg., ch. 542, Sec. 14, eff.

Sept. 1, 2003.

Sec. 4A.107. FEDERAL RESERVE REGULATIONS AND OPERATING

CIRCULARS. Regulations of the Board of Governors of the Federal

Reserve System and operating circulars of the Federal Reserve

Banks supersede any inconsistent provision of this chapter to the

extent of the inconsistency.

Added by Acts 1993, 73rd Leg., ch. 570, Sec. 7, eff. Sept. 1,

1993.

Sec. 4A.108. EXCLUSION OF CONSUMER TRANSACTIONS GOVERNED BY

FEDERAL LAW. This chapter does not apply to a funds transfer any

part of which is governed by the Electronic Fund Transfer Act, 15

U.S.C. Sec. 1693 et seq., as amended from time to time.

Added by Acts 1993, 73rd Leg., ch. 570, Sec. 7, eff. Sept. 1,

1993.

SUBCHAPTER B. ISSUE AND ACCEPTANCE OF PAYMENT ORDER

Sec. 4A.201. SECURITY PROCEDURE. "Security procedure" means a

procedure established by an agreement between a customer and a

receiving bank for the purpose of (i) verifying that a payment

order or communication amending or cancelling a payment order is

that of the customer, or (ii) detecting error in the transmission

or the content of the payment order or communication. A security

procedure may require the use of algorithms or other codes,

identifying words or numbers, encryption, callback procedures, or

similar security devices. Comparison of a signature on a payment

order or communication with an authorized specimen signature of

the customer is not by itself a security procedure.

Added by Acts 1993, 73rd Leg., ch. 570, Sec. 7, eff. Sept. 1,

1993.

Sec. 4A.202. AUTHORIZED AND VERIFIED PAYMENT ORDERS. (a) A

payment order received by the receiving bank is the authorized

order of the person identified as sender if that person

authorized the order or is otherwise bound by it under the law of

agency.

(b) If a bank and its customer have agreed that the authenticity

of payment orders issued to the bank in the name of the customer

as sender will be verified pursuant to a security procedure, a

payment order received by the receiving bank is effective as the

order of the customer, whether or not authorized, if (i) the

security procedure is a commercially reasonable method of

providing security against unauthorized payment orders, and (ii)

the bank proves that it accepted the payment order in good faith

and in compliance with the security procedure and any written

agreement or instruction of the customer restricting acceptance

of payment orders issued in the name of the customer. The bank is

not required to follow an instruction that violates a written

agreement with the customer or notice of which is not received at

a time and in a manner affording the bank a reasonable

opportunity to act on it before the payment order is accepted.

(c) Commercial reasonableness of a security procedure is a

question of law to be determined by considering the wishes of the

customer expressed to the bank, the circumstances of the customer

known to the bank, including the size, type, and frequency of

payment orders normally issued by the customer to the bank,

alternative security procedures offered to the customer, and

security procedures in general use by customers and receiving

banks similarly situated. A security procedure is deemed to be

commercially reasonable if:

(1) the security procedure was chosen by the customer after the

bank offered, and the customer refused, a security procedure that

was commercially reasonable for the customer; and

(2) the customer expressly agreed in writing to be bound by any

payment order, whether or not authorized, issued in its name and

accepted by the bank in compliance with the security procedure

chosen by the customer.

(d) The term "sender" in this chapter includes the customer in

whose name a payment order is issued if the order is the

authorized order of the customer under Subsection (a) or it is

effective as the order of the customer under Subsection (b).

(e) This section applies to amendments and cancellations of

payment orders to the same extent it applies to payment orders.

(f) Except as provided in this section and in Section

4A.203(a)(1), the rights and obligations arising under this

section or Section 4A.203 may not be varied by agreement.

Added by Acts 1993, 73rd Leg., ch. 570, Sec. 7, eff. Sept. 1,

1993.

Sec. 4A.203. UNENFORCEABILITY OF CERTAIN VERIFIED PAYMENT

ORDERS. (a) If an accepted payment order is not, under Section

4A.202(a), an authorized order of a customer identified as

sender, but is effective as an order of the customer pursuant to

Section 4A.202(b), the following rules apply:

(1) By express written agreement, the receiving bank may limit

the extent to which it is entitled to enforce or retain payment

of the payment order.

(2) The receiving bank is not entitled to enforce or retain

payment of the payment order if the customer proves that the

order was not caused, directly or indirectly, by a person:

(A) entrusted at any time with duties to act for the customer

with respect to payment orders or the security procedure; or

(B) who obtained access to transmitting facilities of the

customer or who obtained, from a source controlled by the

customer and without authority of the receiving bank, information

facilitating breach of the security procedure, regardless of how

the information was obtained or whether the customer was at

fault. Information includes any access device, computer software,

or the like.

(b) This section applies to amendments of payment orders to the

same extent it applies to payment orders.

Added by Acts 1993, 73rd Leg., ch. 570, Sec. 7, eff. Sept. 1,

1993.

Sec. 4A.204. REFUND OF PAYMENT AND DUTY OF CUSTOMER TO REPORT

WITH RESPECT TO UNAUTHORIZED PAYMENT ORDER. (a) If a receiving

bank accepts a payment order issued in the name of its customer

as sender which is (i) not authorized and not effective as the

order of the customer under Section 4A.202, or (ii) not

enforceable, in whole or in part, against the customer under

Section 4A.203, the bank shall refund any payment of the payment

order received from the customer to the extent the bank is not

entitled to enforce payment and shall pay interest on the

refundable amount calculated from the date the bank received

payment to the date of the refund. However, the customer is not

entitled to interest from the bank on the amount to be refunded

if the customer fails to exercise ordinary care to determine that

the order was not authorized by the customer and to notify the

bank of the relevant facts within a reasonable time not exceeding

90 days after the date the customer received notification from

the bank that the order was accepted or that the customer's

account was debited with respect to the order. The bank is not

entitled to any recovery from the customer on account of a

failure by the customer to give notification as stated in this

section.

(b) Reasonable time under Subsection (a) may be fixed by

agreement as stated in Section 1.302(b), but the obligation of a

receiving bank to refund payment as stated in Subsection (a) may

not otherwise be varied by agreement.

Added by Acts 1993, 73rd Leg., ch. 570, Sec. 7, eff. Sept. 1,

1993. Amended by Acts 2003, 78th Leg., ch. 542, Sec. 15, eff.

Sept. 1, 2003.

Sec. 4A.205. ERRONEOUS PAYMENT ORDERS. (a) If an accepted

payment order was transmitted pursuant to a security procedure

for the detection of error and the payment order (i) erroneously

instructed payment to a beneficiary not intended by the sender,

(ii) erroneously instructed payment in an amount greater than the

amount intended by the sender, or (iii) was an erroneously

transmitted duplicate of a payment order previously sent by the

sender, the following rules apply:

(1) If the sender proves that the sender or a person acting on

behalf of the sender pursuant to Section 4A.206 complied with the

security procedure and that the error would have been detected if

the receiving bank had also complied, the sender is not obliged

to pay the order to the extent stated in Subdivisions (2) and

(3).

(2) If the funds transfer is completed on the basis of an

erroneous payment order described in clause (i) or (iii) of

Subsection (a), the sender is not obliged to pay the order and

the receiving bank is entitled to recover from the beneficiary

any amount paid to the beneficiary to the extent allowed by the

law governing mistake and restitution.

(3) If the funds transfer is completed on the basis of a payment

order described in clause (ii) of Subsection (a), the sender is

not obliged to pay the order to the extent the amount received by

the beneficiary is greater than the amount intended by the

sender. In that case, the receiving bank is entitled to recover

from the beneficiary the excess amount received to the extent

allowed by the law governing mistake and restitution.

(b) If (i) the sender of an erroneous payment order described in

Subsection (a) is not obliged to pay all or part of the order,

and (ii) the sender receives notification from the receiving bank

that the order was accepted by the bank or that the sender's

account was debited with respect to the order, the sender has a

duty to exercise ordinary care, on the basis of information

available to the sender, to discover the error with respect to

the order and to advise the bank of the relevant facts within a

reasonable time, not exceeding 90 days, after the bank's

notification was received by the sender. If the bank proves that

the sender failed to perform that duty, the sender is liable to

the bank for the loss the bank proves it incurred as a result of

the failure, but the liability of the sender may not exceed the

amount of the sender's order.

(c) This section applies to amendments to payment orders to the

same extent it applies to payment orders.

Added by Acts 1993, 73rd Leg., ch. 570, Sec. 7, eff. Sept. 1,

1993.

Sec. 4A.206. TRANSMISSION OF PAYMENT ORDER THROUGH FUNDS

TRANSFER OR OTHER COMMUNICATION SYSTEM. (a) If a payment order

addressed to a receiving bank is transmitted to a funds transfer

system or other third-party communication system for transmittal

to the bank, the system is deemed to be an agent of the sender

for the purpose of transmitting the payment order to the bank. If

there is a discrepancy between the terms of the payment order

transmitted to the system and the terms of the payment order

transmitted by the system to the bank, the terms of the payment

order of the sender are those transmitted by the system. This

section does not apply to a funds transfer system of the Federal

Reserve Banks.

(b) This section applies to cancellations and amendments of

payment orders to the same extent it applies to payment orders.

Added by Acts 1993, 73rd Leg., ch. 570, Sec. 7, eff. Sept. 1,

1993.

Sec. 4A.207. MISDESCRIPTION OF BENEFICIARY. (a) Subject to

Subsection (b), if, in a payment order received by the

beneficiary's bank, the name, bank account number, or other

identification of the beneficiary refers to a nonexistent or

unidentifiable person or account, no person has rights as a

beneficiary of the order and acceptance of the order cannot

occur.

(b) If a payment order received by the beneficiary's bank

identifies the beneficiary both by name and by an identifying or

bank account number and the name and number identify different

persons, the following rules apply:

(1) Except as provided in Subsection (c), if the beneficiary's

bank does not know that the name and number refer to different

persons or if the funds transfer is processed by the beneficiary

bank in a fully automated manner, it may rely on the number as

the proper identification of the beneficiary of the order. The

beneficiary's bank need not determine whether the name and number

refer to the same person.

(2) If the beneficiary's bank pays the person identified by name

or any individual processing the funds transfer on behalf of the

beneficiary bank knows that the name and number identify

different persons, no person has rights as beneficiary except the

person paid by the beneficiary's bank if that person was entitled

to receive payment from the originator of the funds transfer. If

no person has rights as beneficiary, acceptance of the order

cannot occur.

(c) If (i) a payment order described in Subsection (b) is

accepted, (ii) the originator's payment order described the

beneficiary inconsistently by name and number, and (iii) the

beneficiary's bank pays the person identified by number as

permitted by Subsection (b)(1), the following rules apply:

(1) If the originator is a bank, the originator is obliged to

pay its order.

(2) If the originator is not a bank and proves that the person

identified by number was not entitled to receive payment from the

originator, the originator is not obliged to pay its order unless

the originator's bank proves that the originator, before

acceptance of the originator's order, had notice that payment of

a payment order issued by the originator might be made by the

beneficiary's bank on the basis of an identifying or bank account

number even if it identifies a person different from the named

beneficiary. Proof of notice may be made by any admissible

evidence. The originator's bank satisfies the burden of proof if

it proves that the originator, before the payment order was

accepted, signed a writing stating the information to which the

notice relates.

(d) In a case governed by Subsection (b)(1), if the

beneficiary's bank rightfully pays the person identified by

number and that person was not entitled to receive payment from

the originator, the amount paid may be recovered from that person

to the extent allowed by the law governing mistake and

restitution as follows:

(1) If the originator is obliged to pay its payment order as

stated in Subsection (c), the originator has the right to

recover.

(2) If the originator is not a bank and is not obliged to pay

its payment order, the originator's bank has the right to

recover.

Added by Acts 1993, 73rd Leg., ch. 570, Sec. 7, eff. Sept. 1,

1993.

Sec. 4A.208. MISDESCRIPTION OF INTERMEDIARY BANK OR

BENEFICIARY'S BANK. (a) This subsection applies to a payment

order identifying an intermediary bank or the beneficiary's bank

only by an identifying number.

(1) The receiving bank may rely on the number as the proper

identification of the intermediary or beneficiary's bank and does

not need to determine whether the number identifies a bank.

(2) The sender is obliged to compensate the receiving bank for

any loss and expenses incurred by the receiving bank as a result

of its reliance on the number in executing or attempting to

execute the order.

(b) This subsection applies to a payment order identifying an

intermediary bank or the beneficiary's bank both by name and an

identifying number if the name and number identify different

persons.

(1) If the sender is a bank, the receiving bank may rely on the

number as the proper identification of the intermediary or

beneficiary's bank if the receiving bank, when it executes the

sender's order, does not know that the name and number identify

different persons. The receiving bank need not determine whether

the name and number refer to the same person or whether the

number refers to a bank. The sender is obliged to compensate the

receiving bank for any loss and expenses incurred by the

receiving bank as a result of its reliance on the number in

executing or attempting to execute the order.

(2) If the sender is not a bank and the receiving bank proves

that the sender, before the payment order was accepted, had

notice that the receiving bank might rely on the number as the

proper identification of the intermediary or beneficiary's bank

even if it identifies a person different from the bank identified

by name, the rights and obligations of the sender and the

receiving bank are governed by Subsection (b)(1), as though the

sender were a bank. Proof of notice may be made by any admissible

evidence. The receiving bank satisfies the burden of proof if it

proves that the sender, before the payment order was accepted,

signed a writing stating the information to which the notice

relates.

(3) Regardless of whether the sender is a bank, the receiving

bank may rely on the name as the proper identification of the

intermediary or beneficiary's bank if the receiving bank, at the

time it executes the sender's order, does not know that the name

and number identify different persons. The receiving bank need

not determine whether the name and number refer to the same

person.

(4) If the receiving bank knows that the name and number

identify different persons, reliance on either the name or the

number in executing the sender's payment order is a breach of the

obligation stated in Section 4A.302(a)(1).

Added by Acts 1993, 73rd Leg., ch. 570, Sec. 7, eff. Sept. 1,

1993.

Sec. 4A.209. ACCEPTANCE OF PAYMENT ORDER. (a) Subject to

Subsection (d), a receiving bank other than the beneficiary's

bank accepts a payment order when it executes the order.

(b) Subject to Subsections (c) and (d), a beneficiary's bank

accepts a payment order at the earliest of the following times:

(1) when the bank (i) pays the beneficiary as stated in Section

4A.405(a) or (b), or (ii) notifies the beneficiary of receipt of

the order or that the account of the beneficiary has been

credited with respect to the order unless the notice indicates

that the bank is rejecting the order or that funds with respect

to the order may not be withdrawn or used until receipt of

payment from the sender of the order;

(2) when the bank receives payment of the entire amount of the

sender's order pursuant to Section 4A.403(a)(1) or (2); or

(3) the opening of the next funds transfer business day of the

bank following the payment date of the order if, at that time,

the amount of the sender's order is fully covered by a

withdrawable credit balance in an authorized account of the

sender or the bank has otherwise received full payment from the

sender, unless the order was rejected before that time or is

rejected within (i) one hour after that time, or (ii) one hour

after the opening of the next business day of the sender

following the payment date if that time is later. If notice of

rejection is received by the sender after the payment date and

the authorized account of the sender does not bear interest, the

bank is obliged to pay interest to the sender on the amount of

the order for the number of days elapsing after the payment date

to the day the sender receives notice or learns that the order

was not accepted, counting that day as an elapsed day. If the

withdrawable credit balance during that period falls below the

amount of the order, the amount of interest payable is reduced

accordingly.

(c) Acceptance of a payment order cannot occur before the order

is received by the receiving bank. Acceptance does not occur

under Subsection (b)(2) or (3) if the beneficiary of the payment

order does not have an account with the receiving bank, the

account has been closed, or the receiving bank is not permitted

by law to receive credits for the beneficiary's account.

(d) A payment order issued to the originator's bank cannot be

accepted until the payment date if the bank is the beneficiary's

bank, or the execution date if the bank is not the beneficiary's

bank. If the originator's bank executes the originator's payment

order before the execution date or pays the beneficiary of the

originator's payment order before the payment date and the

payment order is subsequently canceled pursuant to Section

4A.211(b), the bank may recover from the beneficiary any payment

received to the extent allowed by the law governing mistake and

restitution.

Added by Acts 1993, 73rd Leg., ch. 570, Sec. 7, eff. Sept. 1,

1993.

Sec. 4A.210. REJECTION OF PAYMENT ORDER. (a) A payment order

is rejected by the receiving bank by a notice of rejection

transmitted to the sender orally, electronically, or in writing.

A notice of rejection need not use any particular words and is

sufficient if it indicates that the receiving bank is rejecting

the order or will not execute or pay the order. Rejection is

effective when the notice is given if transmission is by a means

that is reasonable under the circumstances. If notice of

rejection is given by a means that is not reasonable, rejection

is effective when the notice is received. If an agreement of the

sender and receiving bank establishes the means to be used to

reject a payment order:

(1) any means complying with the agreement is reasonable; and

(2) any means not complying is not reasonable unless no

significant delay in receipt of the notice resulted from the use

of the noncomplying means.

(b) This subsection applies if a receiving bank other than the

beneficiary's bank fails to execute a payment order despite the

existence on the execution date of a withdrawable credit balance

in an authorized account of the sender sufficient to cover the

order. If the sender does not receive notice of rejection of the

order on the execution date and the authorized account of the

sender does not bear interest, the bank is obliged to pay

interest to the sender on the amount of the order for the number

of days elapsing after the execution date to the earlier of the

day the order is canceled pursuant to Section 4A.211(d) or the

day the sender receives notice or learns that the order was not

executed, counting the final day of the period as an elapsed day.

If the withdrawable credit balance during that period falls below

the amount of the order, the amount of interest is reduced

accordingly.

(c) If a receiving bank suspends payments, all unaccepted

payment orders issued to it are deemed rejected at the time the

bank suspends payments.

(d) Acceptance of a payment order precludes a later rejection of

the order. Rejection of a payment order precludes a later

acceptance of the order.

Added by Acts 1993, 73rd Leg., ch. 570, Sec. 7, eff. Sept. 1,

1993.

Sec. 4A.211. CANCELLATION AND AMENDMENT OF PAYMENT ORDER. (a)

A communication of the sender of a payment order cancelling or

amending the order may be transmitted to the receiving bank

orally, electronically, or in writing. If a security procedure is

in effect between the sender and the receiving bank, the

communication is not effective to cancel or amend the order

unless the communication is verified pursuant to the security

procedure or the bank agrees to the cancellation or amendment.

(b) Subject to Subsection (a), a communication by the sender

cancelling or amending a payment order is effective to cancel or

amend the order if notice of the communication is received at a

time and in a manner affording the receiving bank a reasonable

opportunity to act on the communication before the bank accepts

the payment order.

(c) After a payment order has been accepted, cancellation or

amendment of the order is not effective unless the receiving bank

agrees or a funds transfer system rule allows cancellation or

amendment without agreement of the bank.

(1) With respect to a payment order accepted by a receiving bank

other than the beneficiary's bank, cancellation or amendment is

not effective unless a conforming cancellation or amendment of

the payment order issued by the receiving bank is also made.

(2) With respect to a payment order accepted by the

beneficiary's bank, cancellation or amendment is not effective

unless the order was issued in execution of an unauthorized

payment order or because of a mistake by a sender in the funds

transfer which resulted in the issuance of a payment order (i)

that is a duplicate of a payment order previously issued by the

sender, (ii) that orders payment to a beneficiary not entitled to

receive payment from the originator, or (iii) that orders payment

in an amount greater than the amount the beneficiary was entitled

to receive from the originator. If the payment order is canceled

or amended, the beneficiary's bank is entitled to recover from

the beneficiary any amount paid to the beneficiary to the extent

allowed by the law governing mistake and restitution.

(d) An unaccepted payment order is canceled by operation of law

at the close of the fifth funds transfer business day of the

receiving bank after the execution date or payment date of the

order.

(e) A canceled payment order cannot be accepted. If an accepted

payment order is canceled, the acceptance is nullified and no

person has any right or obligation based on the acceptance.

Amendment of a payment order is deemed to be cancellation of the

original order at the time of amendment and issue of a new

payment order in the amended form at the same time.

(f) Unless otherwise provided in an agreement of the parties or

in a funds transfer system rule, if the receiving bank, after

accepting a payment order, agrees to cancellation or amendment of

the order by the sender or is bound by a funds transfer system

rule allowing cancellation or amendment without the bank's

agreement, the sender, whether or not cancellation or amendment

is effective, is liable to the bank for any loss and expenses,

including reasonable attorney's fees, incurred by the bank as a

result of the cancellation or amendment or attempted cancellation

or amendment.

(g) A payment order is not revoked by the death or legal

incapacity of the sender unless the receiving bank knows of the

death or of an adjudication of incapacity by a court of competent

jurisdiction and has reasonable opportunity to act before

acceptance of the order.

(h) A funds transfer system rule is not effective to the extent

it conflicts with Subsection (c)(2).

Added by Acts 1993, 73rd Leg., ch. 570, Sec. 7, eff. Sept. 1,

1993.

Sec. 4A.212. LIABILITY AND DUTY OF RECEIVING BANK REGARDING

UNACCEPTED PAYMENT ORDER. If a receiving bank fails to accept a

payment order that it is obliged by express agreement to accept,

the bank is liable for breach of the agreement to the extent

provided in the agreement or in this chapter, but does not

otherwise have any duty to accept a payment order or, before

acceptance, to take any action, or refrain from taking action,

with respect to the order except as provided in this chapter or

by express agreement. Liability based on acceptance arises only

when acceptance occurs as stated in Section 4A.209, and liability

is limited to that provided in this chapter. A receiving bank is

not the agent of the sender or beneficiary of the payment order

it accepts, or of any other party to the funds transfer, and the

bank owes no duty to any party to the funds transfer except as

provided in this chapter or by express agreement.

Added by Acts 1993, 73rd Leg., ch. 570, Sec. 7, eff. Sept. 1,

1993.

SUBCHAPTER C. EXECUTION OF SENDERS PAYMENT ORDER BY RECEIVING

BANK

Sec. 4A.301. EXECUTION AND EXECUTION DATE. (a) A payment order

is "executed" by the receiving bank when it issues a payment

order intended to carry out the payment order received by the

bank. A payment order received by the beneficiary's bank can be

accepted but cannot be executed.

(b) "Execution date" of a payment order means the date on which

the receiving bank may properly issue a payment order in

execution of the sender's order. The execution date may be

determined by instruction of the sender but cannot be earlier

than the day the order is received and, unless otherwise

determined, is the day the order is received. If the sender's

instruction states a payment date, the execution date is the

payment date or an earlier date on which execution is reasonably

necessary to allow payment to the beneficiary on the payment

date.

Added by Acts 1993, 73rd Leg., ch. 570, Sec. 7, eff. Sept. 1,

1993.

Sec. 4A.302. OBLIGATIONS OF RECEIVING BANK IN EXECUTION OF

PAYMENT ORDER. (a) Except as provided in Subsections (b)

through (d), if the receiving bank accepts a payment order

pursuant to Section 4A.209(a), the bank has the following

obligations in executing the order:

(1) The receiving bank is obliged to issue, on the execution

date, a payment order complying with the sender's order and to

follow the sender's instructions concerning (i) any intermediary

bank or funds transfer system to be used in carrying out the

funds transfer, or (ii) the means by which payment orders are to

be transmitted in the funds transfer. If the originator's bank

issues a payment order to an intermediary bank, the originator's

bank is obliged to instruct the intermediary bank according to

the instruction of the originator. An intermediary bank in the

funds transfer is similarly bound by an instruction given to it

by the sender of the payment order it accepts.

(2) If the sender's instruction states that the funds transfer

is to be carried out telephonically or by wire transfer or

otherwise indicates that the funds transfer is to be carried out

by the most expeditious means, the receiving bank is obliged to

transmit its payment order by the most expeditious available

means and to instruct any intermediary bank accordingly. If a

sender's instruction states a payment date, the receiving bank is

obliged to transmit its payment order at a time and by means

reasonably necessary to allow payment to the beneficiary on the

payment date or as soon thereafter as is feasible.

(b) Unless otherwise instructed, a receiving bank executing a

payment order may (i) use any funds transfer system if use of

that system is reasonable in the circumstances, and (ii) issue a

payment order to the beneficiary's bank or to an intermediary

bank through which a payment order conforming to the sender's

order can expeditiously be issued to the beneficiary's bank if

the receiving bank exercises ordinary care in the selection of

the intermediary bank. A receiving bank is not required to follow

an instruction of the sender designating a funds transfer system

to be used in carrying out the funds transfer if the receiving

bank, in good faith, determines that it is not feasible to follow

the instruction or that following the instruction would unduly

delay completion of the funds transfer.

(c) Unless Subsection (a)(2) applies or the receiving bank is

otherwise instructed, the bank may execute a payment order by

transmitting its payment order by first class mail or by any

means reasonable in the circumstances. If the receiving bank is

instructed to execute the sender's order by transmitting its

payment order by a particular means, the receiving bank may issue

its payment order by the means stated or by any means as

expeditious as the means stated.

(d) Unless instructed by the sender, (i) the receiving bank may

not obtain payment of its charges for services and expenses in

connection with the execution of the sender's order by issuing a

payment order in an amount equal to the amount of the sender's

order less the amount of the charges, and (ii) may not instruct a

subsequent receiving bank to obtain payment of its charges in the

same amount.

Added by Acts 1993, 73rd Leg., ch. 570, Sec. 7, eff. Sept. 1,

1993.

Sec. 4A.303. ERRONEOUS EXECUTION OF PAYMENT ORDER. (a) A

receiving bank that (i) executes the payment order of the sender

by issuing a payment order in an amount greater than the amount

of the sender's order or (ii) issues a payment order in execution

of the sender's order and then issues a duplicate order, is

entitled to payment of the amount of the sender's order under

Section 4A.402(c) if that subsection is otherwise satisfied. The

bank is entitled to recover from the beneficiary of the erroneous

order the excess payment received to the extent allowed by the

law governing mistake and restitution.

(b) A receiving bank that executes the payment order of the

sender by issuing a payment order in an amount less than the

amount of the sender's order is entitled to payment of the amount

of the sender's order under Section 4A.402(c) if (i) that

subsection is otherwise satisfied and (ii) the bank corrects its

mistake by issuing an additional payment order for the benefit of

the beneficiary of the sender's order. If the error is not

corrected, the issuer of the erroneous order is entitled to

receive or retain payment from the sender of the order it

accepted only to the extent of the amount of the erroneous order.

This subsection does not apply if the receiving bank executes the

sender's payment order by issuing a payment order in an amount

less than the amount of the sender's order for the purpose of

obtaining payment of its charges for services and expenses

pursuant to instruction of the sender.

(c) If a receiving bank executes the payment order of the sender

by issuing a payment order to a beneficiary different from the

beneficiary of the sender's order and the funds transfer is

completed on the basis of that error, the sender of the payment

order that was erroneously executed and all previous senders in

the funds transfer are not obliged to pay the payment orders they

issued. The issuer of the erroneous order is entitled to recover

from the beneficiary of the order the payment received to the

extent allowed by the law governing mistake and restitution.

Added by Acts 1993, 73rd Leg., ch. 570, Sec. 7, eff. Sept. 1,

1993.

Sec. 4A.304. DUTY OF SENDER TO REPORT ERRONEOUSLY EXECUTED

PAYMENT ORDER. If the sender of a payment order that is

erroneously executed as stated in Section 4A.303 receives

notification from the receiving bank that the order was executed

or that the sender's account was debited with respect to the

order, the sender has a duty to exercise ordinary care to

determine, on the basis of information available to the sender,

that the order was erroneously executed and to notify the bank of

the relevant facts within a reasonable time not exceeding 90 days

after the notification from the bank was received by the sender.

If the sender fails to perform that duty, the bank is not obliged

to pay interest on any amount refundable to the sender under

Section 4A.402(d) for the period before the bank learns of the

execution error. The bank is not entitled to any recovery from

the sender on account of a failure by the sender to perform the

duty stated in this section.

Added by Acts 1993, 73rd Leg., ch. 570, Sec. 7, eff. Sept. 1,

1993.

Sec. 4A.305. LIABILITY FOR LATE OR IMPROPER EXECUTION OR FAILURE

TO EXECUTE PAYMENT ORDER. (a) If a funds transfer is completed

but execution of a payment order by the receiving bank in breach

of Section 4A.302 of this chapter results in delay in payment to

the beneficiary, the bank is obliged to pay interest to either

the originator or the beneficiary of the funds transfer for the

period of delay caused by the improper execution. Except as

provided by Subsection (c), additional damages are not

recoverable.

(b) If execution of a payment order by a receiving bank in

breach of Section 4A.302 results in (i) noncompletion of the

funds transfer, (ii) failure to use an intermediary bank

designated by the originator, or (iii) issuance of a payment

order that does not comply with the terms of the payment order of

the originator, the bank is liable to the originator for its

expenses in the funds transfer and for incidental expenses and

interest losses, to the extent not covered by Subsection (a) of

this section, resulting from the improper execution. Except as

provided by Subsection (c), additional damages are not

recoverable.

(c) In addition to the amounts payable under Subsections (a) and

(b), damages, including consequential damages, are recoverable to

the extent provided in an express written agreement of the

receiving bank.

(d) If a receiving bank fails to execute a payment order it was

obliged by express agreement to execute, the receiving bank is

liable to the sender for its expenses in the transaction and for

incidental expenses and interest losses resulting from the

failure to execute. Additional damages, including consequential

damages, are recoverable to the extent provided in an express

written agreement of the receiving bank, but are not otherwise

recoverable.

(e) Reasonable attorney's fees are recoverable if demand for

compensation under Subsection (a) or (b) is made and refused

before an action is brought on the claim. If a claim is made for

breach of an agreement under Subsection (d) and the agreement

does not provide for damages, reasonable attorney's fees are

recoverable if demand for compensation under Subsection (d) of

this section is made and refused before an action is brought on

the claim.

(f) Except as provided by this section, the liability of a

receiving bank under Subsections (a) and (b) of this section may

not be varied by agreement.

Added by Acts 1993, 73rd Leg., ch. 570, Sec. 7, eff. Sept. 1,

1993.

SUBCHAPTER D. PAYMENT

Sec. 4A.401. PAYMENT DATE. "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.

Added by Acts 1993, 73rd Leg., ch. 570, Sec. 7, eff. Sept. 1,

1993.

Sec. 4A.402. OBLIGATION OF SENDER TO PAY RECEIVING BANK. (a)

This section is subject to Sections 4A.205 and 4A.207.

(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 subsection is subject to Subsection (e) and to Section

4A.303. 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 by Sections 4A.204 and

4A.304, interest is payable on the refundable amount from the

date of payment.

(e) If a funds transfer is not completed as provided by

Subsection (c) and an intermediary bank is obliged to refund

payment as provided by Subsection (d) but is unable to do so

because 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 provided by

Section 4A.302(a)(1), 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 a refund as stated

in Subsection (d).

(f) The right of the sender of a payment order to be excused

from the obligation to pay the order as stated in Subsection (c)

or to receive a refund under Subsection (d) may not be varied by

agreement.

Added by Acts 1993, 73rd Leg., ch. 570, Sec. 7, eff. Sept. 1,

1993.

Sec. 4A.403. PAYMENT BY SENDER TO RECEIVING BANK. (a) Payment

of the sender's obligation under Section 4A.402 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 subsection 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 4A.402 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 Subsection (a), the time when

payment of the sender's obligation under Section 4A.402(b) or (c)

occurs is governed by applicable principles of law that determine

when an obligation is satisfied.

Added by Acts 1993, 73rd Leg., ch. 570, Sec. 7, eff. Sept. 1,

1993.

Sec. 4A.404. OBLIGATION OF BENEFICIARY'S BANK TO PAY AND GIVE

NOTICE TO BENEFICIARY. (a) Subject to Sections 4A.211(e) and

4A.405(d) and (e), 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 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 Subsection (a) may not be varied by agreement or a

funds transfer system rule. The right of a beneficiary to be

notified as stated in Subsection (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.

Added by Acts 1993, 73rd Leg., ch. 570, Sec. 7, eff. Sept. 1,

1993.

Sec. 4A.405. PAYMENT BY BENEFICIARY'S BANK TO BENEFICIARY. (a)

If the beneficiary's bank credits an account of the beneficiary

of a payment order, payment of the bank's obligation under

Section 4A.404(a) occurs when and to the extent:

(1) the beneficiary is notified of the right to withdraw the

credit;

(2) the bank lawfully applies the credit to a debt of the

beneficiary; or

(3) 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 Section 4A.404(a) occurs is governed by

principles of law that determine when an obligation is satisfied.

(c) Except as provided by Subsections (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 through the system are

provisional until receipt of payment by the beneficiary's bank of

the payment order is 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

4A.406.

(e) This subsection 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:

(1) the acceptance by the beneficiary's bank is nullified and no

person has any right or obligation based on the acceptance;

(2) the beneficiary's bank is entitled to recover payment from

the beneficiary;

(3) no payment by the originator to the beneficiary occurs under

Section 4A.406; and

(4) subject to Section 4A.402(e), each sender in the funds

transfer is excused from its obligation to pay its payment order

under Section 4A.402(c) because the funds transfer has not been

completed.

Added by Acts 1993, 73rd Leg., ch. 570, Sec. 7, eff. Sept. 1,

1993.

Sec. 4A.406. PAYMENT BY ORIGINATOR TO BENEFICIARY; DISCHARGE OF

UNDERLYING OBLIGATION. (a) Subject to Sections 4A.211(e) and

4A.405(d) and (e), the originator of a funds transfer pays the

beneficiary of the originator's payment order:

(1) at the time a payment order for the benefit of the

beneficiary is accepted by the beneficiary's bank in the funds

transfer; and

(2) 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 Subsection (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 Subsection (a)

of this section 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 Section 4A.404(a).

(c) For the purpose of determining whether discharge of an

obligation occurs under Subsection (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.

Added by Acts 1993, 73rd Leg., ch. 570, Sec. 7, eff. Sept. 1,

1993.

SUBCHAPTER E. MISCELLANEOUS PROVISIONS

Sec. 4A.501. VARIATION BY AGREEMENT AND EFFECT OF FUNDS TRANSFER

SYSTEM RULE. (a) Except as otherwise provided in this chapter,

the rights and obligations of a party to a funds transfer may be

varied by agreement of the affected party.

(b) "Funds transfer system rule" means a rule of an association

of banks (i) governing transmission of payment orders by means of

a funds transfer system of the association or rights and

obligations with respect to those orders, or (ii) to the extent

the rule governs rights and obligations between banks that are

parties to a funds transfer in which a Federal Reserve Bank,

acting as an intermediary bank, sends a payment order to the

beneficiary's bank. Except as otherwise provided in this chapter,

a funds transfer system rule governing rights and obligations

between participating banks using the system may be effective

even if the rule conflicts with this chapter and indirectly

affects another party to the funds transfer who does not consent

to the rule. A funds transfer system rule may also govern rights

and obligations of parties other than participating banks using

the system to the extent stated in Sections 4A.404(c), 4A.405(d),

and 4A.507(c).

Added by Acts 1993, 73rd Leg., ch. 570, Sec. 7, eff. Sept. 1,

1993.

Sec. 4A.502. CREDITOR PROCESS SERVED ON RECEIVING BANK; SETOFF

BY BENEFICIARY'S BANK. (a) As used in this section, "creditor

process" means levy, attachment, garnishment, notice of lien,

sequestration, or similar process issued by or on behalf of a

creditor or other claimant with respect to an account.

(b) This subsection applies to creditor process with respect to

an authorized account of the sender of a payment order if the

creditor process is served on the receiving bank. For the purpose

of determining rights with respect to the creditor process, if

the receiving bank accepts the payment order, the balance in