8.4A-406 - A-406. Payment by originator to beneficiary; discharge of underlying obligation.
§ 8.4A-406. Payment by originator to beneficiary; discharge of underlyingobligation.
(a) Subject to subsection (e) of § 8.4A-211 and subsections (d) and (e) of §8.4A-405, the originator of a funds transfer pays the beneficiary of theoriginator's payment order (i) at the time a payment order for the benefit ofthe beneficiary is accepted by the beneficiary's bank in the funds transferand (ii) in an amount equal to the amount of the order accepted by thebeneficiary's bank, but not more than the amount of the originator's order.
(b) If payment under subsection (a) of this section is made to satisfy anobligation, the obligation is discharged to the same extent discharge wouldresult 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 meansprohibited by the contract of the beneficiary with respect to the obligation,(ii) the beneficiary, within a reasonable time after receiving notice ofreceipt of the order by the beneficiary's bank, notified the originator ofthe beneficiary's refusal of the payment, (iii) funds with respect to theorder were not withdrawn by the beneficiary or applied to a debt of thebeneficiary, and (iv) the beneficiary would suffer a loss that couldreasonably have been avoided if payment had been made by a means complyingwith the contract. If payment by the originator does not result in dischargeunder this section, the originator is subrogated to the rights of thebeneficiary to receive payment from the beneficiary's bank under subsection(a) of § 8.4A-404.
(c) For the purpose of determining whether discharge of an obligation occursunder subsection (b) of this section, if the beneficiary's bank accepts apayment order in an amount equal to the amount of the originator's paymentorder 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'sorder unless upon demand by the beneficiary the originator does not pay thebeneficiary the amount of the deducted charges.
(d) Rights of the originator or of the beneficiary of a funds transfer underthis section may be varied only by agreement of the originator and thebeneficiary.
(1990, c. 9.)