There is a newer version of the Kentucky Revised Statutes
2009 Kentucky Revised Statutes
Article 4A Funds Transfers
355.4A.405 Payment by beneficiary's bank to beneficiary.
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(a) The beneficiary is notified of the right to withdraw the credit;
(b) The bank lawfully applies the credit to a debt of the beneficiary; or
(c) Funds with respect to the order are otherwise made available to the beneficiary by the bank. (2) 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 KRS 355.4A-404(1)
occurs is governed by principles of law that determine when an obligation is
satisfied. (3) Except as stated in subsections (4) and (5), 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. (4) 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:
(a) 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; (b) The beneficiary, the beneficiary's bank, and the originator's bank agreed to be bound by the rule; and (c) 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 KRS 355.4A-406. (5) This subsection applies to a funds transfer that includes a payment order transmitted over a funds-transfer system that:
(a) Nets obligations multilaterally among participants; and
(b) Has in effect a loss-sharing agreement among participants for the purpose of providing funds necessary to complete settlement of the obligations of one (1)
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 KRS
355.4A-406; and 4. Subject to KRS 355.4A-402(5), each sender in the funds transfer is
excused from its obligation to pay its payment order under KRS 355.4A-
402(3) because the funds transfer has not been completed. Effective: July 14, 1992
History: Created 1992 Ky. Acts ch. 116, sec. 53, effective July 14, 1992.
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