355.4A-406 Payment by originator to beneficiary -- Discharge of underlying
obligation.
(1) Subject to KRS 355.4A-211(5), 355.4A-405(4), and 355.4A-405(5), the originator
of a funds transfer pays the beneficiary of the originator's payment order: <br>(a) At the time a payment order for the benefit of the beneficiary is accepted by
the beneficiary's bank in the funds transfer; and
(b) 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.
(2) If payment under subsection (1) is made to satisfy an obligation, the obligation is
discharged to the same extent discharge would result from payment to the <br>beneficiary of the same amount in money, unless: <br>(a) The payment under subsection (1) was made by a means prohibited by the
contract of the beneficiary with respect to the obligation;
(b) 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 <br>refusal of the payment;
(c) Funds with respect to the order were not withdrawn by the beneficiary or
applied to a debt of the beneficiary; and
(d) 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 <br>by the originator does not result in discharge under this section, the originator <br>is subrogated to the rights of the beneficiary to receive payment from the <br>beneficiary's bank under KRS 355.4A-404(1).
(3) For the purpose of determining whether discharge of an obligation occurs under
subsection (2), if the beneficiary's bank accepts a payment order in an amount equal <br>to the amount of the originator's payment order less charges of one (1) or more <br>receiving banks in the funds transfer, payment to the beneficiary is deemed to be in <br>the amount of the originator's order unless upon demand by the beneficiary the <br>originator does not pay the beneficiary the amount of the deducted charges.
(4) 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.
Effective: July 14, 1992 <br>History: Created 1992 Ky. Acts ch. 116, sec. 54, effective July 14, 1992.
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