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355.4A-207 Misdescription of beneficiary.
(1)
(2)
(3)
(4)
Subject to subsection (2), 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.
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:
(a) Except as otherwise provided in subsection (3), if the beneficiary's bank does
not know that the name and number refer to different persons, 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.
(b) If the beneficiary's bank pays the person identified by name or 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.
(a) If a payment order described in subsection (2) is accepted;
(b) The originator's payment order described the beneficiary inconsistently by
name and number; and
(c) The beneficiary's bank pays the person identified by number as permitted by
subsection (2)(a), 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.
In a case governed by subsection (2)(a), 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:
(a) If the originator is obliged to pay its payment order as stated in subsection (3),
the originator has the right to recover.
(b) 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.
Effective: July 14, 1992
History: Created 1992 Ky. Acts ch. 116, sec. 38, effective July 14, 1992.
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