2007 Oregon Code - Chapter 74a :: Chapter 74A - Funds Transfers
Chapter 74A
Funds Transfers
2007 EDITION
FUNDS TRANSFERS
COMMERCIAL TRANSACTIONS
GENERAL PROVISIONS
74A.1010 Short
title
74A.1020 Subject
matter
74A.1030 Payment
order; definitions
74A.1040 Funds
transfer; definitions
74A.1050 Other
definitions
74A.1060 Time
payment order is received
74A.1070 Federal
Reserve regulations and operating circulars
74A.1080 Exclusion
of consumer transactions covered by federal law
ISSUE AND ACCEPTANCE OF PAYMENT ORDER
74A.2010 Security
procedure
74A.2020 Authorized
and verified payment orders
74A.2030 Unenforceability
of certain verified payment orders
74A.2040 Refund
of payment and duty of customer to report with respect to unauthorized payment
order
74A.2050 Erroneous
payment orders
74A.2060 Transmission
of payment order through funds transfer or other communication system
74A.2070 Misdescription
of beneficiary
74A.2080 Misdescription
of intermediary bank or beneficiarys bank
74A.2090 Acceptance
of payment order
74A.2100 Rejection
of payment order
74A.2110 Cancellation
and amendment of payment order
74A.2120 Liability
and duty of receiving bank regarding unaccepted payment order
EXECUTION OF SENDERS PAYMENT ORDER BY
RECEIVING BANK
74A.3010 Execution
and execution date
74A.3020 Obligations
of receiving bank in execution of payment order
74A.3030 Erroneous
execution of payment order
74A.3040 Duty
of sender to report erroneously executed payment order
74A.3050 Liability
for late or improper execution or failure to execute payment order
PAYMENT
74A.4010 Payment
date
74A.4020 Obligation
of sender to pay receiving bank
74A.4030 Payment
by sender to receiving bank
74A.4040 Obligation
of beneficiarys bank to pay and give notice to beneficiary
74A.4050 Payment
by beneficiarys bank to beneficiary
74A.4060 Payment
by originator to beneficiary; discharge of underlying obligation
MISCELLANEOUS PROVISIONS
74A.5010 Variation
by agreement and effect of funds-transfer system rule
74A.5020 Creditor
process served on receiving bank; setoff by beneficiarys bank
74A.5030 Injunction
or restraining order with respect to funds transfer
74A.5040 Order
in which items and payment orders may be charged to account; order of
withdrawals from account
74A.5050 Preclusion
of objection to debit of customers account
74A.5060 Rate
of interest
74A.5070 Choice
of law
GENERAL PROVISIONS
74A.1010
Short title. This chapter
may be cited as Uniform Commercial CodeFunds Transfers. [1991 c.442 §1]
74A.1020
Subject matter. Except as
otherwise provided in ORS 74A.1080, this chapter applies to funds transfers
defined in ORS 74A.1040. [1991 c.442 §2]
74A.1030
Payment order; definitions.
(1) As used in this chapter:
(a) Beneficiary means the person to be
paid by the beneficiarys bank.
(b) Beneficiarys bank means the bank
identified in a payment order in which an account for 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.
(c) 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 for payment to the beneficiary other than 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.
(d) Receiving bank means the bank to
which the senders instruction is addressed.
(e) Sender means the person giving the
instruction to the receiving bank.
(2) If an instruction complying with
subsection (1)(c) of this section is to make more than one payment to a
beneficiary, the instruction is a separate payment order with respect to each
payment.
(3) A payment order is issued when it is
sent to the receiving bank. [1991 c.442 §3]
74A.1040
Funds transfer; definitions.
As used in this chapter:
(1) Funds transfer means the series of
transactions, beginning with the originators payment order, made for the
purpose of making payment to the beneficiary of the order. The term includes
any payment order issued by the originators bank or an intermediary bank
intended to carry out the originators payment order. A funds transfer is
completed by acceptance by the beneficiarys bank of a payment order for the
benefit of the beneficiary of the originators payment order.
(2) Intermediary bank means a receiving
bank other than the originators bank or the beneficiarys bank.
(3) Originator means the sender of the
first payment order in a funds transfer.
(4) Originators 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. [1991 c.442 §4]
74A.1050
Other definitions. (1) As
used in this chapter:
(a) 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.
(b) Bank means a financial institution,
as defined in ORS 706.008. A branch or separate office of a bank is a separate
bank for purposes of this chapter.
(c) Customer means a person, including a
bank, having an account with a bank or from whom a bank has agreed to receive
payment orders.
(d) 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.
(e) Funds-transfer system means a wire
transfer network, automated clearing house, or other communication system of a
clearing house 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.
(f) Good faith means honesty in fact and
the observance of reasonable commercial standards of fair dealing.
(g) Prove with respect to a fact means
to meet the burden of establishing the fact.
(2) Other definitions applying to this
chapter and the sections in which they appear are:
Acceptance ORS
74A.2090
Beneficiary ORS
74A.1030
Beneficiarys bank ORS 74A.1030
Executed ORS
74A.3010
Execution date ORS
74A.3010
Funds transfer ORS
74A.1040
Funds-transfer system rule ORS 74A.5010
Intermediary bank ORS 74A.1040
Originator ORS
74A.1040
Originators bank ORS 74A.1040
Payment by beneficiarys
bank to beneficiary ORS 74A.4050
Payment by originator to
beneficiary ORS
74A.4060
Payment by sender
to receiving bank ORS
74A.4030
Payment date ORS
74A.4010
Payment order ORS
74A.1030
Receiving bank ORS
74A.1030
Security procedure ORS 74A.2010
Sender ORS
74A.1030
(3) The following definitions in ORS
chapter 74 apply to this chapter and ORS 71.1010:
Clearing house ORS
74.1040
Item ORS 74.1040
Suspends payments ORS 74.1040
(4) In addition ORS chapter 71 contains
general definitions and principles of construction and interpretation
applicable throughout this chapter. [1991 c.442 §5; 1997 c.631 §381]
74A.1060
Time payment order is received.
(1) The time of receipt of a payment order or communication canceling or
amending a payment order is determined by the rules applicable to receipt of a
notice stated in ORS 71.2010 (27). A receiving bank may fix a cut-off time or
times on a funds-transfer business day for the receipt and processing of
payment orders and communications canceling or amending payment orders.
Different cut-off times may apply to payment orders, cancellations or
amendments, or to different categories of payment orders, cancellations or
amendments. A cut-off time may apply to senders generally or different cut-off
times may apply to different senders or categories of payment orders. If a
payment order or communication canceling or amending a payment order is
received after the close of a funds-transfer business day or after the
appropriate cut-off 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.
(2) If this chapter refers to an execution
date or payment date or state 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. [1991 c.442 §6]
74A.1070
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. [1991 c.442 §7]
74A.1080
Exclusion of consumer transactions covered by federal law. This chapter does not apply to a funds
transfer any part of which is governed by the Electronic Fund Transfer Act of
1978 (Title XX, P.L. 95.630, 92 Stat. 3728, 15 U.S.C. §1693 et seq.). [1991
c.442 §8]
ISSUE AND
ACCEPTANCE OF PAYMENT ORDER
74A.2010
Security procedure. (1) Security
procedure means a procedure established by agreement of a customer and a
receiving bank for the purpose of:
(a) Verifying that a payment order or
communication amending or canceling a payment order is that of the customer; or
(b) Detecting error in the transmission or
the content of the payment order or communication.
(2) A security procedure may require the
use of algorithms or other codes, identifying words or numbers, encryption,
call-back 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. [1991 c.442 §9]
74A.2020
Authorized and verified payment orders. (1) 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.
(2) 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:
(a) The security procedure is a
commercially reasonable method of providing security against unauthorized
payment orders; and
(b) 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.
(3) 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.
(4) 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:
(a) The security procedure was chosen by
the customer after the bank offered, and the customer refused, a security
procedure that was commercially reasonable for that customer; and
(b) 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.
(5) 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 (1) of this section, or
it is effective as the order of the customer under subsection (2) of this
section.
(6) This section applies to amendments and
cancellations of payment orders to the same extent it applies to payment
orders.
(7) Except as provided in this section and
ORS 74A.2030, rights and obligations arising under this section or ORS 74A.2030
may not be varied by agreement. [1991 c.442 §10]
74A.2030
Unenforceability of certain verified payment orders. (1) If an accepted payment order is not,
under ORS 74A.2020, an authorized order of a customer identified as sender, but
is effective as an order of the customer pursuant to ORS 74A.2020, the
following rules apply:
(a) 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.
(b) 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.
(2) Information includes any access
device, computer software or the like.
(3) This section applies to amendments of
payment orders to the same extent it applies to payment orders. [1991 c.442 §11]
74A.2040
Refund of payment and duty of customer to report with respect to unauthorized
payment order. (1) If a
receiving bank accepts a payment order issued in the name of its customer as
sender which is not authorized and not effective as the order of the customer
under ORS 74A.2020 or not enforceable, in whole or in part, against the
customer under ORS 74A.2030, 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
customers 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.
(2) Reasonable time under subsection (1)
of this section may be fixed by agreement as stated in ORS 71.2040, but the
obligation of a receiving bank to refund payment as stated in subsection (1) of
this section may not otherwise be varied by agreement. [1991 c.442 §12]
74A.2050
Erroneous payment orders.
(1) The rules stated in subsection (2) of this section apply if an accepted
payment order was transmitted pursuant to a security procedure for the
detection of error and the payment order:
(a) Erroneously instructed payment to a
beneficiary not intended by the sender;
(b) Erroneously instructed payment in an
amount greater than the amount intended by the sender; or
(c) Was an erroneously transmitted
duplicate of a payment order previously sent by the sender.
(2)(a) If the sender proves that the
sender or a person acting on behalf of the sender pursuant to ORS 74A.2060
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 paragraphs (b) and (c) of this
subsection.
(b) If the funds transfer is completed on
the basis of an erroneous payment order described in subsection (1)(a) or (c)
of this section, 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.
(c) If the funds transfer is completed on
the basis of a payment order described in subsection (1)(b) of this section,
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.
(3) If the sender of an erroneous payment
order described in subsection (1) of this section is not obliged to pay all or
part of the order, and the sender receives notification from the receiving bank
that the order was accepted by the bank or that the senders 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 banks 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 senders order.
(4) This section applies to amendments to
payment orders to the same extent it applies to payment orders. [1991 c.442 §13]
74A.2060
Transmission of payment order through funds transfer or other communication
system. (1) 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.
(2) This section applies to cancellations
and amendments of payment orders to the same extent it applies to payment
orders. [1991 c.442 §14]
74A.2070
Misdescription of beneficiary.
(1) Subject to subsection (2) of this section, if, in a payment order received
by the beneficiarys 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.
(2) If a payment order received by the
beneficiarys 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) of this section, if the beneficiarys 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 beneficiarys bank
need not determine whether the name and number refer to the same person.
(b) If the beneficiarys 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
beneficiarys 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.
(3) If a payment order described in
subsection (2) of this section is accepted, the originators payment order
described the beneficiary inconsistently by name and number and the beneficiarys
bank pays the person identified by number as permitted by subsection (2)(a) of
this section, the following rules apply:
(a) If the originator is a bank, the
originator is obliged to pay its order; and
(b) 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
originators bank proves that the originator, before acceptance of the originators
order, had notice that payment of a payment order issued by the originator
might be made by the beneficiarys 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
originators 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.
(4) In a case governed by subsection
(2)(a) of this section, if the beneficiarys 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) of this section, 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 originators bank has the right to
recover. [1991 c.442 §15]
74A.2080
Misdescription of intermediary bank or beneficiarys bank. (1) This subsection applies to a payment
order identifying an intermediary bank or the beneficiarys bank only by an
identifying number.
(a) The receiving bank may rely on the
number as the proper identification of the intermediary or beneficiarys bank
and need not determine whether the number identifies a bank.
(b) 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) This subsection applies to a payment
order identifying an intermediary bank or the beneficiarys bank both by name
and an identifying number if the name and number identify different persons.
(a) If the sender is a bank, the receiving
bank may rely on the number as the proper identification of the intermediary or
beneficiarys bank if the receiving bank, when it executes the senders 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.
(b) 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 beneficiarys 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 paragraph (a) of this
subsection, 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.
(c) Regardless of whether the sender is a
bank, the receiving bank may rely on the name as the proper identification of
the intermediary or beneficiarys bank if the receiving bank, at the time it
executes the senders 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.
(d) If the receiving bank knows that the
name and number identify different persons, reliance on either the name or the
number in executing the senders payment order is a breach of the obligation
stated in ORS 74A.3020 (1)(a). [1991 c.442 §16]
74A.2090
Acceptance of payment order.
(1) Subject to subsection (4) of this section, a receiving bank other than the
beneficiarys bank accepts a payment order when it executes the order.
(2) Subject to subsections (3) and (4) of
this section, a beneficiarys bank accepts a payment order at the earliest of
the following times:
(a) When the bank:
(A) Pays the beneficiary as stated in ORS
74A.4050 (1)(a) or (2); or
(B) 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;
(b) When the bank receives payment of the
entire amount of the senders order pursuant to ORS 74A.4030 (1)(a) or (b); or
(c) 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 senders 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 one hour after that time, or 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.
(3) Acceptance of a payment order cannot
occur before the order is received by the receiving bank. Acceptance does not
occur under subsection (2)(b) or (c) of this section 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 beneficiarys account.
(4) A payment order issued to the
originators bank cannot be accepted until the payment date if the bank is the
beneficiarys bank, or the execution date if the bank is not the beneficiarys
bank. If the originators bank executes the originators payment order before
the execution date or pays the beneficiary of the originators payment order
before the payment date and the payment order is subsequently canceled pursuant
to ORS 74A.2110 (2), the bank may recover from the beneficiary any payment
received to the extent allowed by the law governing mistake and restitution. [1991
c.442 §17]
74A.2100
Rejection of payment order.
(1) 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 in 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:
(a) Any means complying with the agreement
is reasonable; and
(b) Any means not complying is not
reasonable unless no significant delay in receipt of the notice resulted from
the use of the noncomplying means.
(2) This subsection applies if a receiving
bank other than the beneficiarys 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 ORS 74A.2110 (4) 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.
(3) If a receiving bank suspends payments,
all unaccepted payment orders issued to it are deemed rejected at the time the
bank suspends payments.
(4) Acceptance of a payment order
precludes a later rejection of the order. Rejection of a payment order
precludes a later acceptance of the order. [1991 c.442 §18]
74A.2110
Cancellation and amendment of payment order. (1) A communication of the sender of a payment order canceling 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.
(2) Subject to subsection (1) of this
section, a communication by the sender canceling 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.
(3) 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. The following apply:
(a) With respect to a payment order
accepted by a receiving bank other than the beneficiarys 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.
(b) With respect to a payment order
accepted by the beneficiarys 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 that is a duplicate of a payment order previously
issued by the sender, that orders payment to a beneficiary not entitled to
receive payment from the originator or 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 beneficiarys 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.
(4) 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.
(5) 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.
(6) 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 banks agreement, the sender, whether or
not cancellation or amendment is effective, is liable to the bank for any loss
and expenses, including reasonable attorney fees, incurred by the bank as a
result of the cancellation or amendment or attempted cancellation or amendment.
(7) 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.
(8) A funds-transfer system rule is not
effective to the extent it conflicts with subsection (3)(b) of this section. [1991
c.442 §19]
74A.2120
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 ORS 74A.2090 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. [1991 c.442 §20]
EXECUTION OF
SENDERS PAYMENT ORDER BY RECEIVING BANK
74A.3010
Execution and execution date.
(1) 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 beneficiarys bank can be accepted but cannot be
executed.
(2) Execution date of a payment order
means the day on which the receiving bank may properly issue a payment order in
execution of the senders 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 senders 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. [1991 c.442 §21]
74A.3020
Obligations of receiving bank in execution of payment order. (1) Except as provided in subsections (2) to
(4) of this section, if the receiving bank accepts a payment order pursuant to
ORS 74A.2090 (1), the bank has the following obligations in executing the
order:
(a) The receiving bank is obliged to
issue, on the execution date, a payment order complying with the senders order
and to follow the senders instructions concerning any intermediary bank or
funds-transfer system to be used in carrying out the funds transfer, or the
means by which payment orders are to be transmitted in the funds transfer. If
the originators bank issues a payment order to an intermediary bank, the
originators 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.
(b) If the senders 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 senders 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.
(2) Unless otherwise instructed, a
receiving bank executing a payment order may use any funds-transfer system if
use of that system is reasonable in the circumstances, and issue a payment
order to the beneficiarys bank or to an intermediary bank through which a
payment order conforming to the senders order can expeditiously be issued to
the beneficiarys 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.
(3) Unless subsection (1)(b) of this
section 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 senders 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.
(4) Unless instructed by the sender:
(a) The receiving bank may not obtain
payment of its charges for services and expenses in connection with the
execution of the senders order by issuing a payment order in an amount equal
to the amount of the senders order less the amount of the charges; and
(b) May not instruct a subsequent
receiving bank to obtain payment of its charges in the same manner. [1991 c.442
§22]
74A.3030
Erroneous execution of payment order. (1) A receiving bank that executes the payment order of the sender by
issuing a payment order in an amount greater than the amount of the senders
order, or issues a payment order in execution of the senders order and then
issues a duplicate order, is entitled to payment of the amount of the senders
order under ORS 74A.4020 (3) 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.
(2) 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 senders order is entitled to payment of the amount of the
senders order under ORS 74A.4020 (3) if that subsection is otherwise satisfied
and the bank corrects its mistake by issuing an additional payment order for
the benefit of the beneficiary of the senders 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 senders payment order by issuing a payment order in an
amount less than the amount of the senders order for the purpose of obtaining
payment of its charges for services and expenses pursuant to instruction of the
sender.
(3) 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 senders 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 covering mistake and restitution. [1991
c.442 §23]
74A.3040
Duty of sender to report erroneously executed payment order. If the sender of a payment order that is
erroneously executed as stated in ORS 74A.3030 receives notification from the
receiving bank that the order was executed or that the senders 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,
that bank is not obliged to pay interest on any amount refundable to the sender
under ORS 74A.4020 (4) 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. [1991 c.442 §24]
74A.3050
Liability for late or improper execution or failure to execute payment order. (1) If a funds transfer is completed but
execution of a payment order by the receiving bank in breach of ORS 74A.3020
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 in
subsection (3) of this section, additional damages are not recoverable.
(2) If execution of a payment order by a
receiving bank in breach of ORS 74A.3020 results in noncompletion of the funds
transfer, failure to use an intermediary bank designated by the originator or
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 the expenses
of the originator in the funds transfer and for incidental expenses and
interest losses, to the extent not covered by subsection (1) of this section,
resulting from the improper execution. Except as provided in subsection (3) of
this section, additional damages are not recoverable.
(3) In addition to the amounts payable
under subsections (1) and (2) of this section, damages, including consequential
damages, are recoverable to the extent provided in an express written agreement
of the receiving bank.
(4) 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 the expenses of the sender 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.
(5) The court may award reasonable
attorney fees to the prevailing party in an action to recover amounts under
this section.
(6) Except as stated in this section, the
liability of a receiving bank under subsections (1) and (2) of this section may
not be varied by agreement. [1991 c.442 §25; 1995 c.618 §44]
PAYMENT
74A.4010
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 beneficiarys 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 beneficiarys bank and, unless otherwise determined, is the day
the order is received by the beneficiarys bank. [1991 c.442 §26]
74A.4020
Obligation of sender to pay receiving bank. (1) This section is subject to ORS 74A.2050 and 74A.2070.
(2) With respect to a payment order issued
to the beneficiarys 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.
(3) This subsection is subject to
subsection (5) of this section and to ORS 74A.3030. With respect to a payment
order issued to a receiving bank other than the beneficiarys bank, acceptance
of the order by the receiving bank obliges the sender to pay the bank the
amount of the senders order. Payment by the sender is not due until the
execution date of the senders order. The obligation of that sender to pay its
payment order is excused if the funds transfer is not completed by acceptance
by the beneficiarys bank of a payment order instructing payment to the
beneficiary of that senders payment order.
(4) 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 in ORS 74A.2040 and 74A.3040, interest is
payable on the refundable amount from the date of payment.
(5) If a funds transfer is not completed
as stated in subsection (3) of this section and an intermediary bank is obliged
to refund payment as stated in subsection (4) of this section 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 stated in ORS 74A.3020 (1)(a), 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 refund as stated in subsection (4) of this section.
(6) The right of the sender of a payment
order to be excused from the obligation to pay the order as stated in
subsection (3) of this section or to receive refund under subsection (4) of
this section may not be varied by agreement. [1991 c.442 §27]
74A.4030
Payment by sender to receiving bank. (1) Payment of the senders obligation under ORS 74A.4020 to pay the
receiving bank occurs as follows:
(a) 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.
(b) If the sender is a bank and the sender
credited an account of the receiving bank with the sender, or 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.
(c) 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.
(2)(a) 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.
(b) 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 senders 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.
(c) 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.
(d) The aggregate balance is determined
after the right of setoff described in paragraph (b) of this subsection has
been exercised.
(3) If two banks transmit payment orders
to each other under an agreement that settlement of the obligations of each
bank to the other under ORS 74A.4020 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.
(4) In a case not covered by subsection
(1) of this section, the time when payment of the senders obligation under ORS
74A.4020 (2) or (3) occurs is governed by the applicable principles of law that
determine when an obligation is satisfied. [1991 c.442 §28]
74A.4040
Obligation of beneficiarys bank to pay and give notice to beneficiary. (1) Subject to ORS 74A.2110 (5) and 74A.4050
(4) and (5), if a beneficiarys 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.
(2) If a payment order accepted by the
beneficiarys 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. The court may award reasonable attorney fees to the prevailing
party in an action to recover interest owing by reason of the provisions of
this subsection.
(3) The right of a beneficiary to receive
payment and damages as stated in subsection (1) of this section may not be
varied by agreement or a funds-transfer system rule. The right of a beneficiary
to be notified as stated in subsection (2) of this section 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. [1991
c.442 §29; 1995 c.618 §45]
74A.4050
Payment by beneficiarys bank to beneficiary. (1) If the beneficiarys bank credits an account of the beneficiary of
a payment order, payment of the banks obligation under ORS 74A.4040 (1) occurs
when and to the extent:
(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 beneficiarys bank does not
credit an account of the beneficiary of a payment order, the time when payment
of the banks obligation under ORS 74A.4040 (1) occurs is governed by
principles of law that determine when an obligation is satisfied.
(3) Except as stated in subsections (4)
and (5) of this section, if the beneficiarys 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 beneficiarys bank of
the payment order it accepted. A beneficiarys bank that makes a payment that
is provisional under the rule is entitled to refund from the beneficiary if 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,
the beneficiary, the beneficiarys bank and the originators bank agreed to be
bound by the rule, and the beneficiarys bank did not receive payment of the
payment order that it accepted. If the beneficiary is obliged to refund payment
to the beneficiarys bank, acceptance of the payment order by the beneficiarys
bank is nullified and no payment by the originator of the funds transfer to the
beneficiary occurs under ORS 74A.4060.
(5) This subsection applies to a funds
transfer that includes a payment order transmitted over a funds-transfer system
that nets obligations multilaterally among participants, and 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 beneficiarys 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:
(a) The acceptance by the beneficiarys
bank is nullified and no person has any right or obligation based on the
acceptance;
(b) The beneficiarys bank is entitled to
recover payment from the beneficiary;
(c) No payment by the originator to the
beneficiary occurs under ORS 74A.4060; and
(d) Subject to ORS 74A.4020 (5), each
sender in the funds transfer is excused from its obligation to pay its payment
order under ORS 74A.4020 (3) because the funds transfer has not been completed.
[1991 c.442 §30]
74A.4060
Payment by originator to beneficiary; discharge of underlying obligation. (1) Subject to ORS 74A.2110 (5) and 74A.4050
(4) and (5), the originator of a funds transfer pays the beneficiary of the
originators payment order:
(a) At the time a payment order for the
benefit of the beneficiary is accepted by the beneficiarys bank in the funds
transfer; and
(b) In an amount equal to the amount of
the order accepted by the beneficiarys bank, but not more than the amount of
the originators order.
(2) If payment under subsection (1) of
this section 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:
(a) The payment under subsection (1) of
this section 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 beneficiarys bank,
notified the originator of the beneficiarys 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.
(3) 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 beneficiarys bank under
ORS 74A.4040 (1).
(4) For the purpose of determining whether
discharge of an obligation occurs under subsection (2) of this section, if the
beneficiarys bank accepts a payment order in an amount equal to the amount of
the originators 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 originators order unless upon demand by the beneficiary the originator
does not pay the beneficiary the amount of the deducted charges.
(5) 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. [1991 c.442 §31]
MISCELLANEOUS
PROVISIONS
74A.5010
Variation by agreement and effect of funds-transfer system rule. (1) 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.
(2) Funds-transfer system rule means a
rule of an association of banks:
(a) 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
(b) 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 beneficiarys bank.
(3) 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 ORS 74A.4040 (3), 74A.4050 (4) and
74A.5070 (3). [1991 c.442 §32]
74A.5020
Creditor process served on receiving bank; setoff by beneficiarys bank. (1) 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.
(2) 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 the authorized account is deemed to
be reduced by the amount of the payment order to the extent the bank did not
otherwise receive payment of the order, unless the creditor process is served
at a time and in a manner affording the bank a reasonable opportunity to act on
it before the bank accepts the payment order.
(3) If a beneficiarys bank has received a
payment order for payment to the beneficiarys account in the bank, the
following rules apply:
(a) The bank may credit the beneficiarys
account. The amount credited may be set off against an obligation owed by the
beneficiary to the bank or may be applied to satisfy creditor process served on
the bank with respect to the account;
(b) The bank may credit the beneficiarys
account and allow withdrawal of the amount credited unless creditor process
with respect to the account is served at a time and in a manner affording the
bank a reasonable opportunity to act to prevent withdrawal; and
(c) If creditor process with respect to
the beneficiarys account has been served and the bank has had a reasonable
opportunity to act on it, the bank may not reject the payment order except for
a reason unrelated to the service of process.
(4) Creditor process with respect to a
payment by the originator to the beneficiary pursuant to a funds transfer may
be served only on the beneficiarys bank with respect to the debt owed by that
bank to the beneficiary. Any other bank served with the creditor process is not
obliged to act with respect to the process. [1991 c.442 §33]
74A.5030
Injunction or restraining order with respect to funds transfer. (1) For proper cause and in compliance with
applicable law, a court may restrain:
(a) A person from issuing a payment order
to initiate a funds transfer;
(b) An originators bank from executing
the payment order of the originator; or
(c) The beneficiarys bank from releasing
funds to the beneficiary or the beneficiary from withdrawing the funds.
(2) A court may not otherwise restrain a
person from issuing a payment order, paying or receiving payment of a payment
order or otherwise acting with respect to a funds transfer. [1991 c.442 §34]
74A.5040
Order in which items and payment orders may be charged to account; order of
withdrawals from account.
(1) If a receiving bank has received more than one payment order of the sender
or one or more payment orders and other items that are payable from the senders
account, the bank may charge the senders account with respect to the various
orders and items in any sequence.
(2) In determining whether a credit to an
account has been withdrawn by the holder of the account or applied to a debt of
the holder of the account, credits first made to the account are first
withdrawn or applied. [1991 c.442 §35]
74A.5050
Preclusion of objection to debit of customers account. If a receiving bank has received payment
from its customer with respect to a payment order issued in the name of the
customer as sender and accepted by the bank, and the customer received
notification reasonably identifying the order, the customer is precluded from
asserting that the bank is not entitled to retain the payment unless the
customer notifies the bank of the customers objection to the payment within
one year after the notification was received by the customer. [1991 c.442 §36]
74A.5060
Rate of interest. (1) If,
under this chapter, a receiving bank is obliged to pay interest with respect to
a payment order issued to the bank, the amount payable may be determined:
(a) By agreement of the sender and
receiving bank; or
(b) By a funds-transfer system rule if the
payment order is transmitted through a funds-transfer system.
(2) If the amount of interest is not
determined by an agreement or rule as stated in subsection (1) of this section,
the amount is calculated by multiplying the applicable Federal Funds rate by
the amount on which interest is payable, and then multiplying the product by
the number of days for which interest is payable. The applicable Federal Funds
rate is the average of the Federal Funds rates published by the Federal Reserve
Bank of
74A.5070
Choice of law. (1) The
following rules apply unless the affected parties otherwise agree or subsection
(3) of this section applies:
(a) The rights and obligations between the
sender of a payment order and the receiving bank are governed by the law of the
jurisdiction in which the receiving bank is located.
(b) The rights and obligations between the
beneficiarys bank and the beneficiary are governed by the law of the
jurisdiction in which the beneficiarys bank is located.
(c) The issue of when payment is made
pursuant to a funds transfer by the originator to the beneficiary is governed
by the law of the jurisdiction in which the beneficiarys bank is located.
(2) If the parties described in each paragraph
of subsection (1) of this section have made an agreement selecting the law of a
particular jurisdiction to govern rights and obligations between each other,
the law of that jurisdiction governs those rights and obligations, whether or
not the payment order or the funds transfer bears a reasonable relation to that
jurisdiction.
(3) A funds-transfer system rule may
select the law of a particular jurisdiction to govern:
(a) Rights and obligations between
participating banks with respect to payment orders transmitted or processed
through the system; or
(b) The rights and obligations of some or
all parties to a funds transfer any part of which is carried out by means of
the system.
(4) A choice of law made pursuant to
subsection (3)(a) of this section is binding on participating banks. A choice
of law made pursuant to subsection (3)(b) of this section is binding on the
originator, other sender or a receiving bank having notice that the
funds-transfer system might be used in the funds transfer and of the choice of
law by the system when the originator, other sender or receiving bank issued or
accepted a payment order. The beneficiary of a funds transfer is bound by the
choice of law if, when the funds transfer is initiated, the beneficiary has
notice that the funds-transfer system might be used in the funds transfer and
of the choice of law by the system. The law of a jurisdiction selected pursuant
to this subsection may govern whether or not that law bears a reasonable
relation to the matter in issue.
(5) In the event of inconsistency between
an agreement under subsection (2) of this section and a choice-of-law rule
under subsection (3) of this section, the agreement under subsection (2) of
this section prevails.
(6) If a funds transfer is made by use of
more than one funds-transfer system and there is inconsistency between
choice-of-law rules of the systems, the matter in issue is governed by the law
of the selected jurisdiction that has the most significant relationship to the
matter in issue. [1991 c.442 §38]
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