Sec. 42a-4A-202. Authorized and verified payment orders.
Sec. 42a-4A-202. Authorized and verified payment orders. (a) 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.
(b) 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 (i) the security procedure is a commercially reasonable method of providing security against unauthorized payment orders, and (ii) 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.
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.
(c) 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 (i) 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 (ii) 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.
(d) The term "sender" in this article includes the customer in whose name a payment
order is issued if the order is the authorized order of the customer under subsection (a),
or it is effective as the order of the customer under subsection (b).
(e) This section applies to amendments and cancellations of payment orders to the
same extent it applies to payment orders.
(f) Except as provided in this section and in subdivision (1) of subsection (a) of
section 42a-4A-203, rights and obligations arising under this section or section 42a-4A-203 may not be varied by agreement.
(P.A. 90-202, S. 1(4A-202), 3.)