§ 6A-4.1-406 - Payment by originator to beneficiary – Discharge of underlying obligation.
SECTION 6A-4.1-406
§ 6A-4.1-406 Payment by originator tobeneficiary – Discharge of underlying obligation. – (a) Subject to §§ 6A-4.1-211(e), 6A-4.1-405(d), and 6A-4.1-405(e),the originator of a funds transfer pays the beneficiary of the originator'spayment order (i) at the time a payment order for the benefit of thebeneficiary is accepted by the beneficiary's bank in the funds transfer and(ii) in an amount equal to the amount of the order accepted by thebeneficiary's bank, but not more than the amount of the originator's order.
(b) If payment under subsection (a) is made to satisfy anobligation, the obligation is discharged to the same extent discharge wouldresult from payment to the beneficiary of the same amount in money, unless (i)the payment under subsection (a) was made by a means prohibited by the contractof the beneficiary with respect to the obligation, (ii) the beneficiary, withina reasonable time after receiving notice of receipt of the order by thebeneficiary's bank, notified the originator of the beneficiary's refusal of thepayment, (iii) funds with respect to the order were not withdrawn by thebeneficiary or applied to a debt of the beneficiary, and (iv) the beneficiarywould suffer a loss that could reasonably have been avoided if payment had beenmade by a means complying with the contract. If payment by the originator doesnot result in discharge under this section, the originator is subrogated to therights of the beneficiary to receive payment from the beneficiary's bank under§ 6A-4.1-404(a).
(c) For the purpose of determining whether discharge of anobligation occurs under subsection (b), if the beneficiary's bank accepts apayment order in an amount equal to the amount of the originator's paymentorder 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 originator'sorder unless upon demand by the beneficiary the originator does not pay thebeneficiary the amount of the deducted charges.
(d) Rights of the originator or of the beneficiary of a fundstransfer under this section may be varied only by agreement of the originatorand the beneficiary.