CHAPTER 4A. FUNDS TRANSFERS
BUSINESS AND COMMERCE CODE
TITLE 1. UNIFORM COMMERCIAL CODE
CHAPTER 4A. FUNDS TRANSFERS
SUBCHAPTER A. SUBJECT MATTER AND DEFINITIONS
Sec. 4A.101. SHORT TITLE. This chapter may be cited as Uniform
Commercial Code--Funds Transfers.
Added by Acts 1993, 73rd Leg., ch. 570, Sec. 7, eff. Sept. 1,
1993.
Sec. 4A.102. SUBJECT MATTER. Except as otherwise provided in
Section 4A.108, this chapter applies to funds transfers defined
in Section 4A.104.
Added by Acts 1993, 73rd Leg., ch. 570, Sec. 7, eff. Sept. 1,
1993.
Sec. 4A.103. PAYMENT ORDER--DEFINITIONS. (a) In this chapter:
(1) "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 of payment to the
beneficiary other than the 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.
(2) "Beneficiary" means the person to be paid by the
beneficiary's bank.
(3) "Beneficiary's bank" means the bank identified in a payment
order in which an account of 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.
(4) "Receiving bank" means the bank to which the sender's
instruction is addressed.
(5) "Sender" means the person giving the instruction to the
receiving bank.
(b) If an instruction complying with Subsection (a)(1) is to
make more than one payment to a beneficiary, the instruction is a
separate payment order with respect to each payment.
(c) A payment order is issued when it is sent to the receiving
bank.
Added by Acts 1993, 73rd Leg., ch. 570, Sec. 7, eff. Sept. 1,
1993.
Sec. 4A.104. FUNDS TRANSFER--DEFINITIONS. In this chapter:
(1) "Funds transfer" means the series of transactions, beginning
with the originator's payment order, made for the purpose of
making payment to the beneficiary of the order. The term includes
any payment order issued by the originator's bank or an
intermediary bank intended to carry out the originator's payment
order. A funds transfer is completed by acceptance by the
beneficiary's bank of a payment order for the benefit of the
beneficiary of the originator's payment order.
(2) "Intermediary bank" means a receiving bank other than the
originator's bank or the beneficiary's bank.
(3) "Originator" means the sender of the first payment order in
a funds transfer.
(4) "Originator's 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.
Added by Acts 1993, 73rd Leg., ch. 570, Sec. 7, eff. Sept. 1,
1993.
Sec. 4A.105. OTHER DEFINITIONS. (a) In this chapter:
(1) "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.
(2) "Bank" means a person engaged in the business of banking and
includes a savings bank, savings and loan association, credit
union, and trust company. A branch or separate office of a bank
is a separate bank for purposes of this chapter.
(3) "Customer" means a person, including a bank, having an
account with a bank or from whom a bank has agreed to receive
payment orders.
(4) "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.
(5) "Funds transfer system" means a wire transfer network,
automated clearinghouse, or other communication system of a
clearinghouse 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.
(6) Reserved.
(7) "Prove" with respect to a fact means to meet the burden of
establishing the fact (Section 1.201(b)(8)).
(b) Other definitions applying to this chapter and the sections
in which they appear are:
(1) "Acceptance." Section 4A.209.
(2) "Beneficiary." Section 4A.103.
(3) "Beneficiary's bank." Section 4A.103.
(4) "Executed." Section 4A.301.
(5) "Execution date." Section 4A.301.
(6) "Funds transfer." Section 4A.104.
(7) "Funds transfer system rule." Section 4A.501.
(8) "Intermediary bank." Section 4A.104.
(9) "Originator." Section 4A.104.
(10) "Originator's bank." Section 4A.104.
(11) "Payment by beneficiary's bank to beneficiary." Section
4A.405.
(12) "Payment by originator to beneficiary." Section 4A.406.
(13) "Payment by sender to receiving bank." Section 4A.403.
(14) "Payment date." Section 4A.401.
(15) "Payment order." Section 4A.103.
(16) "Receiving bank." Section 4A.103.
(17) "Security procedure." Section 4A.201.
(18) "Sender." Section 4A.103.
(c) The following definitions in Chapter 4 apply to this
chapter:
(1) "Clearinghouse." Section 4.104.
(2) "Item." Section 4.104.
(3) "Suspends payments." Section 4.104.
(d) In addition, Chapter 1 contains general definitions and
principles of construction and interpretation applicable
throughout this chapter.
Added by Acts 1993, 73rd Leg., ch. 570, Sec. 7, eff. Sept. 1,
1993. Amended by Acts 2003, 78th Leg., ch. 542, Sec. 13, eff.
Sept. 1, 2003.
Sec. 4A.106. TIME PAYMENT ORDER IS RECEIVED. (a) The time of
receipt of a payment order or communication cancelling or
amending a payment order is determined by the rules applicable to
receipt of a notice stated in Section 1.202. A receiving bank may
fix a cutoff time or times on a funds transfer business day for
the receipt and processing of payment orders and communications
cancelling or amending payment orders. Different cutoff times may
apply to payment orders, cancellations, or amendments, or to
different categories of payment orders, cancellations, or
amendments. A cutoff time may apply to senders generally or
different cutoff times may apply to different senders or
categories of payment orders. If a payment order or communication
cancelling or amending a payment order is received after the
close of a funds transfer business day or after the appropriate
cutoff 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.
(b) If this chapter refers to an execution date or payment date
or states 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.
Added by Acts 1993, 73rd Leg., ch. 570, Sec. 7, eff. Sept. 1,
1993. Amended by Acts 2003, 78th Leg., ch. 542, Sec. 14, eff.
Sept. 1, 2003.
Sec. 4A.107. 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.
Added by Acts 1993, 73rd Leg., ch. 570, Sec. 7, eff. Sept. 1,
1993.
Sec. 4A.108. EXCLUSION OF CONSUMER TRANSACTIONS GOVERNED BY
FEDERAL LAW. This chapter does not apply to a funds transfer any
part of which is governed by the Electronic Fund Transfer Act, 15
U.S.C. Sec. 1693 et seq., as amended from time to time.
Added by Acts 1993, 73rd Leg., ch. 570, Sec. 7, eff. Sept. 1,
1993.
SUBCHAPTER B. ISSUE AND ACCEPTANCE OF PAYMENT ORDER
Sec. 4A.201. SECURITY PROCEDURE. "Security procedure" means a
procedure established by an agreement between a customer and a
receiving bank for the purpose of (i) verifying that a payment
order or communication amending or cancelling a payment order is
that of the customer, or (ii) detecting error in the transmission
or the content of the payment order or communication. A security
procedure may require the use of algorithms or other codes,
identifying words or numbers, encryption, callback 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.
Added by Acts 1993, 73rd Leg., ch. 570, Sec. 7, eff. Sept. 1,
1993.
Sec. 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:
(1) the security procedure was chosen by the customer after the
bank offered, and the customer refused, a security procedure that
was commercially reasonable for the customer; and
(2) 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 chapter 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 Section
4A.203(a)(1), the rights and obligations arising under this
section or Section 4A.203 may not be varied by agreement.
Added by Acts 1993, 73rd Leg., ch. 570, Sec. 7, eff. Sept. 1,
1993.
Sec. 4A.203. UNENFORCEABILITY OF CERTAIN VERIFIED PAYMENT
ORDERS. (a) If an accepted payment order is not, under Section
4A.202(a), an authorized order of a customer identified as
sender, but is effective as an order of the customer pursuant to
Section 4A.202(b), the following rules apply:
(1) 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.
(2) 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. Information includes any access device, computer software,
or the like.
(b) This section applies to amendments of payment orders to the
same extent it applies to payment orders.
Added by Acts 1993, 73rd Leg., ch. 570, Sec. 7, eff. Sept. 1,
1993.
Sec. 4A.204. REFUND OF PAYMENT AND DUTY OF CUSTOMER TO REPORT
WITH RESPECT TO UNAUTHORIZED PAYMENT ORDER. (a) If a receiving
bank accepts a payment order issued in the name of its customer
as sender which is (i) not authorized and not effective as the
order of the customer under Section 4A.202, or (ii) not
enforceable, in whole or in part, against the customer under
Section 4A.203, 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 customer's
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.
(b) Reasonable time under Subsection (a) may be fixed by
agreement as stated in Section 1.302(b), but the obligation of a
receiving bank to refund payment as stated in Subsection (a) may
not otherwise be varied by agreement.
Added by Acts 1993, 73rd Leg., ch. 570, Sec. 7, eff. Sept. 1,
1993. Amended by Acts 2003, 78th Leg., ch. 542, Sec. 15, eff.
Sept. 1, 2003.
Sec. 4A.205. ERRONEOUS PAYMENT ORDERS. (a) If an accepted
payment order was transmitted pursuant to a security procedure
for the detection of error and the payment order (i) erroneously
instructed payment to a beneficiary not intended by the sender,
(ii) erroneously instructed payment in an amount greater than the
amount intended by the sender, or (iii) was an erroneously
transmitted duplicate of a payment order previously sent by the
sender, the following rules apply:
(1) If the sender proves that the sender or a person acting on
behalf of the sender pursuant to Section 4A.206 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 Subdivisions (2) and
(3).
(2) If the funds transfer is completed on the basis of an
erroneous payment order described in clause (i) or (iii) of
Subsection (a), 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.
(3) If the funds transfer is completed on the basis of a payment
order described in clause (ii) of Subsection (a), 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.
(b) If (i) the sender of an erroneous payment order described in
Subsection (a) is not obliged to pay all or part of the order,
and (ii) the sender receives notification from the receiving bank
that the order was accepted by the bank or that the sender's
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 bank's
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 sender's order.
(c) This section applies to amendments to payment orders to the
same extent it applies to payment orders.
Added by Acts 1993, 73rd Leg., ch. 570, Sec. 7, eff. Sept. 1,
1993.
Sec. 4A.206. TRANSMISSION OF PAYMENT ORDER THROUGH FUNDS
TRANSFER OR OTHER COMMUNICATION SYSTEM. (a) 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.
(b) This section applies to cancellations and amendments of
payment orders to the same extent it applies to payment orders.
Added by Acts 1993, 73rd Leg., ch. 570, Sec. 7, eff. Sept. 1,
1993.
Sec. 4A.207. MISDESCRIPTION OF BENEFICIARY. (a) Subject to
Subsection (b), 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.
(b) 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:
(1) Except as provided in Subsection (c), if the beneficiary's
bank does not know that the name and number refer to different
persons or if the funds transfer is processed by the beneficiary
bank in a fully automated manner, 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.
(2) If the beneficiary's bank pays the person identified by name
or any individual processing the funds transfer on behalf of the
beneficiary bank 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.
(c) If (i) a payment order described in Subsection (b) is
accepted, (ii) the originator's payment order described the
beneficiary inconsistently by name and number, and (iii) the
beneficiary's bank pays the person identified by number as
permitted by Subsection (b)(1), 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.
(d) In a case governed by Subsection (b)(1), 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:
(1) If the originator is obliged to pay its payment order as
stated in Subsection (c), the originator has the right to
recover.
(2) 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.
Added by Acts 1993, 73rd Leg., ch. 570, Sec. 7, eff. Sept. 1,
1993.
Sec. 4A.208. MISDESCRIPTION OF INTERMEDIARY BANK OR
BENEFICIARY'S BANK. (a) This subsection applies to a payment
order identifying an intermediary bank or the beneficiary's bank
only by an identifying number.
(1) The receiving bank may rely on the number as the proper
identification of the intermediary or beneficiary's bank and does
not need to determine whether the number identifies a bank.
(2) 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) This subsection applies to a payment order identifying an
intermediary bank or the beneficiary's bank both by name and an
identifying number if the name and number identify different
persons.
(1) If the sender is a bank, the receiving bank may rely on the
number as the proper identification of the intermediary or
beneficiary's bank if the receiving bank, when it executes the
sender's 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.
(2) 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 beneficiary's 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 Subsection (b)(1), 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.
(3) Regardless of whether the sender is a bank, the receiving
bank may rely on the name as the proper identification of the
intermediary or beneficiary's bank if the receiving bank, at the
time it executes the sender's 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.
(4) If the receiving bank knows that the name and number
identify different persons, reliance on either the name or the
number in executing the sender's payment order is a breach of the
obligation stated in Section 4A.302(a)(1).
Added by Acts 1993, 73rd Leg., ch. 570, Sec. 7, eff. Sept. 1,
1993.
Sec. 4A.209. ACCEPTANCE OF PAYMENT ORDER. (a) Subject to
Subsection (d), a receiving bank other than the beneficiary's
bank accepts a payment order when it executes the order.
(b) Subject to Subsections (c) and (d), a beneficiary's bank
accepts a payment order at the earliest of the following times:
(1) when the bank (i) pays the beneficiary as stated in Section
4A.405(a) or (b), or (ii) 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;
(2) when the bank receives payment of the entire amount of the
sender's order pursuant to Section 4A.403(a)(1) or (2); or
(3) 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 sender's 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 (i) one hour after that time, or (ii) 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.
(c) Acceptance of a payment order cannot occur before the order
is received by the receiving bank. Acceptance does not occur
under Subsection (b)(2) or (3) 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 beneficiary's account.
(d) A payment order issued to the originator's bank cannot be
accepted until the payment date if the bank is the beneficiary's
bank, or the execution date if the bank is not the beneficiary's
bank. If the originator's bank executes the originator's payment
order before the execution date or pays the beneficiary of the
originator's payment order before the payment date and the
payment order is subsequently canceled pursuant to Section
4A.211(b), the bank may recover from the beneficiary any payment
received to the extent allowed by the law governing mistake and
restitution.
Added by Acts 1993, 73rd Leg., ch. 570, Sec. 7, eff. Sept. 1,
1993.
Sec. 4A.210. REJECTION OF PAYMENT ORDER. (a) 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 under 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:
(1) any means complying with the agreement is reasonable; and
(2) any means not complying is not reasonable unless no
significant delay in receipt of the notice resulted from the use
of the noncomplying means.
(b) This subsection applies if a receiving bank other than the
beneficiary's 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 Section 4A.211(d) 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.
(c) If a receiving bank suspends payments, all unaccepted
payment orders issued to it are deemed rejected at the time the
bank suspends payments.
(d) Acceptance of a payment order precludes a later rejection of
the order. Rejection of a payment order precludes a later
acceptance of the order.
Added by Acts 1993, 73rd Leg., ch. 570, Sec. 7, eff. Sept. 1,
1993.
Sec. 4A.211. CANCELLATION AND AMENDMENT OF PAYMENT ORDER. (a)
A communication of the sender of a payment order cancelling 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.
(b) Subject to Subsection (a), a communication by the sender
cancelling 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.
(c) 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.
(1) With respect to a payment order accepted by a receiving bank
other than the beneficiary's 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.
(2) With respect to a payment order accepted by the
beneficiary's 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 (i)
that is a duplicate of a payment order previously issued by the
sender, (ii) that orders payment to a beneficiary not entitled to
receive payment from the originator, or (iii) 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 beneficiary's 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.
(d) 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.
(e) 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.
(f) 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 bank's
agreement, the sender, whether or not cancellation or amendment
is effective, is liable to the bank for any loss and expenses,
including reasonable attorney's fees, incurred by the bank as a
result of the cancellation or amendment or attempted cancellation
or amendment.
(g) 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.
(h) A funds transfer system rule is not effective to the extent
it conflicts with Subsection (c)(2).
Added by Acts 1993, 73rd Leg., ch. 570, Sec. 7, eff. Sept. 1,
1993.
Sec. 4A.212. 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 Section 4A.209, 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.
Added by Acts 1993, 73rd Leg., ch. 570, Sec. 7, eff. Sept. 1,
1993.
SUBCHAPTER C. EXECUTION OF SENDERS PAYMENT ORDER BY RECEIVING
BANK
Sec. 4A.301. EXECUTION AND EXECUTION DATE. (a) 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 beneficiary's bank can be
accepted but cannot be executed.
(b) "Execution date" of a payment order means the date on which
the receiving bank may properly issue a payment order in
execution of the sender's 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 sender's
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.
Added by Acts 1993, 73rd Leg., ch. 570, Sec. 7, eff. Sept. 1,
1993.
Sec. 4A.302. OBLIGATIONS OF RECEIVING BANK IN EXECUTION OF
PAYMENT ORDER. (a) Except as provided in Subsections (b)
through (d), if the receiving bank accepts a payment order
pursuant to Section 4A.209(a), the bank has the following
obligations in executing the order:
(1) The receiving bank is obliged to issue, on the execution
date, a payment order complying with the sender's order and to
follow the sender's instructions concerning (i) any intermediary
bank or funds transfer system to be used in carrying out the
funds transfer, or (ii) the means by which payment orders are to
be transmitted in the funds transfer. If the originator's bank
issues a payment order to an intermediary bank, the originator's
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.
(2) If the sender's 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
sender's 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.
(b) Unless otherwise instructed, a receiving bank executing a
payment order may (i) use any funds transfer system if use of
that system is reasonable in the circumstances, and (ii) issue a
payment order to the beneficiary's bank or to an intermediary
bank through which a payment order conforming to the sender's
order can expeditiously be issued to the beneficiary's 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.
(c) Unless Subsection (a)(2) 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 sender's 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.
(d) Unless instructed by the sender, (i) the receiving bank may
not obtain payment of its charges for services and expenses in
connection with the execution of the sender's order by issuing a
payment order in an amount equal to the amount of the sender's
order less the amount of the charges, and (ii) may not instruct a
subsequent receiving bank to obtain payment of its charges in the
same amount.
Added by Acts 1993, 73rd Leg., ch. 570, Sec. 7, eff. Sept. 1,
1993.
Sec. 4A.303. ERRONEOUS EXECUTION OF PAYMENT ORDER. (a) A
receiving bank that (i) executes the payment order of the sender
by issuing a payment order in an amount greater than the amount
of the sender's order or (ii) issues a payment order in execution
of the sender's order and then issues a duplicate order, is
entitled to payment of the amount of the sender's order under
Section 4A.402(c) 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.
(b) 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 sender's order is entitled to payment of the amount
of the sender's order under Section 4A.402(c) if (i) that
subsection is otherwise satisfied and (ii) the bank corrects its
mistake by issuing an additional payment order for the benefit of
the beneficiary of the sender's 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
sender's payment order by issuing a payment order in an amount
less than the amount of the sender's order for the purpose of
obtaining payment of its charges for services and expenses
pursuant to instruction of the sender.
(c) 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 sender's 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 governing mistake and restitution.
Added by Acts 1993, 73rd Leg., ch. 570, Sec. 7, eff. Sept. 1,
1993.
Sec. 4A.304. DUTY OF SENDER TO REPORT ERRONEOUSLY EXECUTED
PAYMENT ORDER. If the sender of a payment order that is
erroneously executed as stated in Section 4A.303 receives
notification from the receiving bank that the order was executed
or that the sender's 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, the bank is not obliged
to pay interest on any amount refundable to the sender under
Section 4A.402(d) 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.
Added by Acts 1993, 73rd Leg., ch. 570, Sec. 7, eff. Sept. 1,
1993.
Sec. 4A.305. LIABILITY FOR LATE OR IMPROPER EXECUTION OR FAILURE
TO EXECUTE PAYMENT ORDER. (a) If a funds transfer is completed
but execution of a payment order by the receiving bank in breach
of Section 4A.302 of this chapter 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 by Subsection (c), additional damages are not
recoverable.
(b) If execution of a payment order by a receiving bank in
breach of Section 4A.302 results in (i) noncompletion of the
funds transfer, (ii) failure to use an intermediary bank
designated by the originator, or (iii) 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 its
expenses in the funds transfer and for incidental expenses and
interest losses, to the extent not covered by Subsection (a) of
this section, resulting from the improper execution. Except as
provided by Subsection (c), additional damages are not
recoverable.
(c) In addition to the amounts payable under Subsections (a) and
(b), damages, including consequential damages, are recoverable to
the extent provided in an express written agreement of the
receiving bank.
(d) 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 its expenses 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.
(e) Reasonable attorney's fees are recoverable if demand for
compensation under Subsection (a) or (b) is made and refused
before an action is brought on the claim. If a claim is made for
breach of an agreement under Subsection (d) and the agreement
does not provide for damages, reasonable attorney's fees are
recoverable if demand for compensation under Subsection (d) of
this section is made and refused before an action is brought on
the claim.
(f) Except as provided by this section, the liability of a
receiving bank under Subsections (a) and (b) of this section may
not be varied by agreement.
Added by Acts 1993, 73rd Leg., ch. 570, Sec. 7, eff. Sept. 1,
1993.
SUBCHAPTER D. PAYMENT
Sec. 4A.401. 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 beneficiary's 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 beneficiary's bank and,
unless otherwise determined, is the day the order is received by
the beneficiary's bank.
Added by Acts 1993, 73rd Leg., ch. 570, Sec. 7, eff. Sept. 1,
1993.
Sec. 4A.402. OBLIGATION OF SENDER TO PAY RECEIVING BANK. (a)
This section is subject to Sections 4A.205 and 4A.207.
(b) With respect to a payment order issued to the beneficiary's
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.
(c) This subsection is subject to Subsection (e) and to Section
4A.303. With respect to a payment order issued to a receiving
bank other than the beneficiary's bank, acceptance of the order
by the receiving bank obliges the sender to pay the bank the
amount of the sender's order. Payment by the sender is not due
until the execution date of the sender's order. The obligation of
that sender to pay its payment order is excused if the funds
transfer is not completed by acceptance by the beneficiary's bank
of a payment order instructing payment to the beneficiary of that
sender's payment order.
(d) 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 by Sections 4A.204 and
4A.304, interest is payable on the refundable amount from the
date of payment.
(e) If a funds transfer is not completed as provided by
Subsection (c) and an intermediary bank is obliged to refund
payment as provided by Subsection (d) 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 provided by
Section 4A.302(a)(1), 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 a refund as stated
in Subsection (d).
(f) The right of the sender of a payment order to be excused
from the obligation to pay the order as stated in Subsection (c)
or to receive a refund under Subsection (d) may not be varied by
agreement.
Added by Acts 1993, 73rd Leg., ch. 570, Sec. 7, eff. Sept. 1,
1993.
Sec. 4A.403. PAYMENT BY SENDER TO RECEIVING BANK. (a) Payment
of the sender's obligation under Section 4A.402 to pay the
receiving bank occurs as follows:
(1) 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.
(2) If the sender is a bank and the sender (i) credited an
account of the receiving bank with the sender, or (ii) 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.
(3) 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.
(b) 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. 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 sender's 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. 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.
The aggregate balance is determined after the right of setoff
stated in the second sentence of this subsection has been
exercised.
(c) If two banks transmit payment orders to each other under an
agreement that settlement of the obligations of each bank to the
other under Section 4A.402 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.
(d) In a case not covered by Subsection (a), the time when
payment of the sender's obligation under Section 4A.402(b) or (c)
occurs is governed by applicable principles of law that determine
when an obligation is satisfied.
Added by Acts 1993, 73rd Leg., ch. 570, Sec. 7, eff. Sept. 1,
1993.
Sec. 4A.404. OBLIGATION OF BENEFICIARY'S BANK TO PAY AND GIVE
NOTICE TO BENEFICIARY. (a) Subject to Sections 4A.211(e) and
4A.405(d) and (e), if a beneficiary's 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.
(b) If a payment order accepted by the beneficiary's 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. Reasonable
attorney's fees are recoverable if demand for interest is made
and refused before an action is brought on the claim.
(c) The right of a beneficiary to receive payment and damages as
stated in Subsection (a) may not be varied by agreement or a
funds transfer system rule. The right of a beneficiary to be
notified as stated in Subsection (b) 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.
Added by Acts 1993, 73rd Leg., ch. 570, Sec. 7, eff. Sept. 1,
1993.
Sec. 4A.405. PAYMENT BY BENEFICIARY'S BANK TO BENEFICIARY. (a)
If the beneficiary's bank credits an account of the beneficiary
of a payment order, payment of the bank's obligation under
Section 4A.404(a) occurs when and to the extent:
(1) the beneficiary is notified of the right to withdraw the
credit;
(2) the bank lawfully applies the credit to a debt of the
beneficiary; or
(3) funds with respect to the order are otherwise made available
to the beneficiary by the bank.
(b) If the beneficiary's bank does not credit an account of the
beneficiary of a payment order, the time when payment of the
bank's obligation under Section 4A.404(a) occurs is governed by
principles of law that determine when an obligation is satisfied.
(c) Except as provided by Subsections (d) and (e), if the
beneficiary's 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.
(d) A funds transfer system rule may provide that payments made
to beneficiaries of funds transfers through the system are
provisional until receipt of payment by the beneficiary's bank of
the payment order is accepted. A beneficiary's bank that makes a
payment that is provisional under the rule is entitled to refund
from the beneficiary if (i) 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,
(ii) the beneficiary, the beneficiary's bank and the originator's
bank agreed to be bound by the rule, and (iii) the beneficiary's
bank did not receive payment of the payment order that it
accepted. If the beneficiary is obliged to refund payment to the
beneficiary's bank, acceptance of the payment order by the
beneficiary's bank is nullified and no payment by the originator
of the funds transfer to the beneficiary occurs under Section
4A.406.
(e) This subsection applies to a funds transfer that includes a
payment order transmitted over a funds transfer system that (i)
nets obligations multilaterally among participants, and (ii) 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 beneficiary's 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:
(1) the acceptance by the beneficiary's bank is nullified and no
person has any right or obligation based on the acceptance;
(2) the beneficiary's bank is entitled to recover payment from
the beneficiary;
(3) no payment by the originator to the beneficiary occurs under
Section 4A.406; and
(4) subject to Section 4A.402(e), each sender in the funds
transfer is excused from its obligation to pay its payment order
under Section 4A.402(c) because the funds transfer has not been
completed.
Added by Acts 1993, 73rd Leg., ch. 570, Sec. 7, eff. Sept. 1,
1993.
Sec. 4A.406. PAYMENT BY ORIGINATOR TO BENEFICIARY; DISCHARGE OF
UNDERLYING OBLIGATION. (a) Subject to Sections 4A.211(e) and
4A.405(d) and (e), the originator of a funds transfer pays the
beneficiary of the originator's payment order:
(1) at the time a payment order for the benefit of the
beneficiary is accepted by the beneficiary's bank in the funds
transfer; and
(2) 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.
(b) If payment under Subsection (a) 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 (i) the payment under Subsection (a)
of this section was made by a means prohibited by the contract of
the beneficiary with respect to the obligation, (ii) 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 refusal of the payment, (iii)
funds with respect to the order were not withdrawn by the
beneficiary or applied to a debt of the beneficiary, and (iv) 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 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
beneficiary's bank under Section 4A.404(a).
(c) For the purpose of determining whether discharge of an
obligation occurs under Subsection (b), if the beneficiary's bank
accepts a payment order in an amount equal to the amount of the
originator's 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 originator's order unless upon demand
by the beneficiary the originator does not pay the beneficiary
the amount of the deducted charges.
(d) 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.
Added by Acts 1993, 73rd Leg., ch. 570, Sec. 7, eff. Sept. 1,
1993.
SUBCHAPTER E. MISCELLANEOUS PROVISIONS
Sec. 4A.501. VARIATION BY AGREEMENT AND EFFECT OF FUNDS TRANSFER
SYSTEM RULE. (a) 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.
(b) "Funds transfer system rule" means a rule of an association
of banks (i) 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 (ii) 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
beneficiary's bank. 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 Sections 4A.404(c), 4A.405(d),
and 4A.507(c).
Added by Acts 1993, 73rd Leg., ch. 570, Sec. 7, eff. Sept. 1,
1993.
Sec. 4A.502. CREDITOR PROCESS SERVED ON RECEIVING BANK; SETOFF
BY BENEFICIARY'S BANK. (a) 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.
(b) 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