70A-4a-405 - Payment by beneficiary's bank to beneficiary.
70A-4a-405. Payment by beneficiary's bank to beneficiary.
(1) If a beneficiary's bank credits an account of the beneficiary of a payment order,payment of the bank's obligation under Subsection 70A-4a-404(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 thebank.
(2) If the beneficiary's bank does not credit an account of the beneficiary of a paymentorder, the time when payment of the bank's obligation under Subsection 70A-4a-404(1) isgoverned by applicable principles of law that determine when an obligation is satisfied.
(3) Except as stated in Subsections (4) and (5), if the beneficiary's bank pays thebeneficiary of a payment order under a condition to payment or agreement of the beneficiarygiving the bank the right to recover payment from the beneficiary if the bank does not receivepayment of the order, the condition to payment or agreement is not enforceable.
(4) (a) A funds transfer system rule may provide that payments made to beneficiaries offunds transfers made through the system are provisional until receipt of payment by thebeneficiary's bank of the payment order it accepted. A beneficiary's bank that makes a paymentthat 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 theprovisional 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 boundby the rule; and
(iii) the beneficiary's bank did not receive payment of the payment order that it accepted.
(b) If the beneficiary is obliged to refund payment to the beneficiary's bank, acceptanceof the payment order by the beneficiary's bank is nullified and no payment by the originator ofthe funds transfer to the beneficiary occurs under Section 70A-4a-406.
(5) (a) This subsection applies to a funds transfer that includes a payment ordertransmitted 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 ofproviding funds necessary to complete settlement of the obligations of one or more participantsthat do not meet their settlement obligations.
(b) If the beneficiary's bank in the funds transfer accepts a payment order and the systemfails to complete settlement pursuant to its rules with respect to any payment order in the fundstransfer:
(i) the acceptance by the beneficiary's bank is nullified and no person has any right orobligation based on the acceptance;
(ii) the beneficiary's bank is entitled to recover payment from the beneficiary;
(iii) no payment by the originator to the beneficiary occurs under Section 70A-4a-406;and
(iv) subject to Subsection 70A-4a-402(5), each sender in the funds transfer is excusedfrom its obligation to pay its payment order under Subsection 70A-4a-402(3) because the fundstransfer has not been completed.
Amended by Chapter 237, 1993 General Session