70A-4a-406 - Payment by originator to beneficiary -- Discharge of underlying obligation.
70A-4a-406. Payment by originator to beneficiary -- Discharge of underlyingobligation.
(1) Subject to Subsection 70A-4a-211(5) and Subsections 70A-4a-405(4) and (5), theoriginator of a funds transfer pays the beneficiary of the originator's payment order:
(a) at the time a payment order for the benefit of the beneficiary is accepted by thebeneficiary's bank in the funds transfer; and
(b) in an amount equal to the amount of the order accepted by the beneficiary's bank, butnot more than the amount of the originator's order.
(2) (a) If payment under Subsection (1) is made to satisfy an obligation, the obligation isdischarged to the same extent discharge would result from payment to the beneficiary of the sameamount in money, unless:
(i) the payment under Subsection (1) was made by a means prohibited by the contract ofthe beneficiary with respect to the obligation;
(ii) the beneficiary, within a reasonable time after receiving notice of receipt of the orderby 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(iii) funds with respect to the order were not withdrawn by the beneficiary or applied to adebt of the beneficiary; and
(iv) the beneficiary would suffer a loss that could reasonably have been avoided ifpayment had been made by a means complying with the contract.
(b) If payment by the originator does not result in discharge under this section, theoriginator is subrogated to the rights of the beneficiary to receive payment from the beneficiary'sbank under Subsection 70A-4a-404(1).
(3) For the purpose of determining whether discharge of an obligation occurs underSubsection (2), if the beneficiary's bank accepts a payment order in an amount equal to theamount of the originator's payment order less charges of one or more receiving banks in the fundstransfer, payment to the beneficiary is deemed to be in the amount of the originator's order unlessupon demand by the beneficiary the originator does not pay the beneficiary the amount of thededucted charges.
(4) Rights of the originator or of the beneficiary of a funds transfer under this sectionmay be varied only by agreement of the originator and the beneficiary.
Amended by Chapter 237, 1993 General Session