8.4A-202 - A-202. Authorized and verified payment orders.
§ 8.4A-202. Authorized and verified payment orders.
(a) A payment order received by the receiving bank is the authorized order ofthe person identified as sender if that person authorized the order or isotherwise bound by it under the law of agency.
(b) If a bank and its customer have agreed that the authenticity of paymentorders issued to the bank in the name of the customer as sender will beverified pursuant to a security procedure, a payment order received by thereceiving bank is effective as the order of the customer, whether or notauthorized, if (i) the security procedure is a commercially reasonable methodof providing security against unauthorized payment orders, and (ii) the bankproves that it accepted the payment order in good faith and in compliancewith the security procedure and any written agreement or instruction of thecustomer restricting acceptance of payment orders issued in the name of thecustomer. The bank is not required to follow an instruction that violates awritten agreement with the customer or notice of which is not received at atime and in a manner affording the bank a reasonable opportunity to act on itbefore the payment order is accepted.
(c) Commercial reasonableness of a security procedure is a question of law tobe determined by considering the wishes of the customer expressed to thebank, the circumstances of the customer known to the bank, including thesize, type, and frequency of payment orders normally issued by the customerto the bank, alternative security procedures offered to the customer, andsecurity procedures in general use by customers and receiving banks similarlysituated. A security procedure is deemed to be commercially reasonable if (i)the security procedure was chosen by the customer after the bank offered, andthe customer refused, a security procedure that was commercially reasonablefor that customer, and (ii) the customer expressly agreed in writing to bebound by any payment order, whether or not authorized, issued in its name andaccepted by the bank in compliance with the security procedure chosen by thecustomer.
(d) The term "sender" in this title includes the customer in whose name apayment order is issued if the order is the authorized order of the customerunder subsection (a) of this section, or it is effective as the order of thecustomer under subsection (b) of this section.
(e) This section applies to amendments and cancellations of payment orders tothe same extent it applies to payment orders.
(f) Except as provided in this section and in subdivision (a) (1) of §8.4A-203, rights and obligations arising under this section or § 8.4A-203 maynot be varied by agreement.
(1990, c. 9.)