8.4A-205 - A-205. Erroneous payment orders.
§ 8.4A-205. Erroneous payment orders.
(a) If an accepted payment order was transmitted pursuant to a securityprocedure for the detection of error and the payment order (i) erroneouslyinstructed payment to a beneficiary not intended by the sender, (ii)erroneously instructed payment in an amount greater than the amount intendedby the sender, or (iii) was an erroneously transmitted duplicate of a paymentorder previously sent by the sender, the following rules apply:
(1) If the sender proves that the sender or a person acting on behalf of thesender pursuant to § 8.4A-206 complied with the security procedure and thatthe 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 insubdivisions (2) and (3) of this subsection.
(2) If the funds transfer is completed on the basis of an erroneous paymentorder described in clause (i) or (iii) of this subsection, the sender is notobliged to pay the order and the receiving bank is entitled to recover fromthe beneficiary any amount paid to the beneficiary to the extent allowed bythe law governing mistake and restitution.
(3) If the funds transfer is completed on the basis of a payment orderdescribed in clause (ii) of this subsection, the sender is not obliged to paythe order to the extent the amount received by the beneficiary is greaterthan the amount intended by the sender. In that case, the receiving bank isentitled to recover from the beneficiary the excess amount received to theextent allowed by the law governing mistake and restitution.
(b) If (i) the sender of an erroneous payment order described in subsection(a) of this section is not obliged to pay all or part of the order, and (ii)the sender receives notification from the receiving bank that the order wasaccepted by the bank or that the sender's account was debited with respect tothe order, the sender has a duty to exercise ordinary care, on the basis ofinformation available to the sender, to discover the error with respect tothe order and to advise the bank of the relevant facts within a reasonabletime, not exceeding ninety days, after the bank's notification was receivedby the sender. If the bank proves that the sender failed to perform thatduty, the sender is liable to the bank for the loss the bank proves itincurred as a result of the failure, but the liability of the sender may notexceed the amount of the sender's order.
(c) This section applies to amendments to payment orders to the same extentit applies to payment orders.
(1990, c. 9.)