336.4A-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
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 paragraphs (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
History: 1990 c 582 art 1 s 13