336.4A-405 PAYMENT BY BENEFICIARY'S BANK TO BENEFICIARY.
(a) If the beneficiary's bank credits an account of the beneficiary of a payment order, payment
of the bank's obligation under section
occurs when and to the extent (i) the
beneficiary is notified of the right to withdraw the credit, (ii) the bank lawfully applies the credit
to a debt of the beneficiary, or (iii) funds with respect to the order are otherwise made available to
the beneficiary by the bank.
(b) If the beneficiary's bank does not credit an account of the beneficiary of a payment order,
the time when payment of the bank's obligation under section
occurs is governed
by principles of law that determine when an obligation is satisfied.
(c) Except as stated in subsections (d) and (e), if the beneficiary's bank pays the beneficiary
of a payment order under a condition to payment or agreement of the beneficiary giving the bank
the right to recover payment from the beneficiary if the bank does not receive payment of the
order, the condition to payment or agreement is not enforceable.
(d) A funds-transfer system rule may provide that payments made to beneficiaries of funds
transfers made through the system are provisional until receipt of payment by the beneficiary's
bank of the payment order it accepted. A beneficiary's bank that makes a payment that 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 the provisional 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 bound by the rule, and (iii) the beneficiary's bank did not receive payment of the
payment order that it accepted. If the beneficiary is obliged to refund payment to the beneficiary's
bank, acceptance of the payment order by the beneficiary's bank is nullified and no payment by
the originator of the funds transfer to the beneficiary occurs under section
(e) This subsection applies to a funds transfer that includes a payment order transmitted
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 of providing funds
necessary to complete settlement of the obligations of one or more participants that do not meet
their settlement obligations. If the beneficiary's bank in the funds transfer accepts a payment order
and the system fails to complete settlement pursuant to its rules with respect to any payment order
in the funds transfer, (i) the acceptance by the beneficiary's bank is nullified and no person has
any right or obligation 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
, and (iv) subject to section
, each sender in the funds transfer is
excused from its obligation to pay its payment order under section
funds transfer has not been completed.
History: 1990 c 582 art 1 s 30