Misdescription of intermediary bank or beneficiary's bank

84-4a-208. Misdescription of intermediary bank or beneficiary's bank. (a) This section applies to a payment order identifying an intermediary bank or beneficiary's bank only by an identifying number. (1) The receiving bank may rely on the number as the proper identification of the intermediary or beneficiary's bank and need not determine whether the number identifies a bank. (2) The sender is obliged to compensate the receiving bank for any loss and expenses incurred by the receiving bank as a result of its reliance on the number in executing or attempting to execute the order. (b) This subsection applies to a payment order identifying an intermediary bank or the beneficiary's bank both by name and an identifying number if the name and number identify different persons. (1) If the sender is a bank, the receiving bank may rely on the number as the proper identification of the intermediary or beneficiary's bank if the receiving bank, when it executes the sender's order, does not know that the name and number identify different persons. The receiving bank need not determine whether the name and number refer to the same person or whether the number refers to a bank. The sender is obliged to compensate the receiving bank for any loss and expenses incurred by the receiving bank as a result of its reliance on the number in executing or attempting to execute the order. (2) If the sender is not a bank and the receiving bank proves that the sender, before the payment order was accepted, had notice that the receiving bank might rely on the number as the proper identification of the intermediary or beneficiary's bank even if it identifies a person different from the bank identified by name, the rights and obligations of the sender and the receiving bank are governed by subsection (b)(1), as though the sender were a bank. Proof of notice may be made by any admissible evidence. The receiving bank satisfies the burden of proof if it proves that the sender, before the payment order was accepted, signed a writing stating the information to which the notice relates. (3) Regardless of whether the sender is a bank, the receiving bank may rely on the name as the proper identification of the intermediary or beneficiary's bank if the receiving bank, at the time it executes the sender's order, does not know that the name and number identify different persons. The receiving bank need not determine whether the name and number refer to the same person. (4) If the receiving bank knows that the name and number identify different persons, reliance on either the name or the number in executing the sender's payment order is a breach of the obligation stated in subsection (a)(1) of K.S.A. 84-4a-302. History: L. 1990, ch. 367, § 16; L. 1991, ch. 294, § 11; July 1. KANSAS COMMENT, 1996 This section is identical to the 1995 Official Text except the Official Text reads "(a) This sub section applies..." rather than "(a) This section applies...." Subsection (a) allows a receiving bank to rely on the identification numbers identifying an intermediary bank or a beneficiary's bank. If those numbers are wrong, the sender is liable for the receiving bank's loss and expenses. Subsection (b) is similar to 84-4a-207, and deals with payment orders which identify intermediary or beneficiary's banks both by name and by an identifying number, one of which identifies the wrong person. The receiving bank can rely on the number if it does not know they identify different persons. If the sender is a bank, or is not a bank but received notice that banks rely on identification numbers, the sender is liable. Paragraph (b)(3) allows the receiving bank to rely on the name if it does not know the name and number identify different persons. If the receiving bank is aware of the discrepancy, paragraph (b)(4) makes the reliance on either a breach of the bank's duty to issue a payment order complying with the sender's instructions.