Title 12A, Uniform Commercial Code

DEFERRED POSTING; RECOVERY OF PAYMENT BY RETURN OF ITEMS; TIME OF DISHONOR; RETURN OF ITEMS BY PAYOR BANK (a) If a payor bank settles for a demand item other than a documentary draft presented otherwise than for immediate payment over the counter before midnight of the banking da…

PAYOR BANK'S RESPONSIBILITY FOR LATE RETURN OF ITEM (a) If an item is presented to and received by a payor bank, the bank is accountable for the amount of: (1) a demand item, other than a documentary draft, whether properly payable or not, if the bank, in any case in which it is …

WHEN ITEMS SUBJECT TO NOTICE, STOP-PAYMENT ORDER, LEGAL PROCESS, OR SETOFF; ORDER IN WHICH ITEMS MAY BE CHARGED OR CERTIFIED (a) Any knowledge, notice, or stop-payment order received by, legal process served upon, or setoff exercised by a payor bank comes too late to terminate, s…

WHEN BANK MAY CHARGE CUSTOMER'S ACCOUNT (a) A bank may charge against the account of a customer an item that is properly payable from that account even though the charge creates an overdraft. An item is properly payable if it is authorized by the customer and is in accordance wit…

BANK'S LIABILITY TO CUSTOMER FOR WRONGFUL DISHONOR; TIME FOR DETERMINING INSUFFICIENCY OF ACCOUNT (a) Except as otherwise provided in this article, a payor bank wrongfully dishonors an item if it dishonors an item that is properly payable, but a bank may dishonor an item that wou…

CUSTOMER'S RIGHT TO STOP PAYMENT; BURDEN OF PROOF OF LOSS (a) A customer or any person authorized to draw on the account if there is more than one person may stop payment of any item drawn on the customer's account or close the account by an order to the bank describing the item …

A bank is under no obligation to a customer having a checking account to pay a check, other than a certified check, which is presented more than six (6) months after its date, but it may charge its customer's account for a payment made thereafter in good faith. Laws 1961, p. 130,…

DEATH OR INCOMPETENCE OF CUSTOMER (a) A payor or collecting bank's authority to accept, pay, or collect an item or to account for proceeds of its collection, if otherwise effective, is not rendered ineffective by incompetence of a customer of either bank existing at the time the …

CUSTOMER'S DUTY TO DISCOVER AND REPORT UNAUTHORIZED SIGNATURE OR ALTERATION (a) A bank that sends or makes available to a customer a statement of account showing payment of items for the account shall either return or make available to the customer the items paid or provide infor…

PAYOR BANK'S RIGHT TO SUBROGATION ON IMPROPER PAYMENT If a payor bank has paid an item over the order of the drawer or maker to stop payment, or after an account has been closed, or otherwise under circumstances giving a basis for objection by the drawer or maker, to prevent unju…

HANDLING OF DOCUMENTARY DRAFTS; DUTY TO SEND FOR PRESENTMENT AND TO NOTIFY CUSTOMER OF DISHONOR A bank that takes a documentary draft for collection shall present or send the draft and accompanying documents for presentment and, upon learning that the draft has not been paid or a…

PRESENTMENT OF "ON ARRIVAL" DRAFTS If a draft or the relevant instructions require presentment "on arrival", "when goods arrive" or the like, the collecting bank need not present until in its judgment a reasonable time for arrival of the goods has expired. Refusal to pay or accep…

RESPONSIBILITY OF PRESENTING BANK FOR DOCUMENTS AND GOODS; REPORT OF REASONS FOR DISHONOR; REFEREE IN CASE OF NEED Unless otherwise instructed and except as provided in Article 5 of this title, a bank presenting a documentary draft: (1) Must deliver the documents to the drawee on…

PRIVILEGE OF PRESENTING BANK TO DEAL WITH GOODS; SECURITY INTEREST FOR EXPENSES (a) A presenting bank that, following the dishonor of a documentary draft, has seasonably requested instructions but does not receive them within a reasonable time may store, sell, or otherwise deal w…

SHORT TITLE This Article, Sections 1 through 38 of this act, shall be known and may be cited as the Uniform Commercial Code - Funds Transfers. Added by Laws 1990, c. 110, § 1, eff. July 1, 1991.

SUBJECT MATTER Except as otherwise provided in Section 8 of this act, this Article applies to funds transfers defined in Section 4 of this act. Added by Laws 1990, c. 110, § 2, eff. July 1, 1991.

PAYMENT ORDER - DEFINITIONS (a) In this article: (1) "Payment order" means an instruction of a sender to a receiving bank, transmitted orally or in a record, to pay, or to cause another bank to pay, a fixed or determinable amount of money to a beneficiary if: (i) the instruction …

FUNDS TRANSFER - DEFINITIONS In this Article: (a) "Funds transfer" means the series of transactions, beginning with the originator's payment order, made for the purpose of making payment to the beneficiary of the order. The term includes any payment order issued by the originator…

OTHER DEFINITIONS (a) In this Article: (1) "Authorized account" means a deposit account of a customer in a bank designated by the customer as a source of payment of payment orders issued by the customer to the bank. If a customer does not so designate an account, any account of t…

TIME PAYMENT ORDER IS RECEIVED (a) The time of receipt of a payment order or communication canceling or amending a payment order is determined by the rules applicable to receipt of a notice stated in Section 1-202 of this title. A receiving bank may fix a cut-off time or times on…

FEDERAL RESERVE REGULATIONS AND OPERATING CIRCULARS Regulations of the board of governors of the Federal Reserve System and operating circulars of the Federal Reserve Banks supersede any inconsistent provision of this Article to the extent of the inconsistency. Added by Laws 1990…

RELATIONSHIP TO ELECTRONIC FUND TRANSFER ACT (a) Except as provided in subsection (b) of this section, this Article does not apply to a funds transfer any part of which is governed by the Electronic Fund Transfer Act of 1978 (Title XX, Public Law 95-630, 92 Stat. 3728, 15 U.S.C. …

SECURITY PROCEDURE "Security procedure" means a procedure established by agreement of a customer and a receiving bank for the purpose of (i) verifying that a payment order or communication amending or canceling a payment order is that of the customer, or (ii) detecting error in t…

AUTHORIZED AND VERIFIED PAYMENT ORDERS (a) A payment order received by the receiving bank is the authorized order of the person identified as sender if that person authorized the order or is otherwise bound by it under the law of agency. (b) If a bank and its customer have agreed…

UNENFORCEABILITY OF CERTAIN VERIFIED PAYMENT ORDERS (a) If an accepted payment order is not, under subsection (a) of Section 10 of this act, an authorized order of a customer identified as sender, but is effective as an order of the customer pursuant to subsection (b) of Section …

REFUND OF PAYMENT AND DUTY OF CUSTOMER TO REPORT WITH RESPECT TO UNAUTHORIZED PAYMENT ORDER (a) If a receiving bank accepts a payment order issued in the name of its customer as sender which is (i) not authorized and not effective as the order of the customer under Section 4A-202…

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 am…

TRANSMISSION OF PAYMENT ORDER THROUGH FUNDS-TRANSFER OR OTHER COMMUNICATION SYSTEM (a) If a payment order addressed to a receiving bank is transmitted to a funds-transfer system or other third-party communication system for transmittal to the bank, the system is deemed to be an a…

MISDESCRIPTION OF BENEFICIARY (a) Subject to subsection (b) of this section, if, in a payment order received by the beneficiary's bank, the name, bank account number, or other identification of the beneficiary refers to a nonexistent or unidentifiable person or account, no person…

MISDESCRIPTION OF INTERMEDIARY BANK OR BENEFICIARY'S BANK (a) This subsection applies to a payment order identifying an intermediary bank or the beneficiary's bank only by an identifying number. (1) The receiving bank may rely on the number as the proper identification of the int…

ACCEPTANCE OF PAYMENT ORDER (a) Subject to subsection (d) of this section, a receiving bank other than the beneficiary's bank accepts a payment order when it executes the order. (b) Subject to subsections (c) and (d) of this section, a beneficiary's bank accepts a payment order a…

REJECTION OF PAYMENT ORDER (a) A payment order is rejected by the receiving bank by a notice of rejection transmitted to the sender orally or in a record. A notice of rejection need not use any particular words and is sufficient if it indicates that the receiving bank is rejectin…

CANCELLATION AND AMENDMENT OF PAYMENT ORDER (a) A communication of the sender of a payment order canceling or amending the order may be transmitted to the receiving bank orally or in a record. If a security procedure is in effect between the sender and the receiving bank, the com…

LIABILITY AND DUTY OF RECEIVING BANK REGARDING UNACCEPTED PAYMENT ORDER If a receiving bank fails to accept a payment order that it is obliged by express agreement to accept, the bank is liable for breach of the agreement to the extent provided in the agreement or in this Article…

EXECUTION AND EXECUTION DATE (a) A payment order is "executed" by the receiving bank when it issues a payment order intended to carry out the payment order received by the bank. A payment order received by the beneficiary's bank can be accepted but cannot be executed. (b) "Execut…

OBLIGATIONS OF RECEIVING BANK IN EXECUTION OF PAYMENT ORDER (a) Except as provided in subsections (b) through (d) of this section, if the receiving bank accepts a payment order pursuant to subsection (a) of Section 17 of this act, the bank has the following obligations in executi…

ERRONEOUS EXECUTION OF PAYMENT ORDER (a) A receiving bank that (i) executes the payment order of the sender by issuing a payment order in an amount greater than the amount of the sender's order, or (ii) issues a payment order in execution of the sender's order and then issues a d…

DUTY OF SENDER TO REPORT ERRONEOUSLY EXECUTED PAYMENT ORDER If the sender of a payment order that is erroneously executed as stated in Section 23 of this act receives notification from the receiving bank that the order was executed or that the sender's account was debited with re…

LIABILITY FOR LATE OR IMPROPER EXECUTION OR FAILURE TO EXECUTE PAYMENT ORDER (a) If a funds transfer is completed but execution of a payment order by the receiving bank in breach of Section 22 of this act results in delay in payment to the beneficiary, the bank is obliged to pay …

PAYMENT DATE "Payment date" of a payment order means the day on which the amount of the order is payable to the beneficiary by the beneficiary's bank. The payment date may be determined by instruction of the sender but cannot be earlier than the day the order is received by the b…

OBLIGATION OF SENDER TO PAY RECEIVING BANK (a) This section is subject to Sections 13 and 15 of this act. (b) With respect to a payment order issued to the beneficiary's bank, acceptance of the order by the bank obliges the sender to pay the bank the amount of the order, but paym…

PAYMENT BY SENDER TO RECEIVING BANK (a) Payment of the sender's obligation under Section 27 of this act to pay the receiving bank occurs as follows: (1) If the sender is a bank, payment occurs when the receiving bank receives final settlement of the obligation through a Federal R…

OBLIGATION OF BENEFICIARY'S BANK TO PAY AND GIVE NOTICE TO BENEFICIARY (a) Subject to subsection (e) of Section 19 and subsections (d) and (e) of Section 30 of this act, if a beneficiary's bank accepts a payment order, the bank is obliged to pay the amount of the order to the ben…

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 subsection (a) of Section 29 of this act occurs when and to the extent (i) the beneficiary is notified of th…

PAYMENT BY ORIGINATOR TO BENEFICIARY; DISCHARGE OF UNDERLYING OBLIGATION (a) Subject to subsection (e) of Section 19 and subsections (d) and (e) of Section 30 of this act, the originator of a funds transfer pays the beneficiary of the originator's payment order (i) at the time a …

VARIATION BY AGREEMENT AND EFFECT OF FUNDS-TRANSFER SYSTEM RULE (a) Except as otherwise provided in this Article, the rights and obligations of a party to a funds transfer may be varied by agreement of the affected party. (b) "Funds-transfer system rule" means a rule of an associ…

CREDITOR PROCESS SERVED ON RECEIVING BANK; SETOFF BY BENEFICIARY'S BANK (a) As used in this section, "creditor process" means levy, attachment, garnishment, notice of lien, sequestration, or similar process issued by or on behalf of a creditor or other claimant with respect to an…

INJUNCTION OR RESTRAINING ORDER WITH RESPECT TO FUNDS TRANSFER For proper cause and in compliance with applicable law, a court may restrain (i) a person from issuing a payment order to initiate a funds transfer, (ii) an originator's bank from executing the payment order of the or…

ORDER IN WHICH ITEMS AND PAYMENT ORDERS MAY BE CHARGED TO ACCOUNT; ORDER OF WITHDRAWALS FROM ACCOUNT (a) If a receiving bank has received more than one payment order of the sender or one or more payment orders and other items that are payable from the sender's account, the bank m…

PRECLUSION OF OBJECTION TO DEBIT OF CUSTOMER'S ACCOUNT (a) If a receiving bank has received payment from its customer with respect to a payment order issued in the name of the customer as sender and accepted by the bank, and the customer received notification reasonably identifyi…