§4A-205. Erroneous payment orders

Link to law: http://legislature.vermont.gov/statutes/section/09A/004A/00205
Published: 2015

Print

The Vermont Statutes Online



Title

09A

:
Uniform Commercial Code






Chapter

004A

:
Funds Transfers











 

§

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 to section 4A-206 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

payment orders. (Added 1993, No. 158 (Adj. Sess.), § 14, eff. Jan. 1, 1995.)
Read Entire Law on legislature.vermont.gov