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The Vermont Statutes Online



Title

09A

:
Uniform Commercial Code






Chapter

004A

:
Funds Transfers











 

§

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 4A-404(a) 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 4A-404(a)

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 4A-406.

(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 section 4A-406, and (iv) subject to

section 4A-402(e), each sender in the funds transfer is excused from its

obligation to pay its payment order under section 4A-402(c) because the funds

transfer has not been completed. (Added 1993, No. 158 (Adj. Sess.), § 14, eff.

Jan. 1, 1995.)