TITLE 6A

Uniform Commercial Code

CHAPTER 6A-4.1

Funds Transfers

PART 6A-4.1-201

Issue and Acceptance of Payment Order

SECTION 6A-4.1-202



   § 6A-4.1-202  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 that the

authenticity of payment orders issued to the bank in the name of the customer

as sender will be verified pursuant to a security procedure, a payment order

received by the receiving bank is effective as the order of the customer

whether or not authorized, if (i) the security procedure is a commercially

reasonable method of providing security against unauthorized payment orders,

and (ii) the bank provides that it accepted the payment order in good faith and

in compliance with the security procedure and any written agreement or

instruction of the customer restricting acceptance of payment orders issued in

the name of the customer. The bank is not required to follow an instruction

that violates a written agreement with the customer or notice of which is not

received at a time and in a manner affording the bank a reasonable opportunity

to act on it before the payment order is accepted.



   (c) Commercial reasonableness of a security procedure is a

question of law to be determined by considering the wishes of the customer

expressed to the bank, the circumstances of the customer known to the bank,

including the mix, type, and frequency of payment orders normally issued by the

customer to the bank, alternative security procedures offered to the customer,

and security procedures in general use by customers and receiving banks

similarly situated. A security procedure is deemed to be commercially

reasonable if (i) the security procedure was chosen by the customer after the

bank offered, and the customer refused, a security procedure that was

commercially reasonable for that customer, and (ii) the customer expressly

agreed in writing to be bound by any payment order, whether or not authorized,

issued in its name and accepted by the bank in compliance with the security

procedure chosen by the customer.



   (d) The term "sender" in this chapter includes the customer

in whose name a payment order is issued if the order is the authorized order of

the customer under subsection (a), or it is effective as the order of the

customer under subsection (b).



   (e) This section applies to amendments and cancellations of

payment orders to the same extent it applies to payment orders.



   (f) Except as provided in this section and in §

6A-4.1-203(a)(1), rights and obligations arising under this section and §

6A-4.1-203 may not be varied by agreement.



History of Section.

(P.L. 1991, ch. 189, § 1.)