§490:4A-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 proves 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 size, 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 article

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

section 490:4A-203(a)(1), rights and obligations arising under this section or

section 490:4A-203 may not be varied by agreement. [L 1991, c 41, pt of §1]