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The Vermont Statutes Online



Title

09A

:
Uniform Commercial Code






Chapter

004A

:
Funds Transfers











 

§

4A-406. Payment by originator to beneficiary; discharge of underlying

obligation

(a) Subject to

sections 4A-211(e), 4A-405(d), and 4A-405(e), the originator of a funds

transfer pays the beneficiary of the originator's payment order (i) at the time

a payment order for the benefit of the beneficiary is accepted by the

beneficiary's bank in the funds transfer and (ii) in an amount equal to the

amount of the order accepted by the beneficiary's bank, but not more than the

amount of the originator's order.

(b) If payment

under subsection (a) is made to satisfy an obligation, the obligation is

discharged to the same extent discharge would result from payment to the

beneficiary of the same amount in money, unless (i) the payment under

subsection (a) was made by a means prohibited by the contract of the

beneficiary with respect to the obligation, (ii) the beneficiary, within a

reasonable time after receiving notice of receipt of the order by the

beneficiary's bank, notified the originator of the beneficiary's refusal of the

payment, (iii) funds with respect to the order were not withdrawn by the

beneficiary or applied to a debt of the beneficiary, and (iv) the beneficiary

would suffer a loss that could reasonably have been avoided if payment had been

made by a means complying with the contract. If payment by the originator does

not result in discharge under this section, the originator is subrogated to the

rights of the beneficiary to receive payment from the beneficiary's bank under

section 4A-404(a).

(c) For the

purpose of determining whether discharge of an obligation occurs under

subsection (b), if the beneficiary's bank accepts a payment order in an amount

equal to the amount of the originator's payment order less charges of one or

more receiving banks in the funds transfer, payment to the beneficiary is

deemed to be in the amount of the originator's order unless upon demand by the

beneficiary the originator does not pay the beneficiary the amount of the

deducted charges.

(d) Rights of

the originator or of the beneficiary of a funds transfer under this section may

be varied only by agreement of the originator and the beneficiary. (Added 1993,

No. 158 (Adj. Sess.), § 14, eff. Jan. 1, 1995.)