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The Vermont Statutes Online



Title

09A

:
Uniform Commercial Code






Chapter

004A

:
Funds Transfers











 

§

4A-403. Payment by sender to receiving bank

(a) Payment of

the sender's obligation under section 4A-402 to pay the receiving bank occurs

as follows:

(1) If the

sender is a bank, payment occurs when the receiving bank receives final

settlement of the obligation through a Federal Reserve Bank or through a

funds-transfer system.

(2) If the

sender is a bank and the sender (i) credited an account of the receiving bank

with the sender, or (ii) caused an account of the receiving bank in another

bank to be credited, payment occurs when the credit is withdrawn or, if not

withdrawn, at midnight of the day on which the credit is withdrawable and the

receiving bank learns of that fact.

(3) If the

receiving bank debits an account of the sender with the receiving bank, payment

occurs when the debit is made to the extent the debit is covered by a

withdrawable credit balance in the account.

(b) If the

sender and receiving bank are members of a funds-transfer system that nets

obligations multilaterally among participants, the receiving bank receives

final settlement when settlement is complete in accordance with the rules of

the system. The obligation of the sender to pay the amount of a payment order

transmitted through the funds-transfer system may be satisfied, to the extent

permitted by the rules of the system, by setting off and applying against the

sender's obligation the right of the sender to receive payment from the

receiving bank of the amount of any other payment order transmitted to the

sender by the receiving bank through the funds-transfer system. The aggregate

balance of obligations owed by each sender to each receiving bank in the

funds-transfer system may be satisfied, to the extent permitted by the rules of

the system, by setting off and applying against that balance the aggregate

balance of obligations owed to the sender by other members of the system. The

aggregate balance is determined after the right of setoff stated in the second

sentence of this subsection has been exercised.

(c) If two banks

transmit payment orders to each other under an agreement that settlement of the

obligations of each bank to the other under section 4A-402 will be made at the

end of the day or other period, the total amount owed with respect to all

orders transmitted by one bank shall be set off against the total amount owed

with respect to all orders transmitted by the other bank. To the extent of the

setoff, each bank has made payment to the other.

(d) In a case

not covered by subsection (a), the time when payment of the sender's obligation

under section 4A-402(b) or 4A-402(c) occurs is governed by applicable

principles of law that determine when an obligation is satisfied. (Added 1993,

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