(b) This subsection applies if a receiving bank other than

the beneficiary's bank fails to execute a payment order despite

the existence on the execution date of a withdrawable credit

balance in an authorized account of the sender sufficient to

cover the order. If the sender does not receive notice of

rejection of the order on the execution date and the authorized

account of the sender does not bear interest, the bank is obliged

to pay interest to the sender on the amount of the order for the

number of days elapsing after the execution date to the earlier

of the day the order is canceled pursuant to Section 4A-211(d) or

the day the sender receives notice or learns that the order was

not executed, counting the final day of the period as an elapsed

day. If the withdrawable credit balance during that period falls

below the amount of the order, the amount of interest is reduced

accordingly.

(c) If a receiving bank suspends payments, all unaccepted

payment orders issued to it are deemed rejected at the time the

bank suspends payments.

(d) Acceptance of a payment order precludes a later

rejection of the order. Rejection of a payment order precludes

a later acceptance of the order.

4A-211. Cancellation and Amendment of Payment Order.

(a) A communication of the sender of a payment order

cancelling or amending the order may be transmitted to the

receiving bank orally, electronically, or in writing. If a

security procedure is in effect between the sender and the

receiving bank, the communication is not effective to cancel or

amend the order unless the communication is verified pursuant to

the security procedure or the bank agrees to the cancellation or

amendment.

(b) Subject to subsection (a), a communication by the

sender cancelling or amending a payment order is effective to

cancel or amend the order if notice of the communication is

received at a time and in a manner affording the receiving bank a

reasonable opportunity to act on the communication before the

bank accepts the payment order.

(c) After a payment order has been accepted, cancellation

or amendment of the order is not effective unless the receiving

bank agrees or a funds-transfer system rule allows cancellation

or amendment without agreement of the bank.

(1) With respect to a payment order accepted by a

receiving bank other than the beneficiary's bank, cancellation or

amendment is not effective unless a conforming cancellation or

amendment of the payment order issued by the receiving bank is

also made.

(2) With respect to a payment order accepted by the

beneficiary's bank, cancellation or amendment is not effective

unless the order was issued in execution of an unauthorized

payment order, or because of a mistake by a sender in the funds

transfer which resulted in the issuance of a payment order (i)

that is a duplicate of a payment order previously issued by the

sender, (ii) that orders payment to a beneficiary not entitled to

receive payment from the originator, or (iii) that orders payment

in an amount greater than the amount the beneficiary was entitled

to receive from the originator. If the payment order is canceled

or amended, the beneficiary's bank is entitled to recover from

the beneficiary any amount paid to the beneficiary to the extent

allowed by the law governing mistake and restitution.

An unaccepted payment order is canceled by operation of

law at the close of the fifth funds-transfer business day of the

receiving bank after the execution date or payment date of the

order.

(e) A canceled payment order cannot be accepted. If an

accepted payment order is canceled, the acceptance is nullified

and no person has any right or obligation based on the

acceptance. Amendment of a payment order is deemed to be

cancellation of the original order at the time of amendment and

issue of a new payment order in the amended form at the same

time.

(f) Unless otherwise provided in an agreement of the

parties or in a funds-transfer system rule, if the receiving

bank, after accepting a payment order, agrees to cancellation

or amendment of the order by the sender or is bound by a

funds-transfer system rule allowing cancellation or amendment

without the bank's agreement, the sender, whether or not

cancellation or amendment is effective, is liable to the bank for

any loss and expenses, including reasonable attorney's fees,

incurred by the bank as a result of the cancellation or amendment

or attempted cancellation or amendment.

(g) A payment order is not revoked by the death or legal

incapacity of the sender unless the receiving bank knows of the

death or of an adjudication of incapacity by a court of competent

jurisdiction and has reasonable opportunity to act before

acceptance of the order.

(h) A funds-transfer system rule is not effective to the

extent it conflicts with subsection (c)(2).

4A-212. Liability and Duty of Receiving Bank Regarding

Unaccepted Payment Order.

If a receiving hank fails to accept a payment order that

it is obliged by express agreement to accept, the bank is liable

for breach of the agreement to the extent provided in the

agreement or in this Article, but does not otherwise have any

duty to accept a payment order or, before acceptance, to take any

action, or refrain from taking action, with respect to the order

except as provided in this Article or by express agreement

Liability based on acceptance arises only when acceptance occurs

as stated in Section 4A-209, and liability is limited to that

provided in this Article. A receiving bank is not the agent of

the sender or beneficiary of the payment order it accepts, or of

any other party to the funds transfer, and the bank owes no duty

to any party to the funds transfer except as provided in this

Article or by express agreement.

PART 3

EXECUTION OF SENDER'S PAYMENT ORDER BY RECEIVING BANK

4A-301. Execution and Execution Date.

(a) A payment order is "executed" by the receiving bank

when it issues a payment order intended to carry out the payment

order received by the bank. A payment order received by the

beneficiary's bank can be accepted but cannot be executed.

(b) "Execution date" of a payment order means the day on

which the receiving bank may properly Issue a payment order in

execution of the sender's order. The execution date may be

determined by instruction of the sender but cannot be earlier

than the day the order is received and, unless otherwise

determined, is the day the order is received. if the sender's

instruction states a payment date, the execution date is the

payment date or an earlier date on which execution is reasonably

necessary to allow payment to the beneficiary on the payment

date.

4A-302. Obligations of Receiving Bank in Execution of

Payment Order.

(a) Except as provided in subsections (b) through (d), if

the receiving bank accepts a payment order pursuant to Section

4A-209(a), the bank has the following obligations in executing

the order:

(1) The receiving bank is obliged to issue, on the

execution date, a payment order complying with the sender's order

and to follow the sender's instructions concerning (i) any

intermediary bank or funds-transfer system to be used in carrying

out the funds transfer, or (ii) the means by which payment orders

are to be transmitted in the funds transfer. If the originator's

bank issues a payment order to an intermediary bank, the

originator's bank is obliged to instruct the intermediary bank

according to the instruction of the originator. An intermediary

bank in the funds transfer is similarly bound by an instruction

given to it by the sender of the payment order it accepts.

(2) If the sender's instruction states that the funds

transfer is to be carried out telephonically or by wire transfer

or otherwise indicates that the funds transfer is to be carried

out by the most expeditious means, the receiving bank is obliged

to transmit its payment order by the most expeditious available

means, and to instruct any intermediary bank accordingly. If a

sender's instruction states a payment date, the receiving bank is

obliged to transmit its payment order at a time and by means

reasonably necessary to allow payment to the beneficiary on the

payment date or as soon thereafter as is feasible.

(b) Unless otherwise instructed, a receiving bank executing a payment order may use any funds-transfer system if use of that system is reasonable in the circumstances, and (ii) issue a payment order to the beneficiary's bank or to an intermediary bank through which a payment order conforming to the sender's order can expeditiously be issued to the beneficiary's bank if the receiving bank exercises ordinary care in the selection of the intermediary bank. A receiving bank is not required to follow an instruction of the sender designating a funds-transfer system to be used in carrying out the funds transfer if the receiving bank, in good faith, determines that it is not feasible to follow the instruction or that following the instruction would unduly delay completion of the funds transfer.

(c) Unless subsection (a)(2) applies or the receiving bank

is otherwise instructed, the bank may execute a payment order by

transmitting its payment order by first class mail or by any

means reasonable in the circumstances. If the receiving bank is

instructed to execute the sender's order by transmitting its

payment order by a particular means, the receiving bank may issue

its payment order by the means stated or by any means as

expeditious as the means stated.

(d) Unless instructed by the sender, (i) the receiving

bank may not obtain payment of its charges for services and

expenses in connection with the execution of the sender's order

by issuing a payment order in an amount equal to the amount of

the sender's order less the amount of the charges, and (ii) may

not instruct a subsequent receiving bank to obtain payment of its

charges in the same manner.

4A-303. Erroneous Execution of Payment Order.

(a) A receiving bank that (i) executes the payment order

of the sender by issuing a payment order in an amount greater

than the amount of the sender's order, or (ii) issues a payment

order in execution of the sender's order and then issues a

duplicate order, is entitled to payment of the amount of the

sender's order under Section 4A-402(c) if that subsection is

otherwise satisfied. The bank is entitled to recover from the

beneficiary of the erroneous order the excess payment received to

the extent allowed by the law governing mistake and restitution.

(b) A receiving bank that executes the payment order of

the sender by issuing a payment order in an amount less than the

amount of the sender's order is entitled to payment of the amount

of the sender's order under Section 4A-402(c) if (i) that

subsection is otherwise satisfied and (ii) the bank corrects its

mistake by issuing an additional payment order for the benefit of

the beneficiary of the sender's order. If the error is not

corrected, the issuer of the erroneous order is entitled to

receive or retain payment from the sender of the order it

accepted only to the extent of the amount of the erroneous order.

This subsection does not apply if the receiving bank executes the

sender's payment order by issuing a payment order in an amount

less than the amount of the sender's order for the purpose of

obtaining payment of its charges for services and expenses

pursuant to instruction of the sender.

(c) If a receiving bank executes the payment order of the

sender by issuing a payment order to a beneficiary different

from the beneficiary of the sender's order and the funds transfer

is completed on the basis of that error, the sender of the

payment order that was erroneously executed and all previous

senders in the funds transfer are not obliged to pay the payment

orders they issued. The issuer of the erroneous order is entitled

to recover from the beneficiary of the order the payment received

to the extent allowed by the law governing mistake and

restitution.

4A-304. Duty of Sender to Report Erroneously Executed Payment

Order.

If the sender of a payment order that is erroneously

executed as stated in Section 4A-303 receives notification from

the receiving bank that the order was executed or that the

sender's account was debited with respect to the order, the

sender has a duty to exercise ordinary care to determine, on the

basis of information available to the sender, that the order was

erroneously executed and to notify the bank of the relevant facts

within a reasonable time not exceeding 90 days after the

notification from the bank was received by the sender. If the

sender fails to perform that duty, the bank is not obliged to pay

interest on any amount refundable to the sender under Section

4A-402(d) for the period before the bank learns of the execution

error. The bank is not entitled to any recovery from the sender

on account of a failure by the sender to perform the duty stated

in this section.

4A-305. Liability for Late or Improper Execution or Failure to

Execute Payment Order.

(a) If a funds transfer is completed but execution of a

payment order by the receiving bank in breach of Section 4A-302

results in delay in payment to the beneficiary, the bank is

obliged to pay interest to either the originator or the

beneficiary of the funds transfer for the period of delay caused

by the improper execution. Except as provided in subsection (c),

additional damages are not recoverable.

(b) If execution of a payment order by a receiving bank in

breach of Section 4A-302 results in (i) noncompletion of the

funds transfer, (ii) failure to use an intermediary bank

designated by the originator, or (iii) issuance of a payment

order that does not comply with the terms of the payment order of

the originator, the bank is liable to the originator for its

expenses in the funds transfer and for incidental expenses and

interest losses, to the extent not covered by subsection (a),

resulting from the improper execution. Except as provided in

subsection (c), additional damages are not recoverable.

(c) In addition to the amounts payable under subsections

(a) and (b), damages, including consequential damages, are

recoverable to the extent provided in an express written

agreement of the receiving bank.

(d) If a receiving bank fails to execute a payment order

it was obliged by express agreement to execute, the receiving

bank is liable to the sender for its expenses in the transaction

and for incidental expenses and interest losses resulting from

the failure to execute. Additional damages, including

consequential damages, are recoverable to the extent provided in

an express written agreement of the receiving bank, but are not

otherwise recoverable.

(e) Reasonable attorney's fees are recoverable if demand

for compensation under subsection (a) or (b) is made and refused

before an action is brought on the claim. If a claim is made for

breach of an agreement under subsection (d) and the agreement

does not provide for damages, reasonable attorney's fees are

recoverable if demand for compensation under subsection (d) is

made and refused before an action is brought on the claim.

(f) Except as stated in this section, the liability of a

receiving bank under subsections (a) and (b) may not be varied

by agreement.

PART 4

PAYMENT

4A-401. Payment Date.

"Payment date" of a payment order means the day on which

the amount of the order is payable to the beneficiary by the

beneficiary's bank. The payment date may be determined by

instruction of the sender but cannot be earlier than the day the

order is received by the beneficiary's bank and, unless otherwise

determined, is the day the order is received by the beneficiary's

bank.

4A-402. Obligation of Sender to Pay Receiving Bank.

(a) This section is subject to Sections 4A-205 and 4A-207.

(b) With respect to a payment order issued to the

beneficiary's bank, acceptance of the order by the bank obliges

the sender to pay the bank the amount of the order, but payment

is not due until the payment date of the order.

(c) This subsection is subject to subsection (e) and to

Section 4A-303. With respect to a payment order issued to a

receiving bank other than the beneficiary's bank, acceptance of

the order by the receiving bank obliges the sender to pay the

bank the amount of the sender's order. Payment by the sender is

not due until the execution date of the sender's order. The

obligation of that sender to pay its payment order is excused if

the funds transfer is not completed by acceptance by the

beneficiary 5 bank of a payment order instructing payment to

the beneficiary of that sender's payment order.

(d) If the sender of a payment order pays the order and

was not obliged to pay all or part of the amount paid, the bank

receiving payment is obliged to refund payment to the extent the

sender was not obliged to pay. Except as provided in Sections

4A-204 and 4A-304, interest is payable on the refundable amount

from the date of payment.

(e) If a funds transfer is not completed as stated in

subsection (c) and an intermediary bank is obliged to refund

payment as stated in subsection (d) but is unable to do so

because not permitted by applicable law or because the bank

suspends payments, a sender in the funds transfer that executed

a payment order in compliance with an instruction, as stated in

Section 4A-302(a)(1), to route the funds transfer through that

intermediary bank is entitled to receive or retain payment from

the sender of the payment order that it accepted. The first

sender in the funds transfer that issued an instruction requiring

routing through that intermediary bank is subrogated to the

right of the bank that paid the intermediary bank to refund as

stated in subsection (d).

(f) The right of the sender of a payment order to be

excused from the obligation to pay the order as stated in

subsection (c) or to receive refund under subsection (d) may not

be varied by agreement.

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.

4A-404 Obligation of Beneficiary's Bank to Pay and Give Notice to

Beneficiary.

(a) Subject to Sections 4A-211(e), 4A-405(d), and

4A-405(e), if a beneficiary's bank accepts a payment order, the

bank is obliged to pay the amount of the order to the beneficiary

of the order. Payment is due on the payment date of the order,

but if acceptance occurs on the payment date after the close of

the funds-transfer business day of the bank, payment is due on

the next funds-transfer business day. If the bank refuses to pay

after demand by the beneficiary and receipt of notice of

particular circumstances that will give rise to consequential

damages as a result of nonpayment, the beneficiary may recover

damages resulting from the refusal to pay to the extent the bank

had notice of the damages, unless the bank proves that it did not

pay because of a reasonable doubt concerning the right of the

beneficiary to payment.

(b) If a payment order accepted by the beneficiary's bank

instructs payment to an account of the beneficiary, the bank is

obliged to notify the beneficiary of receipt of the order before

midnight of the next funds-transfer business day following the

payment date. If the payment order does not instruct payment to

an account of the beneficiary, the bank is required to notify the

beneficiary only if notice is required by the order. Notice may

be given by first class mail or any other means reasonable in the

circumstances. If the bank fails to give the required notice, the

bank is obliged to pay interest to the beneficiary on the amount

of the payment order from the day notice should have been given

until the day the beneficiary learned of receipt of the payment

order by the bank. No other damages are recoverable. Reasonable

attorney's fees are also recoverable if demand for interest is

made and refused before an action is brought on the claim.

(c) The right of a beneficiary to receive payment and

damages as stated in subsection (a) may not be varied by

agreement or a funds-transfer system rule. The right of a

beneficiary to be notified as stated in subsection (b) may be

varied by agreement of the beneficiary or by a funds-transfer

system rule if the beneficiary is notified of the rule before

initiation of the funds transfer.

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 4A404(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.

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.

PART 5

MISCELLANEOUS PROVISIONS

4A-501. Variation by Agreement and Effect of

Funds-Transfer System Rule.

(a) Except as otherwise provided in this Article, the

rights and obligations of a party to a funds transfer may be

varied by agreement of the affected party.

(b) "Funds-transfer system rule" means a rule of an

association of banks (i) governing transmission of payment orders

by means of a funds-transfer system of the association or rights

and obligations with respect to those orders, or (ii) to the

extent the rule governs rights and obligations between banks that

are parties to a funds transfer in which a Federal Reserve Bank,

acting as an intermediary bank, sends a payment order to the

beneficiary's bank. Except as otherwise provided in this Article,

a funds-transfer system rule governing rights and obligations

between participating banks using the system may be effective

even if the rule conflicts with this Article and indirectly

affects another party to the funds transfer who does not consent

to the rule. A funds-transfer system rule may also govern rights

and obligations of parties other than participating banks using

the system to the extent stated in Sections 4A404(c), 4A-405(d),

and 4A-507(c).

4A-502. Creditor Process Served on Receiving Bank; Setoff

by Beneficiary's Bank.

(a) As used in this section, "creditor process" means

levy, attachment, garnishment, notice of lien, sequestration, or

similar process issued by or on behalf of a creditor or other

claimant with respect to an account.

(b) This subsection applies to creditor process with

respect to an authorized account of the sender of a payment order

if the creditor process is served on the receiving bank. For the

purpose of determining rights with respect to the creditor

process, if the receiving bank accepts the payment order the

balance in the authorized account is deemed to be reduced by

the amount of the payment order to the extent the bank did not

otherwise receive payment of the order, unless the creditor

process is served at a time and in a manner affording the bank a

reasonable opportunity to act on it before the bank accepts the

payment order.

(c) If a beneficiary's bank has received a payment order

for payment to the beneficiary's account in the bank, the

following rules apply:

(1) The bank may credit the beneficiary's account. The

amount credited may be set off against an obligation owed by the

beneficiary to the bank or may be applied to satisfy creditor

process served on the bank with respect to the account.

(2) The bank may credit the beneficiary's account and

allow withdrawal of the amount credited unless creditor process

with respect to the account is served at a time and in a manner

affording the bank a reasonable opportunity to act to prevent

withdrawal.

(3) If creditor process with respect to the beneficiary's

account has been served and the bank has had a reasonable

opportunity to act on it, the bank may not reject the payment

order except for a reason unrelated to the service of process.

(d) Creditor process with respect to a payment by the

originator to the beneficiary pursuant to a funds transfer may be

served only on the beneficiary's bank with respect to the debt

owed by that bank to the beneficiary. Any other bank served with

the creditor process is not obliged to act with respect to the

process.

4A-503. Injunction or Restraining Order With Respect to Funds

Transfer. For proper cause and in compliance with applicable

law, a court may restrain (i) a person from issuing a payment

order to initiate a funds transfer, (ii) an originator's bank

from honoring the payment order of the originator, or (iii)

the beneficiary's bank releasing to the beneficiary or the

beneficiary from withdrawing the funds. A court may not otherwise

restrain a person from issuing a payment order, paying or

receiving payment of a payment order, or otherwise acting with

respect to a funds transfer.

4A-504. Order in Which items and Payment Orders May Be

Charged to Account; Order of Withdrawals From Account.

(a) If a receiving bank has received more than one payment

order of the sender or one or more payment orders and other items

that are payable from the sender's account, the bank may charge

the sender's account with respect to the various orders and items

in any sequence.

(b) In determining whether a credit to an account has been

withdrawn by the holder of the account or applied to a debt of

the holder of the account, credits first made to the account are

first withdrawn or applied.

4A-505. Preclusion of Objection to Debit of Customer's

Account.

If a receiving bank has received payment from its

customer with respect to a payment order issued in the name of

the customer as sender and accepted by the bank, and the customer

received notification reasonably identifying the order, the

customer is precluded from asserting that the bank is not

entitled to retain the payment unless the customer notifies the

bank of the customer's objection to the payment within one year

after the notification was received by the customer.

4A-506. Rate of Interest.

(a) If, under this Article, a receiving bank is obliged to

pay interest with respect to a payment order issued to the bank,

the amount payable may be determined (i) by agreement of the

sender and receiving bank, or (ii) by a funds-transfer system

rule if the payment order is transmitted through a funds-transfer

system.

(b) If the amount of interest is not determined by an

agreement or rule as stated in subsection (a), the amount is

calculated by multiplying the applicable Federal Funds rate by

the amount on which interest is payable, and then multiplying the

product by the number of days for which interest is payable. The

applicable Federal Funds rate is the average of the Federal Funds

rates published by the Federal Reserve Bank of New York for each

of the days for which interest is payable divided by 360. The

Federal Funds rate for any day on which a published rate is not

available is the same as the published rate for the next

preceding day for which there is a published rate. If a receiving

bank that accepted a payment order is required to refund payment

to the sender of the order because the funds transfer was not

completed, but the failure to complete as not due to any fault

by the bank, the interest payable is reduced by a percentage

equal to the reserve requirement on deposits of the receiving

bank.

4A-507. Choice of Law.

(a) The following rules apply unless the affected parties

otherwise agree or subsection (c) applies:

(1) The rights and obligations between the sender of a

payment order and the receiving bank are governed by the law of

the jurisdiction in which the receiving bank is located.

(2) The rights and obligations between the beneficiary's

bank and the beneficiary are governed by the law of the

jurisdiction in which the beneficiary's bank is located.

(3) The issue of when payment is made pursuant to a funds

transfer by the originator to the beneficiary is governed by the

law of the jurisdiction in which the beneficiary's bank is

located.

(b) If the parties described in each paragraph of

subsection (a) have made an agreement selecting the law of a

particular jurisdiction to govern rights and obligations

between each other, the law of that jurisdiction governs those

rights and obligations, whether or not the payment order or the

funds transfer bears a reasonable relation to that jurisdiction.

(c) A funds-transfer system rule may select the law of a

particular jurisdiction to govern (i) rights and obligations

between participating banks with respect to payment orders

transmitted or processed through the system, or (ii) the rights

and obligations of some or all parties to a funds transfer any

part of which is carried out by means of the system. A choice of

law made pursuant to clause (i) is binding on participating

banks. A choice of law made pursuant to clause (ii) is binding on

the originator, other sender, or a receiving bank having notice

that the funds-transfer system might be used in the funds

transfer and of the choice of law by the system when the

originator, other sender, or receiving bank issued or accepted a

payment order. The beneficiary of a funds transfer is bound by

the choice of law if, when the funds transfer is initiated, the

beneficiary has notice that the funds-transfer system might be

used in the funds transfer and of the choice of law by the

system. The law of a jurisdiction selected pursuant to this

subsection may govern, whether or not that law bears a reasonable

relation to the matter in issue.

(d) In the event of inconsistency between an agreement

under subsection (b) and a choice-of-law rule under subsection

(c), the agreement under subsection (b) prevails.

(e) If a funds transfer is made by use of more than one

funds-transfer system and there is inconsistency between

choice-of-law rules of the systems, the matter in issue is

governed by the law of the selected jurisdiction that has the

most significant relationship to the matter in issue.