13 Pa.C.S. Ch. 4

in effect

13 Pa.C.S. § 4 Transition provision on changes of place of filing.

(a) Financing statements filed prior to this act.--A financing statement or continuation statement filed prior to the effective date of this act which shall not have lapsed prior to that date shall remain effective for the period provided prior thereto, but not less than five years after the filing. (b) Collateral acquired subsequent to this act.--With respect to any collateral acquired by the debtor subsequent to the effective date of this act, any effective financing statement or continuation statement described in this section shall apply only if the filing or filings are in the office that would be appropriate to perfect the security interests in the new collateral after the effective date of this act. (c) Continuation.--The effectiveness of any financing statement or continuation statement filed prior to the effective date of this act may be continued by a continuation statement as permitted in this act, except that if filing is in an office where there was no previous financing statement required, a new financing statement conforming to section 5 shall be filed in that office. (d) Mortgage as fixture filing.--If the record of a mortgage of real estate would have been effective as a fixture filing of goods described therein if this act had been in effect on the date of recording the mortgage, the mortgage shall be deemed effective as a fixture filing as to such goods under 13 Pa.C.S. § 9402(f) (relating to mortgage as financing statement) as revised by this act.

13 Pa.C.S. § 4A101 Short title of division.

This division shall be known and may be cited as the Uniform Commercial Code, Article 4A, Funds Transfers.

13 Pa.C.S. § 4A102 Subject matter.

Except as otherwise provided in section 4A108 (relating to relationship to Electronic Fund Transfer Act), this division applies to funds transfers defined in section 4A104 (relating to funds transfer; definitions). (July 9, 2013, P.L.262, No.49, eff. 60 days)

13 Pa.C.S. § 4A103 Payment order; definitions.

(a) Definition of "payment order" and related terms.--The following words and phrases when used in this division shall have the meanings given to them in this subsection: (1) "Payment order." An instruction of a sender to a receiving bank, transmitted orally or in a record, to pay, or to cause another bank to pay, a fixed or determinable amount of money to a beneficiary if: (i) the instruction does not state a condition to payment to the beneficiary other than time of payment; (ii) the receiving bank is to be reimbursed by debiting an account of, or otherwise receiving payment from, the sender; and (iii) the instruction is transmitted by the sender directly to the receiving bank or to an agent, funds-transfer system or communication system for transmittal to the receiving bank. (2) "Beneficiary." The person to be paid by the beneficiary's bank. (3) "Beneficiary's bank." The bank identified in a payment order in which an account of the beneficiary is to be credited pursuant to the order or which otherwise is to make payment to the beneficiary if the order does not provide for payment to an account. (4) "Receiving bank." The bank to which the sender's instruction is addressed. (5) "Sender." The person giving the instruction to the receiving bank. (b) Instruction.--If an instruction complying with subsection (a)(1) is to make more than one payment to a beneficiary, the instruction is a separate payment order with respect to each payment. (c) When payment order is issued.--A payment order is issued when it is sent to the receiving bank. (June 8, 2001, P.L.123, No.18, eff. July 1, 2001; July 1, 2024, P.L.450, No.41, eff. 60 days) 2024 Amendment. Act 41 amended subsec. (a)(1) intro. par. See section 1 of Act 41 in the appendix to this title for special provisions relating to findings and declarations. Cross References. Section 4A103 is referred to in section 4A105 of this title.

13 Pa.C.S. § 4A104 Funds transfer; definitions.

(a) Definition of "funds transfer".--"Funds transfer" means the series of transactions, beginning with the originator's payment order, made for the purpose of making payment to the beneficiary of the order. The term includes any payment order issued by the originator's bank or an intermediary bank intended to carry out the originator's payment order. A funds transfer is completed by acceptance by the beneficiary's bank of a payment order for the benefit of the beneficiary of the originator's payment order. (b) Definition of "intermediary bank".--"Intermediary bank" means a receiving bank other than the originator's bank or the beneficiary's bank. (c) Definition of "originator".--"Originator" means the sender of the first payment order in a funds transfer. (d) Definition of "originator's bank".--"Originator's bank" means: (1) the receiving bank to which the payment order of the originator is issued if the originator is not a bank; or (2) the originator if the originator is a bank. Cross References. Section 4A104 is referred to in sections 4A102, 4A105 of this title.

13 Pa.C.S. § 4A105 Other definitions.

(a) Definitions.--The following words and phrases when used in this division shall have the meanings given to them in this subsection: "Authorized account." A deposit account of a customer in a bank designated by the customer as a source of payment of payment orders issued by the customer to the bank. If a customer does not so designate an account, any account of the customer is an authorized account if payment of a payment order from that account is not inconsistent with a restriction on the use of that account. "Bank." A person engaged in the business of banking, including a savings bank, savings and loan association, credit union and trust company. A branch or separate office of a bank is a separate bank for purposes of this division. "Customer." A person, including a bank, having an account with a bank or from whom a bank has agreed to receive payment orders. "Funds-transfer business day." The part of a day during which the receiving bank is open for the receipt, processing and transmittal of payment orders and cancellations and amendments of payment orders. "Funds-transfer system." A wire transfer network, automated clearinghouse or other communication system of a clearinghouse or other association of banks through which a payment order by a bank may be transmitted to the bank to which the order is addressed. "Good faith." (Deleted by amendment). "Prove." With respect to a fact, means to meet the burden of establishing the fact (section 1201(b)(8)). (b) Index of other definitions in division.--Other definitions applying to this division and the sections in which they appear are: "Acceptance." Section 4A209. "Beneficiary." Section 4A103. "Beneficiary's bank." Section 4A103. "Executed." Section 4A301. "Execution date." Section 4A301. "Funds transfer." Section 4A104. "Funds-transfer system rule." Section 4A501. "Intermediary bank." Section 4A104. "Originator." Section 4A104. "Originator's bank." Section 4A104. "Payment by beneficiary's bank to beneficiary." Section 4A405. "Payment by originator to beneficiary." Section 4A406. "Payment by sender to receiving bank." Section 4A403. "Payment date." Section 4A401. "Payment order." Section 4A103. "Receiving bank." Section 4A103. "Security procedure." Section 4A201. "Sender." Section 4A103. (c) Index of definitions in other divisions.--The following definitions in Division 4 (relating to bank deposits and collections) apply to this division: "Clearinghouse." Section 4104. "Item." Section 4104. "Suspends payments." Section 4104. (d) Applicability of general definitions and principles.--In addition, Division 1 (relating to general provisions) contains general definitions and principles of construction and interpretation applicable throughout this division. (June 8, 2001, P.L.123, No.18, eff. July 1, 2001; Apr. 16, 2008, P.L.57, No.13, eff. 60 days) 2008 Amendment. Act 13 amended the def. of "prove" and deleted the def. of "good faith" in subsec. (a). 2001 Amendment. Act 18 amended subsec. (a) intro. par.

13 Pa.C.S. § 4A106 Time payment order is received.

(a) General rule.--The time of receipt of a payment order or communication canceling or amending a payment order is determined by the rules applicable to receipt of a notice stated in section 1202 (relating to notice; knowledge). A receiving bank may fix a cutoff time or times on a funds-transfer business day for the receipt and processing of payment orders and communications canceling or amending payment orders. Different cutoff times may apply to payment orders, cancellations or amendments or to different categories of payment orders, cancellations or amendments. A cutoff time may apply to senders generally or different cutoff times may apply to different senders or categories of payment orders. If a payment order or communication canceling or amending a payment order is received after the close of a funds-transfer business day or after the appropriate cutoff time on a funds-transfer business day, the receiving bank may treat the payment order or communication as received at the opening of the next funds-transfer business day. (b) When date of certain required action does not fall on funds-transfer business day.--If this division refers to an execution date or payment date or states a day on which a receiving bank is required to take action and the date or day does not fall on a funds-transfer business day, the next day that is a funds-transfer business day is treated as the date or day stated, unless the contrary is stated in this division. (Apr. 16, 2008, P.L.57, No.13, eff. 60 days) 2008 Amendment. Act 13 amended subsec. (a).

13 Pa.C.S. § 4A107 Federal Reserve regulations and operating circulars.

Regulations of the Board of Governors of the Federal Reserve System and operating circulars of the Federal Reserve banks supersede any inconsistent provision of this division to the extent of the inconsistency.

13 Pa.C.S. § 4A108 Relationship to Electronic Fund Transfer Act.

(a) Nonapplicability.--Except as set forth in subsection (b), this division does not apply to a funds transfer any part of which is governed by the Electronic Fund Transfer Act (Public Law 95-630, 15 U.S.C. § 1693 et seq.). (b) Applicability.--This division applies to a funds transfer that is a "remittance transfer" as defined in section 919(g)(2) and (3) of the Electronic Fund Transfer Act (Public Law 95-630, 15 U.S.C. § 1693o-1(g)(2) and (3)), unless the remittance transfer is an "electronic fund transfer" as defined in section 903(7) of the Electronic Fund Transfer Act (Public Law 95-630, 15 U.S.C. § 1693a(7)). (c) Inconsistency.--In a funds transfer to which this division applies, in the event of an inconsistency between an applicable provision of this division and an applicable provision of the Electronic Fund Transfer Act, the provision of the Electronic Fund Transfer Act governs to the extent of the inconsistency. (July 9, 2013, P.L.262, No.49, eff. 60 days) Cross References. Section 4A108 is referred to in section 4A102 of this title.

13 Pa.C.S. § 4A201 Security procedure.

"Security procedure" means a procedure established by agreement of a customer and a receiving bank for the purpose of: (1) verifying that a payment order or communication amending or canceling a payment order is that of the customer; or (2) detecting error in the transmission or the content of the payment order or communication. A security procedure may impose an obligation on the receiving bank or the customer and may require the use of algorithms or other codes, identifying words, numbers, symbols, sounds, biometrics, encryption, callback procedures or similar security devices. Comparison of a signature on a payment order or communication with an authorized specimen signature of the customer or requiring a payment order to be sent from a known email address, IP address or telephone number is not by itself a security procedure. (July 1, 2024, P.L.450, No.41, eff. 60 days) 2024 Amendment. See section 1 of Act 41 in the appendix to this title for special provisions relating to findings and declarations. Cross References. Section 4A201 is referred to in section 4A105 of this title.

13 Pa.C.S. § 4A202 Authorized and verified payment orders.

(a) Authorized payment order.--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) Verified payment order.--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: (1) the security procedure is a commercially reasonable method of providing security against unauthorized payment orders; and (2) the bank proves that it accepted the payment order in good faith and in compliance with the bank's obligations under the security procedure and any agreement or instruction of the customer, evidenced by a record, restricting acceptance of payment orders issued in the name of the customer. The bank is not required to follow an instruction that violates an agreement with the customer, evidenced by a record, 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 security procedure.--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: (1) 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 (2) the customer expressly agreed in a record to be bound by any payment order, whether or not authorized, issued in its name and accepted by the bank in compliance with the bank's obligations under the security procedure chosen by the customer. (d) Definition of "sender".--The term "sender" in this division 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) Amendments and cancellations of payment orders.--This section applies to amendments and cancellations of payment orders to the same extent it applies to payment orders. (f) Rights and obligations.--Except as provided in this section and in section 4A203(a)(1) (relating to unenforceability of certain verified payment orders), rights and obligations arising under this section or section 4A203 may not be varied by agreement. (July 1, 2024, P.L.450, No.41, eff. 60 days) 2024 Amendment. Act 41 amended subsecs. (b)(2) and (c)(2). See section 1 of Act 41 in the appendix to this title for special provisions relating to findings and declarations. Cross References. Section 4A202 is referred to in sections 4A203, 4A204 of this title.

13 Pa.C.S. § 4A203 Unenforceability of certain verified payment orders.

(a) General rule.--If an accepted payment order is not, under section 4A202(a) (relating to authorized and verified payment orders), an authorized order of a customer identified as sender, but is effective as an order of the customer pursuant to section 4A202(b), the following rules apply: (1) By express agreement evidenced by a record, the receiving bank may limit the extent to which it is entitled to enforce or retain payment of the payment order. (2) The receiving bank is not entitled to enforce or retain payment of the payment order if the customer proves that the order was not caused, directly or indirectly, by a person: (i) entrusted at any time with duties to act for the customer with respect to payment orders or the security procedure; or (ii) who obtained access to transmitting facilities of the customer or who obtained, from a source controlled by the customer and without authority of the receiving bank, information facilitating breach of the security procedure, regardless of how the information was obtained or whether the customer was at fault. Information includes any access device, computer software or the like. (b) Amendments of payment orders.--This section applies to amendments of payment orders to the same extent it applies to payment orders. (July 1, 2024, P.L.450, No.41, eff. 60 days) 2024 Amendment. Act 41 amended subsec. (a)(1). See section 1 of Act 41 in the appendix to this title for special provisions relating to findings and declarations. Cross References. Section 4A203 is referred to in sections 4A202, 4A204 of this title.

13 Pa.C.S. § 4A204 Refund of payment and duty of customer to report with respect to unauthorized payment order.

(a) General rule.--If a receiving bank accepts a payment order issued in the name of its customer as sender which is not authorized and not effective as the order of the customer under section 4A202 (relating to authorized and verified payment orders) or not enforceable, in whole or in part, against the customer under section 4A203 (relating to unenforceability of certain verified payment orders), the bank shall refund any payment of the payment order received from the customer to the extent the bank is not entitled to enforce payment and shall pay interest on the refundable amount calculated from the date the bank received payment to the date of the refund. However, the customer is not entitled to interest from the bank on the amount to be refunded if the customer fails to exercise ordinary care to determine that the order was not authorized by the customer and to notify the bank of the relevant facts within a reasonable time, not exceeding 90 days, after the date the customer received notification from the bank that the order was accepted or that the customer's account was debited with respect to the order. The bank is not entitled to any recovery from the customer on account of a failure by the customer to give notification as stated in this section. (b) Reasonable time.--Reasonable time under subsection (a) may be fixed by agreement as stated in section 1205(a) (relating to reasonable time; seasonableness), but the obligation of a receiving bank to refund payment as stated in subsection (a) may not otherwise be varied by agreement. (Apr. 16, 2008, P.L.57, No.13, eff. 60 days) 2008 Amendment. Act 13 amended subsec. (b). Cross References. Section 4A204 is referred to in section 4A402 of this title.

13 Pa.C.S. § 4A205 Erroneous payment orders.

(a) Types of erroneous payment orders.-- (1) The rules set forth under paragraph (2) apply if an accepted payment order was transmitted pursuant to a security procedure for the detection of error and the payment order: (i) erroneously instructed payment to a beneficiary not intended by the sender; (ii) erroneously instructed payment in an amount greater than the amount intended by the sender; or (iii) was an erroneously transmitted duplicate of a payment order previously sent by the sender. (2) (i) If the sender proves that the sender or a person acting on behalf of the sender pursuant to section 4A206 (relating to transmission of payment order through funds-transfer or other communication system) complied with the security procedure and that the error would have been detected if the receiving bank had also complied, the sender is not obliged to pay the order to the extent stated in subparagraphs (ii) and (iii). (ii) If the funds transfer is completed on the basis of an erroneous payment order described in paragraph (1)(i) or (iii), the sender is not obliged to pay the order and the receiving 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. (iii) If the funds transfer is completed on the basis of a payment order described in paragraph (1)(ii), the sender is not obliged to pay the order to the extent the amount received by the beneficiary is greater than the amount intended by the sender. In that case, the receiving bank is entitled to recover from the beneficiary the excess amount received to the extent allowed by the law governing mistake and restitution. (b) Duty of sender.--If the sender of an erroneous payment order described in subsection (a) is not obliged to pay all or part of the order and the sender receives notification from the receiving bank that the order was accepted by the bank or that the sender's account was debited with respect to the order, the sender has a duty to exercise ordinary care, on the basis of information available to the sender, to discover the error with respect to the order and to advise the bank of the relevant facts within a reasonable time, not exceeding 90 days, after the bank's notification was received by the sender. If the bank proves that the sender failed to perform that duty, the sender is liable to the bank for the loss the bank proves it incurred as a result of the failure, but the liability of the sender may not exceed the amount of the sender's order. (c) Amendments to payment orders.--This section applies to amendments to payment orders to the same extent it applies to payment orders. Cross References. Section 4A205 is referred to in section 4A402 of this title.

13 Pa.C.S. § 4A206 Transmission of payment order through funds-transfer or other communication system.

(a) General rule.--If a payment order addressed to a receiving bank is transmitted to a funds-transfer system or other third-party communication system for transmittal to the bank, the system is deemed to be an agent of the sender for the purpose of transmitting the payment order to the bank. If there is a discrepancy between the terms of the payment order transmitted to the system and the terms of the payment order transmitted by the system to the bank, the terms of the payment order of the sender are those transmitted by the system. This section does not apply to a funds-transfer system of the Federal Reserve banks. (b) Cancellations and amendments of payment orders.--This section applies to cancellations and amendments of payment orders to the same extent it applies to payment orders. Cross References. Section 4A206 is referred to in section 4A205 of this title.

13 Pa.C.S. § 4A207 Misdescription of beneficiary.

(a) Reference to nonexistent or unidentifiable person or account.--Subject to subsection (b), if, in a payment order received by the beneficiary's bank, the name, bank account number or other identification of the beneficiary refers to a nonexistent or unidentifiable person or account, no person has rights as a beneficiary of the order and acceptance of the order cannot occur. (b) Name and account number identify different persons.--If a payment order received by the beneficiary's bank identifies the beneficiary both by name and by an identifying or bank account number and the name and number identify different persons, the following rules apply: (1) Except as otherwise provided in subsection (c), if the beneficiary's bank does not know that the name and number refer to different persons, it may rely on the number as the proper identification of the beneficiary of the order. The beneficiary's bank need not determine whether the name and number refer to the same person. (2) If the beneficiary's bank pays the person identified by name or knows that the name and number identify different persons, no person has rights as beneficiary except the person paid by the beneficiary's bank if that person was entitled to receive payment from the originator of the funds transfer. If no person has rights as beneficiary, acceptance of the order cannot occur. (c) Applicable rules when bank pays person identified by number.--If a payment order described in subsection (b) is accepted, the originator's payment order described the beneficiary inconsistently by name and number and the beneficiary's bank pays the person identified by number as permitted by subsection (b)(1), the following rules apply: (1) If the originator is a bank, the originator is obliged to pay its order. (2) If the originator is not a bank and proves that the person identified by number was not entitled to receive payment from the originator, the originator is not obliged to pay its order unless the originator's bank proves that the originator, before acceptance of the originator's order, had notice that payment of a payment order issued by the originator might be made by the beneficiary's bank on the basis of an identifying or bank account number even if it identifies a person different from the named beneficiary. Proof of notice may be made by any admissible evidence. The originator's bank satisfies the burden of proof if it proves that the originator, before the payment order was accepted, signed a record stating the information to which the notice relates. (d) When person identified by number not entitled to receive payment.--In a case governed by subsection (b)(1), if the beneficiary's bank rightfully pays the person identified by number and that person was not entitled to receive payment from the originator, the amount paid may be recovered from that person to the extent allowed by the law governing mistake and restitution as follows: (1) If the originator is obliged to pay its payment order as stated in subsection (c), the originator has the right to recover. (2) If the originator is not a bank and is not obliged to pay its payment order, the originator's bank has the right to recover. (July 1, 2024, P.L.450, No.41, eff. 60 days) 2024 Amendment. Act 41 amended subsec. (c)(2). See section 1 of Act 41 in the appendix to this title for special provisions relating to findings and declarations. Cross References. Section 4A207 is referred to in section 4A402 of this title.

13 Pa.C.S. § 4A208 Misdescription of intermediary bank or beneficiary's bank.

(a) Identification only by identifying number.--This subsection applies to a payment order identifying an intermediary bank or the beneficiary's bank only by an identifying number: (1) The receiving bank may rely on the number as the proper identification of the intermediary or beneficiary's bank and need not determine whether the number identifies a bank. (2) The sender is obliged to compensate the receiving bank for any loss and expenses incurred by the receiving bank as a result of its reliance on the number in executing or attempting to execute the order. (b) Identification by name and identifying number; identification of different persons.--This subsection applies to a payment order identifying an intermediary bank or the beneficiary's bank both by name and an identifying number if the name and number identify different persons: (1) If the sender is a bank, the receiving bank may rely on the number as the proper identification of the intermediary or beneficiary's bank if the receiving bank, when it executes the sender's order, does not know that the name and number identify different persons. The receiving bank need not determine whether the name and number refer to the same person or whether the number refers to a bank. The sender is obliged to compensate the receiving bank for any loss and expenses incurred by the receiving bank as a result of its reliance on the number in executing or attempting to execute the order. (2) If the sender is not a bank and the receiving bank proves that the sender, before the payment order was accepted, had notice that the receiving bank might rely on the number as the proper identification of the intermediary or beneficiary's bank even if it identifies a person different from the bank identified by name, the rights and obligations of the sender and the receiving bank are governed by paragraph (1), as though the sender were a bank. Proof of notice may be made by any admissible evidence. The receiving bank satisfies the burden of proof if it proves that the sender, before the payment order was accepted, signed a record stating the information to which the notice relates. (3) Regardless of whether the sender is a bank, the receiving bank may rely on the name as the proper identification of the intermediary or beneficiary's bank if the receiving bank, at the time it executes the sender's order, does not know that the name and number identify different persons. The receiving bank need not determine whether the name and number refer to the same person. (4) If the receiving bank knows that the name and number identify different persons, reliance on either the name or the number in executing the sender's payment order is a breach of the obligation stated in section 4A302(a)(1) (relating to obligations of receiving bank in execution of payment order). (July 1, 2024, P.L.450, No.41, eff. 60 days) 2024 Amendment. Act 41 amended subsec. (b)(2). See section 1 of Act 41 in the appendix to this title for special provisions relating to findings and declarations.

13 Pa.C.S. § 4A209 Acceptance of payment order.

(a) Receiving bank.--Subject to subsection (d), a receiving bank other than the beneficiary's bank accepts a payment order when it executes the order. (b) Beneficiary's bank.--Subject to subsections (c) and (d), a beneficiary's bank accepts a payment order at the earliest of the following times: (1) when the bank: (i) pays the beneficiary as stated in section 4A405(a) or (b) (relating to payment by beneficiary's bank to beneficiary); or (ii) notifies the beneficiary of receipt of the order or that the account of the beneficiary has been credited with respect to the order unless the notice indicates that the bank is rejecting the order or that funds with respect to the order may not be withdrawn or used until receipt of payment from the sender of the order; (2) when the bank receives payment of the entire amount of the sender's order pursuant to section 4A403(a)(1) or (2) (relating to payment by sender to receiving bank); or (3) the opening of the next funds-transfer business day of the bank following the payment date of the order if, at that time, the amount of the sender's order is fully covered by a withdrawable credit balance in an authorized account of the sender or the bank has otherwise received full payment from the sender, unless the order was rejected before that time or is rejected within one hour after that time, or one hour after the opening of the next business day of the sender following the payment date if that time is later. If notice of rejection is received by the sender after the payment 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 payment date to the day the sender receives notice or learns that the order was not accepted, counting that day as an elapsed day. If the withdrawable credit balance during that period falls below the amount of the order, the amount of interest payable is reduced accordingly. (c) Limitations on acceptance.--Acceptance of a payment order cannot occur before the order is received by the receiving bank. Acceptance does not occur under subsection (b)(2) or (3) if the beneficiary of the payment order does not have an account with the receiving bank, the account has been closed or the receiving bank is not permitted by law to receive credits for the beneficiary's account. (d) Payment order by originator of funds transfer to originator's bank.--A payment order issued to the originator's bank cannot be accepted until the payment date if the bank is the beneficiary's bank or the execution date if the bank is not the beneficiary's bank. If the originator's bank executes the originator's payment order before the execution date or pays the beneficiary of the originator's payment order before the payment date and the payment order is subsequently canceled pursuant to section 4A211(b) (relating to cancellation and amendment of payment order), the bank may recover from the beneficiary any payment received to the extent allowed by the law governing mistake and restitution. Cross References. Section 4A209 is referred to in sections 4A105, 4A212, 4A302 of this title.

13 Pa.C.S. § 4A210 Rejection of payment order.

(a) Manner of rejection.--A payment order is rejected by the receiving bank by a notice of rejection transmitted to the sender orally or in a record. A notice of rejection need not use any particular words and is sufficient if it indicates that the receiving bank is rejecting the order or will not execute or pay the order. Rejection is effective when the notice is given if transmission is by a means that is reasonable in the circumstances. If notice of rejection is given by a means that is not reasonable, rejection is effective when the notice is received. If an agreement of the sender and receiving bank establishes the means to be used to reject a payment order, any means complying with the agreement is reasonable and any means not complying is not reasonable unless no significant delay in receipt of the notice resulted from the use of the noncomplying means. (b) When sender learns after execution date that sender's order has not been executed.--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 4A211(d) (relating to cancellation and amendment of payment order) 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) When receiving bank suspends payments.--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 and rejection; mutually exclusive.--Acceptance of a payment order precludes a later rejection of the order. Rejection of a payment order precludes a later acceptance of the order. (July 1, 2024, P.L.450, No.41, eff. 60 days) 2024 Amendment. Act 41 amended subsec. (a). See section 1 of Act 41 in the appendix to this title for special provisions relating to findings and declarations.

13 Pa.C.S. § 4A211 Cancellation and amendment of payment order.

(a) Communication.--A communication of the sender of a payment order canceling or amending the order may be transmitted to the receiving bank orally or in a record. 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) Communication received before payment order accepted.--Subject to subsection (a), a communication by the sender canceling 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) Communication received after payment order accepted.--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. (d) When unaccepted payment order canceled by operation of law.--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) Canceled payment order.--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) Liability of sender.--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 fees, incurred by the bank as a result of the cancellation or amendment or attempted cancellation or amendment. (g) When payment order revoked by death or incompetency.--A payment order is not revoked by the death or incompetency of the sender unless the receiving bank knows of the death or of an adjudication of incompetency under 20 Pa.C.S. Ch. 55 (relating to incapacitated persons) and has reasonable opportunity to act before acceptance of the order. (h) When funds-transfer system rule not effective.--A funds-transfer system rule is not effective to the extent it conflicts with subsection (c)(2). (July 1, 2024, P.L.450, No.41, eff. 60 days) 2024 Amendment. Act 41 amended subsec. (a). See section 1 of Act 41 in the appendix to this title for special provisions relating to findings and declarations. Cross References. Section 4A211 is referred to in sections 4A209, 4A210, 4A404, 4A406 of this title.

13 Pa.C.S. § 4A212 Liability and duty of receiving bank regarding unaccepted payment order.

If a receiving bank 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 division 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 division or by express agreement. Liability based on acceptance arises only when acceptance occurs as stated in section 4A209 (relating to acceptance of payment order), and liability is limited to that provided in this division. 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 division or by express agreement.

13 Pa.C.S. § 4A301 Execution and execution date.

(a) Execution.--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.--"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. Cross References. Section 4A301 is referred to in section 4A105 of this title.

13 Pa.C.S. § 4A302 Obligations of receiving bank in execution of payment order.

(a) General rule.--Except as provided in subsections (b), (c) and (d), if the receiving bank accepts a payment order pursuant to section 4A209(a) (relating to acceptance of payment order), 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) Discretion of receiving bank.--Unless otherwise instructed, a receiving bank executing a payment order may: (1) use any funds-transfer system if use of that system is reasonable in the circumstances; and (2) 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) Manner by which receiving bank may execute payment order in certain circumstances.--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) Certain prohibited acts of receiving bank.--Unless instructed by the sender, the receiving bank: (1) 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 (2) may not instruct a subsequent receiving bank to obtain payment of its charges in the same manner. Cross References. Section 4A302 is referred to in sections 4A208, 4A305, 4A402 of this title.

13 Pa.C.S. § 4A303 Erroneous execution of payment order.

(a) Issuance of payment order in amount greater than amount of sender's order.--A receiving bank that: (1) 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 (2) 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 4A402(c) (relating to obligation of sender to pay receiving bank) 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) Issuance of payment order in amount less than amount of sender's order.--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 4A402(c) if that subsection is otherwise satisfied and 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) Issuance of payment order to wrong beneficiary.--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. Cross References. Section 4A303 is referred to in sections 4A304, 4A402 of this title.

13 Pa.C.S. § 4A304 Duty of sender to report erroneously executed payment order.

If the sender of a payment order that is erroneously executed as stated in section 4A303 (relating to erroneous execution of payment order) 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 4A402(d) (relating to obligation of sender to pay receiving bank) 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. Cross References. Section 4A304 is referred to in section 4A402 of this title.

13 Pa.C.S. § 4A305 Liability for late or improper execution or failure to execute payment order.

(a) Liability for improper execution resulting in delay in payment.--If a funds transfer is completed but execution of a payment order by the receiving bank in breach of section 4A302 (relating to obligations of receiving bank in execution of payment order) 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) Other liability resulting from improper execution.--If execution of a payment order by a receiving bank in breach of section 4A302 results in: (1) noncompletion of the funds transfer; (2) failure to use an intermediary bank designated by the originator; or (3) 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) Additional damages.--In addition to the amounts payable under subsections (a) and (b), damages, including consequential damages, are recoverable to the extent provided in an express agreement of the receiving bank, evidenced by a record. (d) Failure to execute payment order.--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 agreement of the receiving bank, evidenced by a record, but are not otherwise recoverable. (e) Attorney fees.--Reasonable attorney 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 fees are recoverable if demand for compensation under subsection (d) is made and refused before an action is brought on the claim. (f) Prohibition against modification of liability by agreement.--Except as stated in this section, the liability of a receiving bank under subsections (a) and (b) may not be varied by agreement. (July 1, 2024, P.L.450, No.41, eff. 60 days) 2024 Amendment. Act 41 amended subsecs. (c) and (d). See section 1 of Act 41 in the appendix to this title for special provisions relating to findings and declarations.

13 Pa.C.S. § 4A401 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. Cross References. Section 4A401 is referred to in section 4A105 of this title.

13 Pa.C.S. § 4A402 Obligation of sender to pay receiving bank.

(a) Scope of section.--This section is subject to sections 4A205 (relating to erroneous payment orders) and 4A207 (relating to misdescription of beneficiary). (b) Payment order issued to beneficiary's bank.--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) Payment order issued to receiving bank other than beneficiary's bank.--This subsection is subject to subsection (e) and to section 4A303 (relating to erroneous execution of payment order). 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's bank of a payment order instructing payment to the beneficiary of that sender's payment order. (d) Refund.--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 4A204 (relating to refund of payment and duty of customer to report with respect to unauthorized payment order) and 4A304 (relating to duty of sender to report erroneously executed payment order), interest is payable on the refundable amount from the date of payment. (e) Certain subrogation rights.--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 4A302(a)(1) (relating to obligations of receiving bank in execution of payment order), 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) Prohibition against modification by agreement of certain rights of sender.--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. Cross References. Section 4A402 is referred to in sections 4A303, 4A304, 4A403, 4A405 of this title.

13 Pa.C.S. § 4A403 Payment by sender to receiving bank.

(a) When payment occurs.--Payment of the sender's obligation under section 4A402 (relating to obligation of sender to pay receiving bank) 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 credited an account of the receiving bank with the sender or 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) Multilateral settlements.--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) When two banks transmit payment orders to each other under agreement that settlement will be at certain date.--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 4A402 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) Other cases when payment occurs.--In a case not covered by subsection (a), the time when payment of the sender's obligation under section 4A402(b) or (c) occurs is governed by applicable principles of law that determine when an obligation is satisfied. Cross References. Section 4A403 is referred to in sections 4A105, 4A209 of this title.

13 Pa.C.S. § 4A404 Obligation of beneficiary's bank to pay and give notice to beneficiary.

(a) Obligation.--Subject to sections 4A211(e) (relating to cancellation and amendment of payment order) and 4A405(d) and (e) (relating to payment by beneficiary's bank to beneficiary), 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) Notice.--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 fees are also recoverable if demand for interest is made and refused before an action is brought on the claim. (c) Prohibition against modification of certain rights of beneficiary.--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. Cross References. Section 4A404 is referred to in sections 4A405, 4A406, 4A501 of this title.

13 Pa.C.S. § 4A405 Payment by beneficiary's bank to beneficiary.

(a) Beneficiary's bank credits an account of beneficiary; when payment occurs.--If the beneficiary's bank credits an account of the beneficiary of a payment order, payment of the bank's obligation under section 4A404(a) (relating to obligation of beneficiary's bank to pay and give notice to beneficiary) occurs when and to the extent: (1) the beneficiary is notified of the right to withdraw the credit; (2) the bank lawfully applies the credit to a debt of the beneficiary; or (3) funds with respect to the order are otherwise made available to the beneficiary by the bank. (b) Beneficiary's bank does not credit an account of beneficiary; when payment occurs.--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) Certain conditions to payment or agreements not enforceable.--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) Automated clearinghouse transfers.--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: (1) 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; (2) the beneficiary, the beneficiary's bank and the originator's bank agreed to be bound by the rule; and (3) 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 4A406 (relating to payment by originator to beneficiary; discharge of underlying obligation). (e) Funds-transfer systems having loss-sharing rules.--This subsection applies to a funds transfer that includes a payment order transmitted over a funds-transfer system that nets obligations multilaterally among participants and 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, the acceptance by the beneficiary's bank is nullified and no person has any right or obligation based on the acceptance, the beneficiary's bank is entitled to recover payment from the beneficiary, no payment by the originator to the beneficiary occurs under section 4A406 and, subject to section 4A402(e) (relating to obligation of sender to pay receiving bank), each sender in the funds transfer is excused from its obligation to pay its payment order under section 4A402(c) because the funds transfer has not been completed. Cross References. Section 4A405 is referred to in sections 4A105, 4A209, 4A404, 4A406, 4A501 of this title.

13 Pa.C.S. § 4A406 Payment by originator to beneficiary; discharge of underlying obligation.

(a) Payment.--Subject to sections 4A211(e) (relating to cancellation and amendment of payment order) and 4A405(d) and (e) (relating to payment by beneficiary's bank to beneficiary), the originator of a funds transfer pays the beneficiary of the originator's payment order: (1) at the time a payment order for the benefit of the beneficiary is accepted by the beneficiary's bank in the funds transfer; and (2) 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) Discharge.--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: (1) the payment under subsection (a) was made by a means prohibited by the contract of the beneficiary with respect to the obligation; (2) 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; (3) funds with respect to the order were not withdrawn by the beneficiary or applied to a debt of the beneficiary; and (4) 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 4A404(a) (relating to obligation of beneficiary's bank to pay and give notice to beneficiary). (c) Rule for determining whether discharge occurs.--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 may be varied only by agreement.--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. Cross References. Section 4A406 is referred to in sections 4213, 4A105, 4A405 of this title.

13 Pa.C.S. § 4A501 Variation by agreement and effect of funds-transfer system rule.

(a) Variation by agreement.--Except as otherwise provided in this division, the rights and obligations of a party to a funds transfer may be varied by agreement of the affected party. (b) Effect of funds-transfer system rule.--"Funds-transfer system rule" means a rule of an association of banks: (1) 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 (2) 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 division, 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 division 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) (relating to obligation of beneficiary's bank to pay and give notice to beneficiary), 4A405(d) (relating to payment by beneficiary's bank to beneficiary) and 4A507(c) (relating to choice of law). Cross References. Section 4A501 is referred to in section 4A105 of this title.

13 Pa.C.S. § 4A502 Creditor process served on receiving bank; setoff by beneficiary's bank.

(a) Definition.--As used in this section, the term "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) Creditor process served on receiving bank.--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) Payment orders issued to beneficiary's bank.--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 served on beneficiary's bank.--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.

13 Pa.C.S. § 4A503 Injunction or restraining order with respect to funds transfer.

For proper cause and in compliance with applicable law, a court may restrain: (1) a person from issuing a payment order to initiate a funds transfer; (2) an originator's bank from executing the payment order of the originator; or (3) the beneficiary's bank from releasing funds 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.

13 Pa.C.S. § 4A504 Order in which items and payment orders may be charged to account; order of withdrawals from account.

(a) Priority among obligations paid from account.--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) Priority among withdrawals from account.--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.

13 Pa.C.S. § 4A505 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.

13 Pa.C.S. § 4A506 Rate of interest.

(a) By agreement or funds-transfer system rule.--If, under this division, a receiving bank is obliged to pay interest with respect to a payment order issued to the bank, the amount payable may be determined: (1) by agreement of the sender and receiving bank; or (2) by a funds-transfer system rule if the payment order is transmitted through a funds-transfer system. (b) Method of calculation when not determined by agreement or rule.--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 was 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.

13 Pa.C.S. § 4A507 Choice of law.

(a) General rule.--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) By agreement.--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) By funds-transfer system rule.--A funds-transfer system rule may select the law of a particular jurisdiction to govern: (1) rights and obligations between participating banks with respect to payment orders transmitted or processed through the system; or (2) 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 paragraph (1) is binding on participating banks. A choice of law made pursuant to paragraph (2) 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) Inconsistency between agreement and rule.--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) Inconsistency between choice-of-law rules of systems.--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 system, the matter in issue is governed by the law of the selected jurisdiction that has the most significant relationship to the matter in issue. Cross References. Section 4A507 is referred to in sections 1301, 4A501 of this title. DIVISION 5 LETTERS OF CREDIT Chapter 51. Letters of Credit Enactment. Division 5 was added June 8, 2001, P.L.123, No.18, effective July 1, 2001. Prior Provisions. Former Division 5, which related to the same subject matter, was added November 1, 1979, P.L.255, No.86, and repealed June 8, 2001, P.L.123, No.18, effective July 1, 2001.

Source: Open US Law by Vaquill AI (CC BY 4.0)URL: https://www.palegis.us/statutes/consolidated/view-statute?txtType=HTM&ttl=13Fetched: 10/16/2026