California Commercial Code 11305 – (a) If a funds transfer is completed but execution of a payment …
(a) If a funds transfer is completed but execution of a payment order by the receiving bank in breach of Section 11302 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 subdivision (c), additional damages are not recoverable.
(b) If execution of a payment order by a receiving bank in breach of Section 11302 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 subdivision (a), resulting from the improper execution. Except as provided in subdivision (c), additional damages are not recoverable.
Terms Used In California Commercial Code 11305
- agreement: means the total legal obligation that results from the parties' agreement as determined by this code and as supplemented by any other applicable laws. See California Commercial Code 1201
- Bank: means a person engaged in the business of banking, and includes a savings bank, savings and loan association, credit union, and trust company. See California Commercial Code 1201
- Beneficiary: A person who is entitled to receive the benefits or proceeds of a will, trust, insurance policy, retirement plan, annuity, or other contract. Source: OCC
- Damages: Money paid by defendants to successful plaintiffs in civil cases to compensate the plaintiffs for their injuries.
- Record: means information that is inscribed on a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable form. See California Commercial Code 1201
(c) In addition to the amounts payable under subdivisions (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) 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) Reasonable attorney’s fees are recoverable if demand for compensation under subdivision (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 subdivision (d) and the agreement does not provide for damages, reasonable attorney’s fees are recoverable if demand for compensation under subdivision (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 subdivisions (a) and (b) may not be varied by agreement.
(Amended by Stats. 2023, Ch. 210, Sec. 89. (SB 95) Effective January 1, 2024.)