(1) 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, the following rules apply:
    (a) If the sender proves that the sender or a person acting on behalf of the sender pursuant to section 4A206 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 subdivisions (b) and (c).

Terms Used In Michigan Laws 440.4705

  • 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 Michigan Laws 440.4605
  • 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
  • Beneficiary: means the person to be paid by the beneficiary's bank. See Michigan Laws 440.4603
  • 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. See Michigan Laws 440.4604
  • Payment order: means an instruction of a sender to a receiving bank, transmitted orally, electronically, or in writing, to pay, or to cause another bank to pay, a fixed or determinable amount of money to a beneficiary if the following apply:
    (i) The instruction does not state a condition to payment to the beneficiary other than time of payment. See Michigan Laws 440.4603
  • Person: means an individual, corporation, business trust, estate, trust, partnership, limited liability company, association, joint venture, government, governmental subdivision, agency, or instrumentality, public corporation, or any other legal or commercial entity. See Michigan Laws 440.1201
  • Receiving bank: means the bank to which the sender's instruction is addressed. See Michigan Laws 440.4603
  • Restitution: The court-ordered payment of money by the defendant to the victim for damages caused by the criminal action.
  • Sender: means the person giving the instruction to the receiving bank. See Michigan Laws 440.4603
    •     (b) If the funds transfer is completed on the basis of an erroneous payment order described in subsection (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.
        (c) If the funds transfer is completed on the basis of a payment order described in subsection (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.
        (2) If (i) the sender of an erroneous payment order described in subsection (1) is not obliged to pay all or part of the order, and (ii) 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.
        (3) This section applies to amendments to payment orders to the same extent it applies to payment orders.
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