Michigan Laws 440.4708 – Payment order; identification of intermediary or beneficiary bank; rules
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(1) The following rules apply to a payment order identifying an intermediary bank or the beneficiary‘s bank only by an identifying number:
(a) 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.
Terms Used In Michigan Laws 440.4708
- 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
- Evidence: Information presented in testimony or in documents that is used to persuade the fact finder (judge or jury) to decide the case for one side or the other.
- Intermediary bank: means a receiving bank other than the originator's bank or the beneficiary's bank. See Michigan Laws 440.4604
- Obligation: An order placed, contract awarded, service received, or similar transaction during a given period that will require payments during the same or a future period.
- 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 440.4603Person: 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 Sender: means the person giving the instruction to the receiving bank. See Michigan Laws 440.4603 Signed: includes any symbol executed or adopted by a party with present intention to adopt or accept a writing. See Michigan Laws 440.1201 writing: includes printing, typewriting, or any other intentional reduction to tangible form. See Michigan Laws 440.1201
(b) 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) The following rules apply 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.
(a) 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.
(b) 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 subsection (2)(a), 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 writing stating the information to which the notice relates.
(c) 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.
(d) 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(1)(a).