(1) Except as provided in subsections (2) through (4), if the receiving bank accepts a payment order pursuant to section 4A209(1), the bank has the following obligations in executing the order:
  (a) 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 any intermediary bank or funds-transfer system to be used in carrying out the funds transfer, or 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.

Terms Used In Michigan Laws 440.4802

  • 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
  • Funds-transfer system: means 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. See Michigan Laws 440.4605
  • Good faith: except as otherwise provided in article 5, means honesty in fact and the observance of reasonable commercial standards of fair dealing. See Michigan Laws 440.1201
  • Intermediary bank: means a receiving bank other than the originator's bank or the beneficiary's bank. See Michigan Laws 440.4604
  • Originator: means the sender of the first payment order in a funds transfer. 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
  • 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
    •   (b) 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.
      (2) 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 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.
      (3) Unless subsection (1)(b) 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.
      (4) Unless instructed by the sender, 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 may not instruct a subsequent receiving bank to obtain payment of its charges in the same manner.
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