Michigan Laws 440.4803 – Receiving bank; payment of sender’s order pursuant to MCL 440.4902(3); effect of erroneous payment order; applicability of subsection (2); obligation of sender to pay payment order; recovery by issuer
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(1) A receiving bank that 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 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(3) 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.
(2) 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(3) 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.
Terms Used In Michigan Laws 440.4803
- 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 440.4603Receiving 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
(3) 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.