Michigan Laws 440.4905 – Beneficiary bank; crediting account of beneficiary of payment order; payment of bank obligations under MCL 440.4904(1); time of payment; condition to payment or agreement; provisional payments to bene
Current as of: 2023 | Check for updates
|
Other versions
(1) If the beneficiary‘s bank credits an account of the beneficiary of a payment order, payment of the bank’s obligation under section 4A404(1) occurs when and to the extent (i) the beneficiary is notified of the right to withdraw the credit, (ii) the bank lawfully applies the credit to a debt of the beneficiary, or (iii) funds with respect to the order are otherwise made available to the beneficiary by the bank.
(2) If the beneficiary’s bank does not credit an account of the beneficiary of a payment order, the time when payment of the bank’s obligation under section 4A404(1) occurs is governed by principles of law that determine when an obligation is satisfied.
Terms Used In Michigan Laws 440.4905
- 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
- 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.
- 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 440.4603Person: 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 Right: includes remedy. See Michigan Laws 440.1201 Sender: means the person giving the instruction to the receiving bank. See Michigan Laws 440.4603 Settlement: Parties to a lawsuit resolve their difference without having a trial. Settlements often involve the payment of compensation by one party in satisfaction of the other party's claims.
(3) Except as stated in subsections (4) and (5), if the beneficiary’s bank pays the beneficiary of a payment order under a condition to payment or agreement of the beneficiary giving the bank the right to recover payment from the beneficiary if the bank does not receive payment of the order, the condition to payment or agreement is not enforceable.
(4) A funds-transfer system rule may provide that payments made to beneficiaries of funds transfers made through the system are provisional until receipt of payment by the beneficiary’s bank of the payment order is accepted. A beneficiary’s bank that makes a payment that is provisional under the rule is entitled to refund from the beneficiary if (i) the rule requires that both the beneficiary and the originator be given notice of the provisional nature of the payment before the funds transfer is initiated, (ii) the beneficiary, the beneficiary’s bank, and the originator’s bank agreed to be bound by the rule, and (iii) the beneficiary’s bank did not receive payment of the payment order that it accepted. If the beneficiary is obliged to refund payment to the beneficiary’s bank, acceptance of the payment order by the beneficiary’s bank is nullified and no payment by the originator of the funds transfer to the beneficiary occurs under section 4A406.
(5) This subsection applies to the funds transfer that includes a payment order transmitted over a funds-transfer system that (i) nets obligations multilaterally among participants, and (ii) has in effect a loss-sharing agreement among participants for the purpose of providing funds necessary to complete settlement of the obligations of 1 or more participants that do not meet their settlement obligations. If the beneficiary’s bank in the funds transfer accepts a payment order and the system fails to complete settlement pursuant to its rules with respect to any payment order in the funds transfer, (i) the acceptance by the beneficiary’s bank is nullified and no person has any right or obligation based on the acceptance, (ii) the beneficiary’s bank is entitled to recover payment from the beneficiary, (iii) no payment by the originator to the beneficiary occurs under section 4A406, and (iv) subject to section 4A402(5), each sender in the funds transfer is excused from its obligation to pay its payment order under section 4A402(3) because the funds transfer has not been completed.