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410.211(3)(b)2. 2. If the payment order is canceled or amended, the beneficiary's 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.
410.211(4) (4) An unaccepted payment order is canceled by operation of law at the close of the 5th funds-transfer business day of the receiving bank after the execution date or payment date of the order.
410.211(5) (5) A canceled payment order cannot be accepted. If an accepted payment order is canceled, the acceptance is nullified and no person has any right or obligation based on the acceptance. Amendment of a payment order is considered to be cancellation of the original order at the time of amendment and issue of a new payment order in the amended form at the same time.
410.211(6) (6) Unless otherwise provided in an agreement of the parties or in a funds-transfer system rule, if the receiving bank, after accepting a payment order, agrees to cancellation or amendment of the order by the sender or is bound by a funds-transfer system rule allowing cancellation or amendment without the bank's agreement, the sender, whether or not cancellation or amendment is effective, is liable to the bank for any loss and expenses, including reasonable attorney fees, incurred by the bank as a result of the cancellation or amendment or attempted cancellation or amendment.
410.211(7) (7) A payment order is not revoked by the death or legal incapacity of the sender unless the receiving bank knows of the death or of an adjudication of incapacity by a court of competent jurisdiction and has reasonable opportunity to act before acceptance of the order.
410.211(8) (8) A funds-transfer system rule is not effective to the extent it conflicts with sub. (3) (b).
410.211 History History: 1991 a. 304.
410.212 410.212 Liability and duty of receiving bank regarding unaccepted payment order. If a receiving bank fails to accept a payment order that it is obliged by express agreement to accept, the bank is liable for breach of the agreement to the extent provided in the agreement or in this chapter, but does not otherwise have any duty to accept a payment order or, before acceptance, to take any action, or refrain from taking action, with respect to the order except as provided in this chapter or by express agreement. Liability based on acceptance arises only when acceptance occurs as stated in s. 410.209, and liability is limited to that provided in this chapter. A receiving bank is not the agent of the sender or beneficiary of the payment order it accepts, or of any other party to the funds transfer, and the bank owes no duty to any party to the funds transfer except as provided in this chapter or by express agreement.
410.212 History History: 1991 a. 304.
subch. III of ch. 410 SUBCHAPTER III
EXECUTION OF SENDER'S PAYMENT ORDER
BY RECEIVING BANK
410.301 410.301 Execution and execution date.
410.301(1) (1) A payment order is "executed" by the receiving bank when it issues a payment order intended to carry out the payment order received by the bank. A payment order received by the beneficiary's bank can be accepted but cannot be executed.
410.301(2) (2) "Execution date" of a payment order means the day on which the receiving bank may properly issue a payment order in execution of the sender's order. The execution date may be determined by instruction of the sender but cannot be earlier than the day the order is received and, unless otherwise determined, is the day the order is received. If the sender's instruction states a payment date, the execution date is the payment date or an earlier date on which execution is reasonably necessary to allow payment to the beneficiary on the payment date.
410.301 History History: 1991 a. 304.
410.302 410.302 Obligations of receiving bank in execution of payment order.
410.302(1)(1) Except as provided in subs. (2) to (4), if the receiving bank accepts a payment order pursuant to s. 410.209 (1), the bank has the following obligations in executing the order:
410.302(1)(a) (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 concerning 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.
410.302(1)(b) (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.
410.302(2) (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 may 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.
410.302(3) (3) Unless sub. (1) (b) applies or the receiving bank is otherwise instructed, the bank may execute a payment order by transmitting its payment order by 1st 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.
410.302(4) (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.
410.302 History History: 1991 a. 304.
410.303 410.303 Erroneous execution of payment order.
410.303(1) (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 that 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 s. 410.402 (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.
410.303(2) (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 s. 410.402 (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.
410.303(3) (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 that 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.
410.303 History History: 1991 a. 304.
410.303 Annotation A bank that received an electronic transfer of funds, with incomplete instructions, and deposited the funds into an account in which the account owner had granted a security interest to a creditor who had a rightful claim to the funds was liable to the secured creditor for the amount of the transfer when the bank subsequently transferred the funds to another account of the account owner who absconded with the funds. General Electric Capital Corp. v. Central Bank, 49 F.3d 280 (1995).
410.304 410.304 Duty of sender to report erroneously executed payment order. If the sender of a payment order that is erroneously executed as stated in s. 410.303 receives notification from the receiving bank that the order was executed or that the sender's account was debited with respect to the order, the sender has a duty to exercise ordinary care to determine, on the basis of information available to the sender, that the order was erroneously executed and to notify the bank of the relevant facts within a reasonable time not exceeding 90 days after the notification from the bank was received by the sender. If the sender fails to perform that duty, the bank is not obliged to pay interest on any amount refundable to the sender under s. 410.402 (4) for the period before the bank learns of the execution error. The bank is not entitled to any recovery from the sender on account of a failure by the sender to perform the duty stated in this section.
410.304 History History: 1991 a. 304.
410.305 410.305 Liability for late or improper execution or failure to execute payment order.
410.305(1) (1) If a funds transfer is completed but execution of a payment order by the receiving bank in breach of s. 410.302 results in delay in payment to the beneficiary, the bank is obliged to pay interest to either the originator or the beneficiary of the funds transfer for the period of delay caused by the improper execution. Except as provided in sub. (3), additional damages are not recoverable.
410.305(2) (2) If execution of a payment order by a receiving bank in breach of s. 410.302 results in noncompletion of the funds transfer, failure to use an intermediary bank designated by the originator, or issuance of a payment order that does not comply with the terms of the payment order of the originator, the bank is liable to the originator for its expenses in the funds transfer and for incidental expenses and interest losses, to the extent not covered by sub. (1), resulting from the improper execution. Except as provided in sub. (3), additional damages are not recoverable.
410.305(3) (3) In addition to the amounts payable under subs. (1) and (2), damages, including consequential damages, are recoverable to the extent provided in an express written agreement of the receiving bank.
410.305(4) (4) If a receiving bank fails to execute a payment order it was obliged by express agreement to execute, the receiving bank is liable to the sender for its expenses in the transaction and for incidental expenses and interest losses resulting from the failure to execute. Additional damages, including consequential damages, are recoverable to the extent provided in an express written agreement of the receiving bank, but are not otherwise recoverable.
410.305(5) (5) Reasonable attorney fees are recoverable if demand for compensation under sub. (1) or (2) is made and refused before an action is brought on the claim. If a claim is made for breach of an agreement under sub. (4) and the agreement does not provide for damages, reasonable attorney fees are recoverable if demand for compensation under sub. (4) is made and refused before an action is brought on the claim.
410.305(6) (6) Except as stated in this section, the liability of a receiving bank under subs. (1) and (2) may not be varied by agreement.
410.305 History History: 1991 a. 304.
subch. IV of ch. 410 SUBCHAPTER IV
PAYMENT
410.401 410.401 Payment date. "Payment date" of a payment order means the day on which the amount of the order is payable to the beneficiary by the beneficiary's bank. The payment date may be determined by instruction of the sender but cannot be earlier than the day the order is received by the beneficiary's bank and, unless otherwise determined, is the day the order is received by the beneficiary's bank.
410.401 History History: 1991 a. 304.
410.402 410.402 Obligation of sender to pay receiving bank.
410.402(1)(1) This section is subject to ss. 410.205 and 410.207.
410.402(2) (2) With respect to a payment order issued to the beneficiary's bank, acceptance of the order by the bank obliges the sender to pay the bank the amount of the order, but payment is not due until the payment date of the order.
410.402(3) (3) This subsection is subject to sub. (5) and to s. 410.303. With respect to a payment order issued to a receiving bank other than the beneficiary's bank, acceptance of the order by the receiving bank obliges the sender to pay the bank the amount of the sender's order. Payment by the sender is not due until the execution date of the sender's order. The obligation of that sender to pay its payment order is excused if the funds transfer is not completed by acceptance by the beneficiary's bank of a payment order instructing payment to the beneficiary of that sender's payment order.
410.402(4) (4) If the sender of a payment order pays the order and was not obliged to pay all or part of the amount paid, the bank receiving payment is obliged to refund payment to the extent the sender was not obliged to pay. Except as provided in ss. 410.204 and 410.304, interest is payable on the refundable amount from the date of payment.
410.402(5) (5) If a funds transfer is not completed as stated in sub. (3) and an intermediary bank is obliged to refund payment as stated in sub. (4) but is unable to do so because not permitted by applicable law or because the bank suspends payments, a sender in the funds transfer that executed a payment order in compliance with an instruction, as stated in s. 410.302 (1) (a), to route the funds transfer through that intermediary bank is entitled to receive or retain payment from the sender of the payment order that it accepted. The first sender in the funds transfer that issued an instruction requiring routing through that intermediary bank is subrogated to the right of the bank that paid the intermediary bank to refund as stated in sub. (4).
410.402(6) (6) The right of the sender of a payment order to be excused from the obligation to pay the order as stated in sub. (3) or to receive refund under sub. (4) may not be varied by agreement.
410.402 History History: 1991 a. 304.
410.403 410.403 Payment by sender to receiving bank.
410.403(1) (1) Payment of the sender's obligation under s. 410.402 to pay the receiving bank occurs as follows:
410.403(1)(a) (a) If the sender is a bank, payment occurs when the receiving bank receives final settlement of the obligation through a federal reserve bank or through a funds-transfer system.
410.403(1)(b) (b) If the sender is a bank and the sender credited an account of the receiving bank with the sender, or caused an account of the receiving bank in another bank to be credited, payment occurs when the credit is withdrawn or, if not withdrawn, at midnight of the day on which the credit is withdrawable and the receiving bank learns of that fact.
410.403(1)(c) (c) If the receiving bank debits an account of the sender with the receiving bank, payment occurs when the debit is made to the extent the debit is covered by a withdrawable credit balance in the account.
410.403(2) (2)
410.403(2)(a)(a) If the sender and receiving bank are members of a funds-transfer system that nets obligations multilaterally among participants, the receiving bank receives final settlement when settlement is complete in accordance with the rules of the system.
410.403(2)(b) (b) The obligation of the sender to pay the amount of a payment order transmitted through the funds-transfer system may be satisfied, to the extent permitted by the rules of the system, by setting off and applying against the sender's obligation the right of the sender to receive payment from the receiving bank of the amount of any other payment order transmitted to the sender by the receiving bank through the funds-transfer system.
410.403(2)(c) (c) The aggregate balance of obligations owed by each sender to each receiving bank in the funds-transfer system may be satisfied, to the extent permitted by the rules of the system, by setting off and applying against that balance the aggregate balance of obligations owed to the sender by other members of the system. The aggregate balance is determined after the right of setoff stated in par. (b) has been exercised.
410.403(3) (3) If 2 banks transmit payment orders to each other under an agreement that settlement of the obligations of each bank to the other under s. 410.402 will be made at the end of the day or other period, the total amount owed with respect to all orders transmitted by one bank shall be set off against the total amount owed with respect to all orders transmitted by the other bank. To the extent of the setoff, each bank has made payment to the other.
410.403(4) (4) In a case not covered by sub. (1), the time when payment of the sender's obligation under s. 410.402 (2) or (3) occurs is governed by applicable principles of law that determine when an obligation is satisfied.
410.403 History History: 1991 a. 304.
410.404 410.404 Obligation of beneficiary's bank to pay and give notice to beneficiary.
410.404(1) (1) Subject to ss. 410.211 (5) and 410.405 (4) and (5), if a beneficiary's bank accepts a payment order, the bank is obliged to pay the amount of the order to the beneficiary of the order. Payment is due on the payment date of the order, but if acceptance occurs on the payment date after the close of the funds-transfer business day of the bank, payment is due on the next funds-transfer business day. If the bank refuses to pay after demand by the beneficiary and receipt of notice of particular circumstances that will give rise to consequential damages as a result of nonpayment, the beneficiary may recover damages resulting from the refusal to pay to the extent the bank had notice of the damages, unless the bank proves that it did not pay because of a reasonable doubt concerning the right of the beneficiary to payment.
410.404(2) (2) If a payment order accepted by the beneficiary's bank instructs payment to an account of the beneficiary, the bank is obliged to notify the beneficiary of receipt of the order before midnight of the next funds-transfer business day following the payment date. If the payment order does not instruct payment to an account of the beneficiary, the bank is required to notify the beneficiary only if notice is required by the order. Notice may be given by 1st class mail or any other means reasonable in the circumstances. If the bank fails to give the required notice, the bank is obliged to pay interest to the beneficiary on the amount of the payment order from the day notice should have been given until the day the beneficiary learned of receipt of the payment order by the bank. No other damages are recoverable. Reasonable attorney fees are also recoverable if demand for interest is made and refused before an action is brought on the claim.
410.404(3) (3) The right of a beneficiary to receive payment and damages as stated in sub. (1) may not be varied by agreement or a funds-transfer system rule. The right of a beneficiary to be notified as stated in sub. (2) may be varied by agreement of the beneficiary or by a funds-transfer system rule if the beneficiary is notified of the rule before initiation of the funds transfer.
410.404 History History: 1991 a. 304.
410.405 410.405 Payment by beneficiary's bank to beneficiary.
410.405(1)(1) If the beneficiary's bank credits an account of the beneficiary of a payment order, payment of the bank's obligation under s. 410.404 (1) occurs when and to the extent the beneficiary is notified of the right to withdraw the credit, the bank lawfully applies the credit to a debt of the beneficiary, or funds with respect to the order are otherwise made available to the beneficiary by the bank.
410.405(2) (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 s. 410.404 (1) occurs is governed by principles of law that determine when an obligation is satisfied.
410.405(3) (3) Except as stated in subs. (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.
410.405(4) (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 it accepted. A beneficiary's bank that makes a payment that is provisional under the rule is entitled to refund from the beneficiary if 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, if the beneficiary, the beneficiary's bank and the originator's bank agreed to be bound by the rule, and if 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 s. 410.406.
410.405(5) (5) This subsection applies to a funds transfer that includes a payment order transmitted over a funds-transfer system that nets obligations multilaterally among participants, and that has in effect a loss-sharing agreement among participants for the purpose of providing funds necessary to complete settlement of the obligations of one 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, all of the following occur:
410.405(5)(a) (a) The acceptance by the beneficiary's bank is nullified and no person has any right or obligation based on the acceptance.
410.405(5)(b) (b) The beneficiary's bank is entitled to recover payment from the beneficiary.
410.405(5)(c) (c) No payment by the originator to the beneficiary occurs under s. 410.406.
410.405(5)(d) (d) Subject to s. 410.402 (5), each sender in the funds transfer is excused from its obligation to pay its payment order under s. 410.402 (3) because the funds transfer has not been completed.
410.405 History History: 1991 a. 304.
410.406 410.406 Payment by originator to beneficiary; discharge of underlying obligation.
410.406(1) (1) Subject to ss. 410.211 (5) and 410.405 (4) and (5), the originator of a funds transfer pays the beneficiary of the originator's payment order at the time a payment order for the benefit of the beneficiary is accepted by the beneficiary's bank in the funds transfer and in an amount equal to the amount of the order accepted by the beneficiary's bank, but not more than the amount of the originator's order.
410.406(2) (2)
410.406(2)(a)(a) If payment under sub. (1) is made to satisfy an obligation, the obligation is discharged to the same extent discharge would result from payment to the beneficiary of the same amount in money, unless all of the following apply:
410.406(2)(a)1. 1. The payment under sub. (1) was made by a means prohibited by the contract of the beneficiary with respect to the obligation.
410.406(2)(a)2. 2. The beneficiary, within a reasonable time after receiving notice of receipt of the order by the beneficiary's bank, notified the originator of the beneficiary's refusal of the payment.
410.406(2)(a)3. 3. Funds with respect to the order were not withdrawn by the beneficiary or applied to a debt of the beneficiary.
410.406(2)(a)4. 4. The beneficiary would suffer a loss that could reasonably have been avoided if payment had been made by a means complying with the contract.
410.406(2)(b) (b) If payment by the originator does not result in discharge under this section, the originator is subrogated to the rights of the beneficiary to receive payment from the beneficiary's bank under s. 410.404 (1).
410.406(3) (3) For the purpose of determining whether discharge of an obligation occurs under sub. (2) (a), if the beneficiary's bank accepts a payment order in an amount equal to the amount of the originator's payment order less charges of one or more receiving banks in the funds transfer, payment to the beneficiary is considered to be in the amount of the originator's order unless upon demand by the beneficiary the originator does not pay the beneficiary the amount of the deducted charges.
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