Texas Business & Commerce Code - Section 4A.205. Erroneous Payment Orders
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§ 4A.205. ERRONEOUS PAYMENT ORDERS. (a) If an accepted
payment order was transmitted pursuant to a security procedure for
the detection of error and the payment order (i) erroneously
instructed payment to a beneficiary not intended by the sender,
(ii) erroneously instructed payment in an amount greater than the
amount intended by the sender, or (iii) was an erroneously
transmitted duplicate of a payment order previously sent by the
sender, the following rules apply:
(1) If the sender proves that the sender or a person
acting on behalf of the sender pursuant to Section 4A.206 complied
with the security procedure and that the error would have been
detected if the receiving bank had also complied, the sender is not
obliged to pay the order to the extent stated in Subdivisions (2)
and (3).
(2) If the funds transfer is completed on the basis of
an erroneous payment order described in clause (i) or (iii) of
Subsection (a), the sender is not obliged to pay the order and the
receiving 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.
(3) If the funds transfer is completed on the basis of
a payment order described in clause (ii) of Subsection (a), the
sender is not obliged to pay the order to the extent the amount
received by the beneficiary is greater than the amount intended by
the sender. In that case, the receiving bank is entitled to recover
from the beneficiary the excess amount received to the extent
allowed by the law governing mistake and restitution.
(b) If (i) the sender of an erroneous payment order
described in Subsection (a) is not obliged to pay all or part of the
order, and (ii) the sender receives notification from the receiving
bank that the order was accepted by the bank or that the sender's
account was debited with respect to the order, the sender has a duty
to exercise ordinary care, on the basis of information available to
the sender, to discover the error with respect to the order and to
advise the bank of the relevant facts within a reasonable time, not
exceeding 90 days, after the bank's notification was received by
the sender. If the bank proves that the sender failed to perform
that duty, the sender is liable to the bank for the loss the bank
proves it incurred as a result of the failure, but the liability of
the sender may not exceed the amount of the sender's order.
(c) This section applies to amendments to payment orders to
the same extent it applies to payment orders.
Added by Acts 1993, 73rd Leg., ch. 570, § 7, eff. Sept. 1, 1993.
Section: 4A.106 4A.107 4A.108 4A.201 4A.202 4A.203 4A.204 4A.205 4A.206 4A.207 4A.208 4A.209 4A.210 4A.211 4A.212
Last modified: August 10, 2007
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