Texas Business & Commerce Code - Section 4A.207. Misdescription Of Beneficiary
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§ 4A.207. MISDESCRIPTION OF BENEFICIARY. (a) Subject to
Subsection (b), if, in a payment order received by the
beneficiary's bank, the name, bank account number, or other
identification of the beneficiary refers to a nonexistent or
unidentifiable person or account, no person has rights as a
beneficiary of the order and acceptance of the order cannot occur.
(b) If a payment order received by the beneficiary's bank
identifies the beneficiary both by name and by an identifying or
bank account number and the name and number identify different
persons, the following rules apply:
(1) Except as provided in Subsection (c), if the
beneficiary's bank does not know that the name and number refer to
different persons or if the funds transfer is processed by the
beneficiary bank in a fully automated manner, it may rely on the
number as the proper identification of the beneficiary of the
order. The beneficiary's bank need not determine whether the name
and number refer to the same person.
(2) If the beneficiary's bank pays the person
identified by name or any individual processing the funds transfer
on behalf of the beneficiary bank knows that the name and number
identify different persons, no person has rights as beneficiary
except the person paid by the beneficiary's bank if that person was
entitled to receive payment from the originator of the funds
transfer. If no person has rights as beneficiary, acceptance of the
order cannot occur.
(c) If (i) a payment order described in Subsection (b) is
accepted, (ii) the originator's payment order described the
beneficiary inconsistently by name and number, and (iii) the
beneficiary's bank pays the person identified by number as
permitted by Subsection (b)(1), the following rules apply:
(1) If the originator is a bank, the originator is
obliged to pay its order.
(2) If the originator is not a bank and proves that the
person identified by number was not entitled to receive payment
from the originator, the originator is not obliged to pay its order
unless the originator's bank proves that the originator, before
acceptance of the originator's order, had notice that payment of a
payment order issued by the originator might be made by the
beneficiary's bank on the basis of an identifying or bank account
number even if it identifies a person different from the named
beneficiary. Proof of notice may be made by any admissible
evidence. The originator's bank satisfies the burden of proof if it
proves that the originator, before the payment order was accepted,
signed a writing stating the information to which the notice
relates.
(d) In a case governed by Subsection (b)(1), if the
beneficiary's bank rightfully pays the person identified by number
and that person was not entitled to receive payment from the
originator, the amount paid may be recovered from that person to the
extent allowed by the law governing mistake and restitution as
follows:
(1) If the originator is obliged to pay its payment
order as stated in Subsection (c), the originator has the right to
recover.
(2) If the originator is not a bank and is not obliged
to pay its payment order, the originator's bank has the right to
recover.
Added by Acts 1993, 73rd Leg., ch. 570, § 7, eff. Sept. 1, 1993.
Section: 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 4A.301 4A.302
Last modified: August 10, 2007
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