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Texas Business & Commerce Code - Section 4A.302. Obligations Of Receiving Bank In Execution Of Payment Order

Legal Research Home > Texas Lawyer > Business & Commerce Code > Texas Business & Commerce Code - Section 4A.302. Obligations Of Receiving Bank In Execution Of Payment Order

§ 4A.302. OBLIGATIONS OF RECEIVING BANK IN EXECUTION OF 
PAYMENT ORDER.  (a) Except as provided in Subsections (b) through 
(d), if the receiving bank accepts a payment order pursuant to 
Section 4A.209(a), the bank has the following obligations in 
executing the order:
		(1)  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 (i) any 
intermediary bank or funds transfer system to be used in carrying 
out the funds transfer, or (ii) 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.
		(2)  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.
	(b)  Unless otherwise instructed, a receiving bank executing 
a payment order may (i) use any funds transfer system if use of that 
system is reasonable in the circumstances, and (ii) 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.
	(c)  Unless Subsection (a)(2) applies or the receiving bank 
is otherwise instructed, the bank may execute a payment order by 
transmitting its payment order by first 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.
	(d)  Unless instructed by the sender, (i) 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 (ii) may not instruct a 
subsequent receiving bank to obtain payment of its charges in the 
same amount.

Added by Acts 1993, 73rd Leg., ch. 570, § 7, eff. Sept. 1, 1993.           

Last modified: August 10, 2007