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Texas Business & Commerce Code - Section 4A.404. Obligation Of Beneficiary's Bank To Pay And Give Notice To Beneficiary

Legal Research Home > Texas Laws > Business & Commerce Code > Texas Business & Commerce Code - Section 4A.404. Obligation Of Beneficiary's Bank To Pay And Give Notice To Beneficiary

§ 4A.404. OBLIGATION OF BENEFICIARY'S BANK TO PAY AND GIVE 
NOTICE TO BENEFICIARY.  (a) Subject to Sections 4A.211(e) and 
4A.405(d) and (e), 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.
	(b)  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 first 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's 
fees are recoverable if demand for interest is made and refused 
before an action is brought on the claim.
	(c)  The right of a beneficiary to receive payment and 
damages as stated in Subsection (a) may not be varied by agreement 
or a funds transfer system rule.  The right of a beneficiary to be 
notified as stated in Subsection (b) 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.

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

Last modified: August 11, 2007