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Texas Business & Commerce Code - Section 4A.406. Payment By Originator To Beneficiary; Discharge Of Underlying Obligation

Legal Research Home > Texas Lawyer > Business & Commerce Code > Texas Business & Commerce Code - Section 4A.406. Payment By Originator To Beneficiary; Discharge Of Underlying Obligation

§ 4A.406. PAYMENT BY ORIGINATOR TO BENEFICIARY;  
DISCHARGE OF UNDERLYING OBLIGATION.  (a) Subject to Sections 
4A.211(e) and 4A.405(d) and (e), the originator of a funds transfer 
pays the beneficiary of the originator's payment order:
		(1)  at the time a payment order for the benefit of the 
beneficiary is accepted by the beneficiary's bank in the funds 
transfer;  and
		(2)  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.
	(b)  If payment under Subsection (a) 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 (i) the payment under Subsection (a) of this 
section was made by a means prohibited by the contract of the 
beneficiary with respect to the obligation, (ii) 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, (iii) funds with respect to 
the order were not withdrawn by the beneficiary or applied to a debt 
of the beneficiary, and (iv) the beneficiary would suffer a loss 
that could reasonably have been avoided if payment had been made by 
a means complying with the contract.  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 Section 4A.404(a).
	(c)  For the purpose of determining whether discharge of an 
obligation occurs under Subsection (b), 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 deemed 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.
	(d)  Rights of the originator or of the beneficiary of a 
funds transfer under this section may be varied only by agreement of 
the originator and the beneficiary.

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

Last modified: August 10, 2007