§ 336.4A-208 — Misdescription of Intermediary Bank or Beneficiary's Bank
Plain-Language Summary
This section covers payment orders that misdescribe an intermediary bank or the beneficiary's bank. If the order names such a bank only by an identifying number, the receiving bank may rely on that number, need not check whether it actually identifies a bank, and the sender must reimburse the receiving bank for any loss or expense from relying on it. If the order gives both a name and a number that point to different banks, a sender that is itself a bank (or a non-bank sender that was warned in advance, such as by a signed record) bears that same compensation duty when the receiving bank relied on the number without knowing of the conflict. The receiving bank may instead rely on the name if it does not know of a mismatch, but if it actually knows the name and number identify different persons, relying on either one breaches its duty under section 336.4A-302.
336.4A-208 MISDESCRIPTION OF INTERMEDIARY BANK OR BENEFICIARY’S BANK.
(a) This subsection applies to a payment order identifying an intermediary bank or the beneficiary’s bank only by an identifying number.
(1) The receiving bank may rely on the number as the proper identification of the intermediary or beneficiary’s bank and need not determine whether the number identifies a bank.
(2) The sender is obliged to compensate the receiving bank for any loss and expenses incurred by the receiving bank as a result of its reliance on the number in executing or attempting to execute the order.
(b) This subsection applies to a payment order identifying an intermediary bank or the beneficiary’s bank both by name and an identifying number if the name and number identify different persons.
(1) If the sender is a bank, the receiving bank may rely on the number as the proper identification of the intermediary or beneficiary’s bank if the receiving bank, when it executes the sender’s order, does not know that the name and number identify different persons. The receiving bank need not determine whether the name and number refer to the same person or whether the number refers to a bank. The sender is obliged to compensate the receiving bank for any loss and expenses incurred by the receiving bank as a result of its reliance on the number in executing or attempting to execute the order.
(2) If the sender is not a bank and the receiving bank proves that the sender, before the payment order was accepted, had notice that the receiving bank might rely on the number as the proper identification of the intermediary or beneficiary’s bank even if it identifies a person different from the bank identified by name, the rights and obligations of the sender and the receiving bank are governed by subsection (b)(1), as though the sender were a bank. Proof of notice may be made by any admissible evidence. The receiving bank satisfies the burden of proof if it proves that the sender, before the payment order was accepted, signed a record stating the information to which the notice relates.
(3) Regardless of whether the sender is a bank, the receiving bank may rely on the name as the proper identification of the intermediary or beneficiary’s bank if the receiving bank, at the time it executes the sender’s order, does not know that the name and number identify different persons. The receiving bank need not determine whether the name and number refer to the same person.
(4) If the receiving bank knows that the name and number identify different persons, reliance on either the name or the number in executing the sender’s payment order is a breach of the obligation stated in section 336.4A-302(a)(1).
History:
1990 c 582 art 1 s 16; 2024 c 93 art 5 s 6
History: History: 1990 c 582 art 1 s 16; 2024 c 93 art 5 s 6