47-4A205. Erroneous payment orders


A. If an accepted payment order was transmitted pursuant to a security procedure
for the detection of error and the payment order erroneously instructed payment to a
beneficiary not intended by the sender, erroneously instructed payment in an amount
greater than the amount intended by the sender or was an erroneously transmitted
duplicate of a payment order previously sent by the sender, the following rules apply:


1. If the sender proves that the sender or a person acting on behalf of the sender
pursuant to section 47-4A206 complied with the security procedure and that the error
would have been detected if the receiving bank had also complied, the sender is not
obliged to pay the order to the extent stated in paragraphs 2 and 3.


2. If the funds transfer is completed on the basis of a payment order that
erroneously instructed payment to a beneficiary not intended by the sender or that was an
erroneously transmitted duplicate of a payment order previously sent by the sender, the
sender is not obliged to pay the order and the receiving bank is entitled to recover from
the beneficiary any amount paid to the beneficiary to the extent allowed by the law
governing mistake and restitution.


3. If the funds transfer is completed on the basis of a payment order that
erroneously instructed payment in an amount greater than the amount intended by the
sender, the sender is not obliged to pay the order to the extent the amount received by
the beneficiary is greater than the amount intended by the sender. In that case, the
receiving bank is entitled to recover from the beneficiary the excess amount received to
the extent allowed by the law governing mistake and restitution.


B. If the sender of an erroneous payment order described in subsection A of this
section is not obliged to pay all or part of the order and the sender receives
notification from the receiving bank that the order was accepted by the bank or that the
sender's account was debited with respect to the order, the sender has a duty to exercise
ordinary care, on the basis of information available to the sender, to discover the error
with respect to the order and to advise the bank of the relevant facts within a
reasonable time, not exceeding ninety days, after the bank's notification was received by
the sender. If the bank proves that the sender failed to perform that duty, the sender
is liable to the bank for the loss the bank proves it incurred as a result of the
failure, but the liability of the sender may not exceed the amount of the sender's order.


C. This section applies to amendments to payment orders to the same extent it
applies to payment orders.