11501. (a) Except as otherwise provided in this division, the
rights and obligations of a party to a funds transfer may be varied
by agreement of the affected party.
(b) "Funds-transfer system rule" means a rule of an association of
banks (i) governing transmission of payment orders by means of a
funds-transfer system of the association or rights and obligations
with respect to those orders, or (ii) to the extent the rule governs
rights and obligations between banks that are parties to a funds
transfer in which a Federal Reserve Bank, acting as an intermediary
bank, sends a payment order to the beneficiary's bank. Except as
otherwise provided in this division, a funds-transfer system rule
governing rights and obligations between participating banks using
the system may be effective even if the rule conflicts with this
division and indirectly affects another party to the funds transfer
who does not consent to the rule. A funds-transfer system rule may
also govern rights and obligations of parties other than
participating banks using the system to the extent stated in
subdivision (c) of Section 11404, subdivision (d) of Section 11405,
and subdivision (c) of Section 11507.
11502. (a) As used in this section, "creditor process" means levy,
attachment, garnishment, notice of lien, sequestration, or similar
process issued by or on behalf of a creditor or other claimant with
respect to an account.
(b) This subdivision applies to creditor process with respect to
an authorized account of the sender of a payment order if the
creditor process is served on the receiving bank. For the purpose of
determining rights with respect to the creditor process, if the
receiving bank accepts the payment order the balance in the
authorized account is deemed to be reduced by the amount of the
payment order to the extent the bank did not otherwise receive
payment of the order, unless the creditor process is served at a time
and in a manner affording the bank a reasonable opportunity to act
on it before the bank accepts the payment order.
(c) If a beneficiary's bank has received a payment order for
payment to the beneficiary's account in the bank, the following rules
apply:
(1) The bank may credit the beneficiary's account. The amount
credited may be set off against an obligation owed by the beneficiary
to the bank or may be applied to satisfy creditor process served on
the bank with respect to the account.
(2) The bank may credit the beneficiary's account and allow
withdrawal of the amount credited unless creditor process with
respect to the account is served at a time and in a manner affording
the bank a reasonable opportunity to act to prevent withdrawal.
(3) If creditor process with respect to the beneficiary's account
has been served and the bank has had a reasonable opportunity to act
on it, the bank may not reject the payment order except for a reason
unrelated to the service of process.
(d) Creditor process with respect to a payment by the originator
to the beneficiary pursuant to a funds transfer may be served only on
the beneficiary's bank with respect to the debt owed by that bank to
the beneficiary. Any other bank served with the creditor process is
not obliged to act with respect to the process.
11503. For proper cause and in compliance with applicable law, a
court may restrain (i) a person from issuing a payment order to
initiate a funds transfer, (ii) an originator's bank from executing
the payment order of the originator, or (iii) the beneficiary's bank
from releasing funds to the beneficiary or the beneficiary from
withdrawing the funds. A court may not otherwise restrain a person
from issuing a payment order, paying or receiving payment of a
payment order, or otherwise acting with respect to a funds transfer.
11504. (a) If a receiving bank has received more than one payment
order of the sender or one or more payment orders and other items
that are payable from the sender's account, the bank may charge the
sender's account with respect to the various orders and items in any
sequence.
(b) In determining whether a credit to an account has been
withdrawn by the holder of the account or applied to a debt of the
holder of the account, credits first made to the account are first
withdrawn or applied.
11505. If a receiving bank has received payment from its customer
with respect to a payment order issued in the name of the customer as
sender and accepted by the bank, and the customer received
notification reasonably identifying the order, the customer is
precluded from asserting that the bank is not entitled to retain the
payment unless the customer notifies the bank of the customer's
objection to the payment within one year after the notification was
received by the customer.
11506. (a) If, under this division, a receiving bank is obliged to
pay interest with respect to a payment order issued to the bank, the
amount payable may be determined (i) by agreement of the sender and
receiving bank, or (ii) by a funds-transfer system rule if the
payment order is transmitted through a funds-transfer system.
(b) If the amount of interest is not determined by an agreement or
rule as stated in subdivision (a), the amount is calculated by
multiplying the applicable federal funds rate by the amount on which
interest is payable, and then multiplying the product by the number
of days for which interest is payable. The applicable federal funds
rate is the average of the federal funds rates published by the
Federal Reserve Bank of New York for each of the days for which
interest is payable divided by 360. The federal funds rate for any
day on which a published rate is not available is the same as the
published rate for the next preceding day for which there is a
published rate. If a receiving bank that accepted a payment order is
required to refund payment to the sender of the order because the
funds transfer was not completed, but the failure to complete was not
due to any fault by the bank, the interest payable is reduced by a
percentage equal to the reserve requirement on deposits of the
receiving bank.
11507. (a) The following rules apply unless the affected parties
otherwise agree or subdivision (c) applies:
(1) The rights and obligations between the sender of a payment
order and the receiving bank are governed by the law of the
jurisdiction in which the receiving bank is located.
(2) The rights and obligations between the beneficiary's bank and
the beneficiary are governed by the law of the jurisdiction in which
the beneficiary's bank is located.
(3) The issue of when payment is made pursuant to a funds transfer
by the originator to the beneficiary is governed by the law of the
jurisdiction in which the beneficiary's bank is located.
(b) If the parties described in each paragraph of subdivision (a)
have made an agreement selecting the law of a particular jurisdiction
to govern rights and obligations between each other, the law of that
jurisdiction governs those rights and obligations, whether or not
the payment order or the funds transfer bears a reasonable relation
to that jurisdiction.
(c) A funds-transfer system rule may select the law of a
particular jurisdiction to govern (i) rights and obligations between
participating banks with respect to payment orders transmitted or
processed through the system, or (ii) the rights and obligations of
some or all parties to a funds transfer any part of which is carried
out by means of the system. A choice of law made pursuant to clause
(i) is binding on participating banks. A choice of law made pursuant
to clause (ii) is binding on the originator, other sender, or a
receiving bank having notice that the funds-transfer system might be
used in the funds transfer and of the choice of law by the system
when the originator, other sender, or receiving bank issued or
accepted a payment order. The beneficiary of a funds transfer is
bound by the choice of law if, when the funds transfer is initiated,
the beneficiary has notice that the funds-transfer system might be
used in the funds transfer and of the choice of law by the system.
The law of a jurisdiction selected pursuant to this subdivision may
govern, whether or not that law bears a reasonable relation to the
matter in issue.
(d) In the event of inconsistency between an agreement under
subdivision (b) and a choice-of-law rule under subdivision (c), the
agreement under subdivision (b) prevails.
(e) If a funds transfer is made by use of more than one
funds-transfer system and there is inconsistency between
choice-of-law rules of the systems, the matter in issue is governed
by the law of the selected jurisdiction that has the most significant
relationship to the matter in issue.
11501. (a) Except as otherwise provided in this division, the
rights and obligations of a party to a funds transfer may be varied
by agreement of the affected party.
(b) "Funds-transfer system rule" means a rule of an association of
banks (i) governing transmission of payment orders by means of a
funds-transfer system of the association or rights and obligations
with respect to those orders, or (ii) to the extent the rule governs
rights and obligations between banks that are parties to a funds
transfer in which a Federal Reserve Bank, acting as an intermediary
bank, sends a payment order to the beneficiary's bank. Except as
otherwise provided in this division, a funds-transfer system rule
governing rights and obligations between participating banks using
the system may be effective even if the rule conflicts with this
division and indirectly affects another party to the funds transfer
who does not consent to the rule. A funds-transfer system rule may
also govern rights and obligations of parties other than
participating banks using the system to the extent stated in
subdivision (c) of Section 11404, subdivision (d) of Section 11405,
and subdivision (c) of Section 11507.
11502. (a) As used in this section, "creditor process" means levy,
attachment, garnishment, notice of lien, sequestration, or similar
process issued by or on behalf of a creditor or other claimant with
respect to an account.
(b) This subdivision applies to creditor process with respect to
an authorized account of the sender of a payment order if the
creditor process is served on the receiving bank. For the purpose of
determining rights with respect to the creditor process, if the
receiving bank accepts the payment order the balance in the
authorized account is deemed to be reduced by the amount of the
payment order to the extent the bank did not otherwise receive
payment of the order, unless the creditor process is served at a time
and in a manner affording the bank a reasonable opportunity to act
on it before the bank accepts the payment order.
(c) If a beneficiary's bank has received a payment order for
payment to the beneficiary's account in the bank, the following rules
apply:
(1) The bank may credit the beneficiary's account. The amount
credited may be set off against an obligation owed by the beneficiary
to the bank or may be applied to satisfy creditor process served on
the bank with respect to the account.
(2) The bank may credit the beneficiary's account and allow
withdrawal of the amount credited unless creditor process with
respect to the account is served at a time and in a manner affording
the bank a reasonable opportunity to act to prevent withdrawal.
(3) If creditor process with respect to the beneficiary's account
has been served and the bank has had a reasonable opportunity to act
on it, the bank may not reject the payment order except for a reason
unrelated to the service of process.
(d) Creditor process with respect to a payment by the originator
to the beneficiary pursuant to a funds transfer may be served only on
the beneficiary's bank with respect to the debt owed by that bank to
the beneficiary. Any other bank served with the creditor process is
not obliged to act with respect to the process.
11503. For proper cause and in compliance with applicable law, a
court may restrain (i) a person from issuing a payment order to
initiate a funds transfer, (ii) an originator's bank from executing
the payment order of the originator, or (iii) the beneficiary's bank
from releasing funds to the beneficiary or the beneficiary from
withdrawing the funds. A court may not otherwise restrain a person
from issuing a payment order, paying or receiving payment of a
payment order, or otherwise acting with respect to a funds transfer.
11504. (a) If a receiving bank has received more than one payment
order of the sender or one or more payment orders and other items
that are payable from the sender's account, the bank may charge the
sender's account with respect to the various orders and items in any
sequence.
(b) In determining whether a credit to an account has been
withdrawn by the holder of the account or applied to a debt of the
holder of the account, credits first made to the account are first
withdrawn or applied.
11505. If a receiving bank has received payment from its customer
with respect to a payment order issued in the name of the customer as
sender and accepted by the bank, and the customer received
notification reasonably identifying the order, the customer is
precluded from asserting that the bank is not entitled to retain the
payment unless the customer notifies the bank of the customer's
objection to the payment within one year after the notification was
received by the customer.
11506. (a) If, under this division, a receiving bank is obliged to
pay interest with respect to a payment order issued to the bank, the
amount payable may be determined (i) by agreement of the sender and
receiving bank, or (ii) by a funds-transfer system rule if the
payment order is transmitted through a funds-transfer system.
(b) If the amount of interest is not determined by an agreement or
rule as stated in subdivision (a), the amount is calculated by
multiplying the applicable federal funds rate by the amount on which
interest is payable, and then multiplying the product by the number
of days for which interest is payable. The applicable federal funds
rate is the average of the federal funds rates published by the
Federal Reserve Bank of New York for each of the days for which
interest is payable divided by 360. The federal funds rate for any
day on which a published rate is not available is the same as the
published rate for the next preceding day for which there is a
published rate. If a receiving bank that accepted a payment order is
required to refund payment to the sender of the order because the
funds transfer was not completed, but the failure to complete was not
due to any fault by the bank, the interest payable is reduced by a
percentage equal to the reserve requirement on deposits of the
receiving bank.
11507. (a) The following rules apply unless the affected parties
otherwise agree or subdivision (c) applies:
(1) The rights and obligations between the sender of a payment
order and the receiving bank are governed by the law of the
jurisdiction in which the receiving bank is located.
(2) The rights and obligations between the beneficiary's bank and
the beneficiary are governed by the law of the jurisdiction in which
the beneficiary's bank is located.
(3) The issue of when payment is made pursuant to a funds transfer
by the originator to the beneficiary is governed by the law of the
jurisdiction in which the beneficiary's bank is located.
(b) If the parties described in each paragraph of subdivision (a)
have made an agreement selecting the law of a particular jurisdiction
to govern rights and obligations between each other, the law of that
jurisdiction governs those rights and obligations, whether or not
the payment order or the funds transfer bears a reasonable relation
to that jurisdiction.
(c) A funds-transfer system rule may select the law of a
particular jurisdiction to govern (i) rights and obligations between
participating banks with respect to payment orders transmitted or
processed through the system, or (ii) the rights and obligations of
some or all parties to a funds transfer any part of which is carried
out by means of the system. A choice of law made pursuant to clause
(i) is binding on participating banks. A choice of law made pursuant
to clause (ii) is binding on the originator, other sender, or a
receiving bank having notice that the funds-transfer system might be
used in the funds transfer and of the choice of law by the system
when the originator, other sender, or receiving bank issued or
accepted a payment order. The beneficiary of a funds transfer is
bound by the choice of law if, when the funds transfer is initiated,
the beneficiary has notice that the funds-transfer system might be
used in the funds transfer and of the choice of law by the system.
The law of a jurisdiction selected pursuant to this subdivision may
govern, whether or not that law bears a reasonable relation to the
matter in issue.
(d) In the event of inconsistency between an agreement under
subdivision (b) and a choice-of-law rule under subdivision (c), the
agreement under subdivision (b) prevails.
(e) If a funds transfer is made by use of more than one
funds-transfer system and there is inconsistency between
choice-of-law rules of the systems, the matter in issue is governed
by the law of the selected jurisdiction that has the most significant
relationship to the matter in issue.
11501. (a) Except as otherwise provided in this division, the
rights and obligations of a party to a funds transfer may be varied
by agreement of the affected party.
(b) "Funds-transfer system rule" means a rule of an association of
banks (i) governing transmission of payment orders by means of a
funds-transfer system of the association or rights and obligations
with respect to those orders, or (ii) to the extent the rule governs
rights and obligations between banks that are parties to a funds
transfer in which a Federal Reserve Bank, acting as an intermediary
bank, sends a payment order to the beneficiary's bank. Except as
otherwise provided in this division, a funds-transfer system rule
governing rights and obligations between participating banks using
the system may be effective even if the rule conflicts with this
division and indirectly affects another party to the funds transfer
who does not consent to the rule. A funds-transfer system rule may
also govern rights and obligations of parties other than
participating banks using the system to the extent stated in
subdivision (c) of Section 11404, subdivision (d) of Section 11405,
and subdivision (c) of Section 11507.
11502. (a) As used in this section, "creditor process" means levy,
attachment, garnishment, notice of lien, sequestration, or similar
process issued by or on behalf of a creditor or other claimant with
respect to an account.
(b) This subdivision applies to creditor process with respect to
an authorized account of the sender of a payment order if the
creditor process is served on the receiving bank. For the purpose of
determining rights with respect to the creditor process, if the
receiving bank accepts the payment order the balance in the
authorized account is deemed to be reduced by the amount of the
payment order to the extent the bank did not otherwise receive
payment of the order, unless the creditor process is served at a time
and in a manner affording the bank a reasonable opportunity to act
on it before the bank accepts the payment order.
(c) If a beneficiary's bank has received a payment order for
payment to the beneficiary's account in the bank, the following rules
apply:
(1) The bank may credit the beneficiary's account. The amount
credited may be set off against an obligation owed by the beneficiary
to the bank or may be applied to satisfy creditor process served on
the bank with respect to the account.
(2) The bank may credit the beneficiary's account and allow
withdrawal of the amount credited unless creditor process with
respect to the account is served at a time and in a manner affording
the bank a reasonable opportunity to act to prevent withdrawal.
(3) If creditor process with respect to the beneficiary's account
has been served and the bank has had a reasonable opportunity to act
on it, the bank may not reject the payment order except for a reason
unrelated to the service of process.
(d) Creditor process with respect to a payment by the originator
to the beneficiary pursuant to a funds transfer may be served only on
the beneficiary's bank with respect to the debt owed by that bank to
the beneficiary. Any other bank served with the creditor process is
not obliged to act with respect to the process.
11503. For proper cause and in compliance with applicable law, a
court may restrain (i) a person from issuing a payment order to
initiate a funds transfer, (ii) an originator's bank from executing
the payment order of the originator, or (iii) the beneficiary's bank
from releasing funds to the beneficiary or the beneficiary from
withdrawing the funds. A court may not otherwise restrain a person
from issuing a payment order, paying or receiving payment of a
payment order, or otherwise acting with respect to a funds transfer.
11504. (a) If a receiving bank has received more than one payment
order of the sender or one or more payment orders and other items
that are payable from the sender's account, the bank may charge the
sender's account with respect to the various orders and items in any
sequence.
(b) In determining whether a credit to an account has been
withdrawn by the holder of the account or applied to a debt of the
holder of the account, credits first made to the account are first
withdrawn or applied.
11505. If a receiving bank has received payment from its customer
with respect to a payment order issued in the name of the customer as
sender and accepted by the bank, and the customer received
notification reasonably identifying the order, the customer is
precluded from asserting that the bank is not entitled to retain the
payment unless the customer notifies the bank of the customer's
objection to the payment within one year after the notification was
received by the customer.
11506. (a) If, under this division, a receiving bank is obliged to
pay interest with respect to a payment order issued to the bank, the
amount payable may be determined (i) by agreement of the sender and
receiving bank, or (ii) by a funds-transfer system rule if the
payment order is transmitted through a funds-transfer system.
(b) If the amount of interest is not determined by an agreement or
rule as stated in subdivision (a), the amount is calculated by
multiplying the applicable federal funds rate by the amount on which
interest is payable, and then multiplying the product by the number
of days for which interest is payable. The applicable federal funds
rate is the average of the federal funds rates published by the
Federal Reserve Bank of New York for each of the days for which
interest is payable divided by 360. The federal funds rate for any
day on which a published rate is not available is the same as the
published rate for the next preceding day for which there is a
published rate. If a receiving bank that accepted a payment order is
required to refund payment to the sender of the order because the
funds transfer was not completed, but the failure to complete was not
due to any fault by the bank, the interest payable is reduced by a
percentage equal to the reserve requirement on deposits of the
receiving bank.
11507. (a) The following rules apply unless the affected parties
otherwise agree or subdivision (c) applies:
(1) The rights and obligations between the sender of a payment
order and the receiving bank are governed by the law of the
jurisdiction in which the receiving bank is located.
(2) The rights and obligations between the beneficiary's bank and
the beneficiary are governed by the law of the jurisdiction in which
the beneficiary's bank is located.
(3) The issue of when payment is made pursuant to a funds transfer
by the originator to the beneficiary is governed by the law of the
jurisdiction in which the beneficiary's bank is located.
(b) If the parties described in each paragraph of subdivision (a)
have made an agreement selecting the law of a particular jurisdiction
to govern rights and obligations between each other, the law of that
jurisdiction governs those rights and obligations, whether or not
the payment order or the funds transfer bears a reasonable relation
to that jurisdiction.
(c) A funds-transfer system rule may select the law of a
particular jurisdiction to govern (i) rights and obligations between
participating banks with respect to payment orders transmitted or
processed through the system, or (ii) the rights and obligations of
some or all parties to a funds transfer any part of which is carried
out by means of the system. A choice of law made pursuant to clause
(i) is binding on participating banks. A choice of law made pursuant
to clause (ii) is binding on the originator, other sender, or a
receiving bank having notice that the funds-transfer system might be
used in the funds transfer and of the choice of law by the system
when the originator, other sender, or receiving bank issued or
accepted a payment order. The beneficiary of a funds transfer is
bound by the choice of law if, when the funds transfer is initiated,
the beneficiary has notice that the funds-transfer system might be
used in the funds transfer and of the choice of law by the system.
The law of a jurisdiction selected pursuant to this subdivision may
govern, whether or not that law bears a reasonable relation to the
matter in issue.
(d) In the event of inconsistency between an agreement under
subdivision (b) and a choice-of-law rule under subdivision (c), the
agreement under subdivision (b) prevails.
(e) If a funds transfer is made by use of more than one
funds-transfer system and there is inconsistency between
choice-of-law rules of the systems, the matter in issue is governed
by the law of the selected jurisdiction that has the most significant
relationship to the matter in issue.
