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Commercial Code > COMMERCIAL CODE - FUNDS TRANSFERS
Short Summary
This legal document governs the rights and obligations in funds transfers. It specifies that the rights and obligations between the sender of a payment order and the receiving bank are governed by the law of the jurisdiction where the receiving bank is located. Similarly, the rights and obligations between the beneficiary’s bank and the beneficiary are governed by the law of the jurisdiction where the beneficiary’s bank is located. The issue of when payment is made in a funds transfer is governed by the law of the jurisdiction where the beneficiary’s bank is located. However, if the parties have made an agreement selecting the law of a particular jurisdiction to govern their rights and obligations, that jurisdiction’s law prevails. Additionally, a funds-transfer system rule may select the law of a particular jurisdiction to govern the rights and obligations between participating banks or the rights and obligations of parties involved in a funds transfer carried out through the system. In case of inconsistency between an agreement and a choice-of-law rule, the agreement prevails. If a funds transfer is made using multiple funds-transfer systems with inconsistent choice-of-law rules, the law of the selected jurisdiction that has the most significant relationship to the matter in issue governs. The document also addresses the rate of interest applicable to payment orders issued to a receiving bank. The amount of interest payable may be determined by agreement between the sender and receiving bank or by a funds-transfer system rule if the payment order is transmitted through a funds-transfer system. If the amount of interest is not determined by an agreement or rule, it is calculated based on the applicable Federal Funds rate and the number of days for which interest is payable. The document further discusses the rights and obligations of receiving banks and beneficiary’s banks in relation to failed funds transfers, refund of payments, and customer objections. It also covers the process of creditor process served on receiving banks and setoff by beneficiary’s banks. The document allows for the variation of rights and obligations in a funds transfer through agreement and defines ‘funds-transfer system rule’ as a rule of an association of banks that governs the transmission of payment orders or the rights and obligations between banks involved in a funds transfer. This legal document governs the liability of receiving banks in cases of late or improper execution or failure to execute a payment order in funds transfers. If a funds transfer is completed but the receiving bank breaches Section 36-4A-302, resulting in a delay in payment to the beneficiary, the bank is obliged to pay interest to either the originator or the beneficiary for the period of delay caused by the improper execution. If the receiving bank breaches Section 36-4A-302, resulting in noncompletion of the funds transfer, failure to use an intermediary bank designated by the originator, or issuance of a payment order that does not comply with the terms of the originator’s payment order, the bank is liable to the originator for its expenses in the funds transfer, as well as incidental expenses and interest losses resulting from the improper execution. Damages, including consequential damages, are recoverable to the extent provided in an express written agreement of the receiving bank. If a receiving bank fails to execute a payment order it was obliged to execute by express agreement, the bank is liable to the sender for its expenses in the transaction, as well as incidental expenses and interest losses resulting from the failure to execute. Reasonable attorney’s fees are recoverable if demand for compensation is made and refused before an action is brought on the claim. The liability of a receiving bank under this document may not be varied by agreement, except as stated in the document. If the sender of a payment order that is erroneously executed as stated in Section 36-4A-303 receives notification from the receiving bank that the order was executed or that the sender’s account was debited with respect to the order, the sender has a duty to exercise ordinary care to determine, on the basis of information available to the sender, that the order was erroneously executed and to notify the bank of the relevant facts within a reasonable time not exceeding ninety days after the notification from the bank was received by the sender. If the sender fails to perform that duty, the bank is not obliged to pay interest on any amount refundable to the sender under Section 36-4A-402(d) for the period before the bank learns of the execution error. The bank is not entitled to any recovery from the sender on account of a failure by the sender to perform the duty stated in this section. The provided legal document content pertains to the issuance and acceptance of payment orders in the context of funds transfers. It outlines the rules and procedures for receiving banks, senders, beneficiaries, and other parties involved in funds transfers. The document specifies the obligations and liabilities of receiving banks in accepting payment orders, including the requirement to accept payment orders as agreed upon and the limited liability for breach of agreement. It also clarifies that receiving banks are not agents of the sender or beneficiary and have no duty except as provided in the document or by express agreement. The document further discusses the cancellation and amendment of payment orders, including the methods of communication for cancellation or amendment and the conditions under which cancellation or amendment is effective. It addresses the acceptance of payment orders by receiving banks, beneficiary’s banks, and originator’s banks, outlining the conditions and exemptions for acceptance. The document also covers the identification of intermediary banks or beneficiary’s banks in payment orders and the reliance on identifying numbers or names. Additionally, it provides guidelines for the issuance and acceptance of payment orders transmitted through funds-transfer systems or third-party communication systems. The document further addresses the issuance and acceptance of payment orders transmitted erroneously, including the obligations and rights of the sender and receiving bank in such cases. It also discusses the refund of payment and the duty of the customer to report unauthorized payment orders. The document covers the unenforceability of certain verified payment orders and the requirements for authorization and security procedures. Overall, the document provides comprehensive guidelines and regulations for the issuance and acceptance of payment orders in funds transfers. This legal document, part of the South Carolina Code of Laws, Commercial Code - Funds Transfers, governs the determination of the time of receipt of a payment order or communication canceling or amending a payment order in the context of funds transfers. It applies to receiving banks involved in funds transfers. The document allows receiving banks to establish cut-off times for the receipt and processing of payment orders and communications. If a payment order or communication is received after the close of a funds-transfer business day or after the appropriate cut-off time, the receiving bank may treat it as received at the opening of the next funds-transfer business day. The document also clarifies that if an execution date, payment date, or required action falls on a non-business day, the next funds-transfer business day is considered as the stated date or day, unless stated otherwise. It provides definitions and principles related to funds transfers, serving as a reference for understanding the terminology and concepts related to funds transfers. The document defines terms such as ‘authorized account’, ‘bank’, ‘customer’, ‘funds-transfer business day’, ‘funds-transfer system’, and others. It also references other definitions that apply to specific sections within the document. No specific exemptions or penalties are mentioned in this document.
Whom does it apply to?
Senders of payment orders, receiving banks, beneficiary's banks, and other parties involved in funds transfers
What does it govern?
Rights and obligations in funds transfers
What are exemptions?
No specific exemptions are mentioned in this document.
What are the Penalties?
No specific penalties are mentioned in this document.
Jurisdiction
South Carolina