Ask Reggi Your Question Now
Can you summarize 8.4A VACV Part 5?
Commercial Code Funds Transfers >
Short Summary
These legal documents, part of the Code of Virginia’s Commercial Code Funds Transfers, cover various aspects related to funds transfers. They govern the choice of law in funds transfers, stating 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 also 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, that law governs their rights and obligations, regardless of the payment order or funds transfer’s relation to that jurisdiction. 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 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 with the most significant relationship to the matter in issue governs. The documents also specify the rate of interest applicable to payment orders issued to a receiving bank. The amount of interest payable by the receiving bank can be determined by agreement between the sender and receiving bank or by a funds-transfer system rule. If not determined by an agreement or rule, interest is calculated based on the applicable Federal Funds rate multiplied by the amount on which interest is payable and the number of days for which interest is payable. The documents also address the treatment of creditor process served on receiving banks and the setoff by beneficiary’s banks. If a receiving bank accepts a payment order and creditor process is served on it, the balance in the authorized account is reduced by the amount of the payment order, unless the bank had a reasonable opportunity to act on the process before accepting the payment order. In the case of a beneficiary’s bank receiving a payment order for payment to the beneficiary’s account, the bank may credit the account and set off the amount against an obligation owed by the beneficiary or apply it to satisfy creditor process served on the bank. The bank may also allow withdrawal of the amount credited unless creditor process is served in a manner that affords the bank a reasonable opportunity to prevent withdrawal. However, if the bank has had a reasonable opportunity to act on the creditor process, it may not reject the payment order except for reasons unrelated to the service of process. Lastly, the documents govern the rights and obligations of parties involved in funds transfers. They allow for the variation of rights and obligations through agreement, except where otherwise provided in the title. The documents define ‘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. They state that a funds-transfer system rule may be effective even if it conflicts with the title and indirectly affects a party who did not consent to the rule. The rule may also govern the rights and obligations of parties other than participating banks. These documents apply to senders of payment orders, receiving banks, beneficiary’s banks, beneficiaries, and participating banks in funds-transfer systems.
Whom does it apply to?
Senders of payment orders, receiving banks, beneficiary's banks, beneficiaries, participating banks in funds-transfer systems
What does it govern?
Choice of law in funds transfers, rate of interest applicable to payment orders, treatment of creditor process served on receiving banks, rights and obligations of parties involved in funds transfers
What are exemptions?
No specific exemptions are mentioned.
What are the Penalties?
No specific penalties are mentioned.
Jurisdiction
Virginia