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Can you summarize IACO 554.12303?
UNIFORM COMMERCIAL CODE > Erroneous execution of payment order.
Short Summary
This legal document, found in the Iowa Code under the Commerce section and the Uniform Commercial Code, governs the execution of payment orders by receiving banks. It outlines the rights and entitlements of receiving banks in cases of erroneous execution of payment orders. If a receiving bank issues a payment order in an amount greater than the sender’s order or issues a duplicate order, the bank is entitled to payment of the sender’s order amount and can recover the excess payment from the beneficiary. On the other hand, if the receiving bank issues a payment order in an amount less than the sender’s order, the bank is entitled to payment of the sender’s order amount if it corrects the error by issuing an additional payment order for the beneficiary. If the error is not corrected, the issuer of the erroneous order can only receive or retain payment up to the amount of the erroneous order. However, if the receiving bank executes the payment order to a different beneficiary and the funds transfer is completed based on that error, the sender and previous senders are not obligated to pay the payment orders they issued, and the issuer of the erroneous order can recover the payment received from the beneficiary. It is important to note that there is an exemption to this rule if the receiving bank issues a payment order in an amount less than the sender’s order for the purpose of obtaining payment for the bank’s charges and expenses as instructed by the sender.
Whom does it apply to?
Receiving banks, senders of payment orders, beneficiaries of payment orders
What does it govern?
Execution of payment orders by receiving banks
What are exemptions?
This subsection does not apply if the receiving bank executes the senders payment order by issuing a payment order in an amount less than the amount of the senders order for the purpose of obtaining payment of the receiving banks charges for services and expenses pursuant to instruction of the sender.
What are the Penalties?
No specific penalties mentioned.
Jurisdiction
Iowa