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Can you summarize MNST 336.4A-205?
UNIFORM COMMERCIAL CODE > ERRONEOUS PAYMENT ORDERS.
Short Summary
This legal document, found in the Minnesota Statutes under the Trade Regulations and Consumer Protection section, specifically falls under the Uniform Commercial Code. It addresses the issue of erroneous payment orders in funds transfers. If a payment order is transmitted with errors, such as instructing payment to the wrong beneficiary, instructing payment for an amount greater than intended, or being a duplicate of a previous payment order, certain rules apply. If the sender can prove that they followed the security procedure and the error would have been detected if the receiving bank also complied, they are not obliged to pay the order. If the funds transfer is completed based on an erroneous payment order, the sender is not obliged to pay and the receiving bank can recover the amount paid from the beneficiary. If the funds transfer is completed based on an order instructing payment for an amount greater than intended, the sender is not obliged to pay the excess amount. The receiving bank can recover the excess amount from the beneficiary. The document also outlines the duty of the sender to exercise ordinary care in discovering and reporting errors within a reasonable time. Failure to do so may result in liability for the sender. Amendments to payment orders are also subject to the same rules. No specific penalties are mentioned in this document.
Whom does it apply to?
Senders and receiving banks involved in funds transfers
What does it govern?
Erroneous payment orders
What are exemptions?
No exemptions are mentioned.
What are the Penalties?
No specific penalties are mentioned.
Jurisdiction
Minnesota