New York Laws
Part 4 - Payment
4-A-405 - Payment by Beneficiary's Bank to Beneficiary.

(1) If the beneficiary's bank credits an account of the beneficiary of
a payment order, payment of the bank's obligation under subsection (1)
of Section 4-A-404 occurs when and to the extent (i) the beneficiary is
notified of the right to withdraw the credit, (ii) the bank lawfully
applies the credit to a debt of the beneficiary, or (iii) funds with
respect to the order are otherwise made available to the beneficiary by
the bank.
(2) If the beneficiary's bank does not credit an account of the
beneficiary of a payment order, the time when payment of the bank's
obligation under subsection (1) of Section 4-A-404 occurs is governed by
principles of law that determine when an obligation is satisfied.
(3) Except as stated in subsections (4) and (5), if the beneficiary's
bank pays the beneficiary of a payment order under a condition to
payment or agreement of the beneficiary giving the bank the right to
recover payment from the beneficiary if the bank does not receive
payment of the order, the condition to payment or agreement is not
enforceable.
(4) A funds-transfer system rule may provide that payments made to
beneficiaries of funds transfers made through the system are provisional
until receipt of payment by the beneficiary's bank of the payment order
it accepted. A beneficiary's bank that makes a payment that is
provisional under the rule is entitled to refund from the beneficiary if
(i) the rule requires that both the beneficiary and the originator be
given notice of the provisional nature of the payment before the funds
transfer is initiated, (ii) the beneficiary, the beneficiary's bank and
the originator's bank agreed to be bound by the rule, and (iii) the
beneficiary's bank did not receive payment of the payment order that it
accepted. If the beneficiary is obliged to refund payment to the
beneficiary's bank, acceptance of the payment order by the beneficiary's
bank is nullified and no payment by the originator of the funds transfer
to the beneficiary occurs under Section 4-A-406.
(5) This subsection applies to a funds transfer that includes a
payment order transmitted over a funds-transfer system that (i) nets
obligations multilaterally among participants, and (ii) has in effect a
loss-sharing agreement among participants for the purpose of providing
funds necessary to complete settlement of the obligations of one or more
participants that do not meet their settlement obligations. If the
beneficiary's bank in the funds transfer accepts a payment order and the
system fails to complete settlement pursuant to its rules with respect
to any payment order in the funds transfer, (i) the acceptance by the
beneficiary's bank is nullified and no person has any right or
obligation based on the acceptance, (ii) the beneficiary's bank is
entitled to recover payment from the beneficiary, (iii) no payment by
the originator to the beneficiary occurs under Section 4-A-406, and (iv)
subject to subsection (5) of Section 4-A-402, each sender in the funds
transfer is excused from its obligation to pay its payment order under
subsection (3) of Section 4-A-402 because the funds transfer has not
been completed.

Structure New York Laws