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84-4a-103. Payment order—definitions. (a) In this article:

(1) "Payment order" means an instruction of a sender to a receiving bank, transmitted orally, electronically, or in writing, to pay, or to cause another bank to pay, a fixed or determinable amount of money to a beneficiary if:

(i) The instruction does not state a condition to payment to the beneficiary other than time of payment;

(ii) the receiving bank is to be reimbursed by debiting an account of, or otherwise receiving payment from, the sender; and

(iii) the instruction is transmitted by the sender directly to the receiving bank or to an agent, funds-transfer system, or communication system for transmittal to the receiving bank.

(2) "Beneficiary" means the person to be paid by the beneficiary's bank.

(3) "Beneficiary's bank" means the bank identified in a payment order in which an account of the beneficiary is to be credited pursuant to the order or which otherwise is to make payment to the beneficiary if the order does not provide for payment to an account.

(4) "Receiving bank" means the bank to which the sender's instruction is addressed.

(5) "Sender" means the person giving the instruction to the receiving bank.

(b) If an instruction complying with subsection (a)(1) is to make more than one payment to a beneficiary, the instruction is a separate payment order with respect to each of the payments.

(c) A payment order is issued when it is sent to the receiving bank.

History: L. 1990, ch. 367, § 3; L. 1991, ch. 294, § 2; July 1.


This section is identical to the 1995 Official Text.

By the terms of paragraph (a)(1), a "payment order" is essentially a credit transfer where the sender is directing that a credit be paid to another by the receiving bank, rather than a debit transfer in which the person to be paid initiates the transaction. The relationship of the parties is somewhat analogous to the credits which are exchanged as an item moves toward the drawee bank. A major difference is that the credits are initiated by the instructions of the sender sent directly to the receiving bank. The payment order may not contain any conditions to payment other than the time of payment. Conditions such as receipt or delivery of goods or other documents remove the transaction from article 4a. Subparagraph (ii) requires that the sender, the one ordering the transaction, be debited or make payment to the receiving bank. Article 4a does not apply to debit transfers in which a person has been authorized to debit the account, which is to be repaid by another. Finally, subparagraph (iii) requires that the instruction be delivered by the sender to a receiving bank and not by an article 3 instrument or article 4 item. Those articles cover the latter transactions. Although the requirement that the sender instruct the receiving bank is an attempt to distinguish article 4a credit transactions from debit transactions, if the sender instructs the receiving bank through agents, the transaction becomes more difficult to categorize, especially if the beneficiary of the payment order is allegedly also an agent of the sender.

The "beneficiary" is the ultimate beneficiary of the payment order, a position analogous to the payee of a check. The "beneficiary's bank" is the institution receiving the payment for the beneficiary, a position somewhat analogous to the depository bank receiving credits for its customer from the sender or from the receiving bank. In this transaction, however, the credits are instituted by the sender's instructions directly to the receiving bank.

Under subsection (b), each payment to be made is treated as a separate payment order, and the act of giving a payment order to the receiving bank is "issue" of the payment order.

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