Printable Format84-4a-303. Erroneous execution of payment order. (a) A receiving bank that: (i) Executes the payment order of the sender by issuing a payment order in an amount greater than the amount of the sender's order; or (ii) issues a payment order in execution of the sender's order and then issues a duplicate order, is entitled to payment of the amount of the sender's order in accordance with subsection (c) of K.S.A. 84-4a-402 if that subsection is otherwise satisfied. The bank is entitled to recover from the beneficiary of the erroneous order the excess payment received to the extent allowed by the law governing mistake and restitution.
(b) A receiving bank that executes the payment order of the sender by issuing a payment order in an amount less than the amount of the sender's order is entitled to payment of the amount of the sender's order under subsection (c) of K.S.A. 84-4a-402 if: (i) That subsection is otherwise satisfied; and (ii) the bank corrects its mistake by issuing an additional payment order for the benefit of the beneficiary of the sender's order. If the error is not corrected, the issuer of the erroneous order is entitled to receive or retain payment from the sender of the order it accepted only to the extent of the amount of the erroneous order. This subsection does not apply if the receiving bank executes the sender's payment order by issuing a payment order in an amount less than the amount of the sender's order for the purpose of obtaining payment of its charges for services and expenses pursuant to instruction of the sender.
(c) If a receiving bank executes the payment order of the sender by issuing a payment order to a beneficiary different from the beneficiary of the sender's order and the funds transfer is completed on the basis of that error, the sender of the payment order that was erroneously executed and all previous senders in the funds transfer are not obliged to pay the payment orders they issued. The issuer of the erroneous order is entitled to recover from the beneficiary of the order the payment received to the extent allowed by the law governing mistake and restitution.
History: L. 1990, ch. 367, § 23; L. 1991, ch. 294, § 18; July 1.
KANSAS COMMENT, 1996
This section is identical to the 1995 Official Text, dealing with errors of execution by the receiving bank as 84-4a-207 deals with errors in the payment order received by the beneficiary's bank.
If the receiving bank issues a payment order for a larger amount than the sender's order, or duplicates the order, it is entitled to payment for the correct amount from the sender and it is entitled to reimbursement from the beneficiary under the rules for restitution.
If the receiving bank issues a payment order for a smaller amount than the sender's payment order, and later corrects the error by issuing an additional payment order, it is entitled to payment from the sender for the amount of the sender's order. The subsection does not apply, however, if the receiving bank issues a smaller payment order because the originator instructed it to deduct its fees, as described in 84-4a-302(d). In this case it is entitled to full payment.
If the receiving bank issues a payment order to the wrong beneficiary, none of the prior senders are required to pay for the payment order. The receiving bank has a right, pursuant to the rules on restitution, to recover from the beneficiary paid.