The Law of Modern Payment Systems
Authors:
Miller, Frederick H. / Harrell, Alvin C.
Edition:
2nd
Copyright Date:
2017
22 chapters
have results for payment systems
Index 125 results (showing 5 best matches)
- For discussion of these topics in contexts other than the Internet and Mobile Banking, see the specific topics, PayPal, Non-UCC Payment Systems: ECCHO and ACH; Virtual Currency, and Non-UCC Payment Systems: Credit Cards, and Non-UCC Payment Systems: Debit and Stored Valued Cards; Remittances.
- For discussion of these topics beyond PayPal, see Internet and Mobile Banking, the specific topics, Non-UCC Payment Systems: ECCHO and ACH; Virtual Currency, and Non-UCC Payment Systems: Credit Cards, and Non-UCC Payment Systems: Debit and Stored Value Cards; Remittances.
- Electronic payment systems, 893
- Payment or satisfaction and tender of payment, 261–268, 290–291
- Satisfaction or payment and tender of payment, 261–268
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Chapter 11. Non-UCC Payment Systems: Credit Cards 19 results (showing 5 best matches)
- There are various kinds of payment systems, other than cash, in use today. Some consider letters of credit as a kind of payment system. That view is tenable when one considers a commercial credit that may be used by a seller of goods to obtain payment other that directly from the buyer. UCC Article 5, is beyond the scope of this book. Moreover, as other uses for a letter of credit, such as in the case of a standby credit, are not payment uses, but are more in the nature of an alternative to a guaranty or a secured transaction, the focus in this book is limited to systems for payment (except for the discussion of promissory notes).
- Another system in common use is the credit card system. A credit card essentially is a continuing offer by the card issuer to extend credit to or for the cardholder. This permits the card holder to accept the offer and pay a seller by use of the credit; that is, the card issuer pays the seller on behalf of the cardholder and the cardholder then repays the card issuer on the terms agreed upon between them in the credit card arrangement. A sample credit card agreement is included in the Appendix to this book, between a bank issuer and a customer. For our purposes, there is no substantial difference between a credit card and a “charge card”, even though a debt incurred with the latter is due on billing so there is no finance charge. For other purposes there may be; that is, since there is no right to defer payment in a charge card plan (at least not beyond receipt of the statement and the period thereafter allowed for payment), for a number of purposes a charge card, such as American...
- Because the person paid in a two-party (non-bank) credit card situation usually will be the merchant, who both sells the goods or services and issues the card, it is arguable that the two-party card arrangement is not a true payment system. In any event, a three-party credit card arrangement, such as a bank credit card, clearly is a system for making payment. It is a method by which one party may pay another with credit extended by a third party. Today, most credit card transactions are not completed by the use of paper instruments as opposed to electronically, but paper usually is kept by the merchant and a copy given to the cardholder after the cardholder signs to serve as evidence. This paper may contain a promise or an order to pay, but the language on the paper usually subjects the promise or order to the credit card agreement, and thus renders it non-negotiable under
- . The slips, if they are used for more than evidence, normally are truncated at the bank of deposit, and information from them is sent forward to the card issuing bank electronically. In this regard the system essentially is not different than that for truncated checks. Section 4–104(a)(9) now excludes credit card slips form the definition of “item,” and thus leaves them to other governing law and system agreements and rules. Note in any credit card transaction, there will be another agreement in addition to the cardholder agreement. Where the credit card is used to purchase or lease goods, for example, it will be a sale or lease subject to UCC Article 2 or Article 2A. In a three party credit card arrangement, such as a bank credit card, there will also be an agreement between the merchant and the card issuing bank or system, often accompanied by elaborate system rules dealing with times of payment, verification of cardholders, charge backs, and a myriad of other matters. These...
- A common system for making payment is the system using drafts and checks. This system is the subject of the previous chapters of this book and is governed primarily but not entirely by the Uniform Commercial Code. For example, efforts to speed up the collection of a check are in Regulation CC,
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Chapter 10. UCC Article 4A—Funds Transfers 251 results (showing 5 best matches)
- , these rules cannot be modified by agreement, and any contractual condition to payment or agreement to allow the bank to recover payment is unenforceable. As noted , there is an exception at § 4A–405(d), providing that conditions or provisional payment rules in a funds-transfer system agreement are enforceable under certain circumstances. There is a similar rule nullifying certain payments where the funds-transfer system fails to complete settlements pursuant to its rules.
- A funds-transfer system rule may select the law of a particular jurisdiction to govern: (i) rights and obligations between participating banks with respect to payment orders transmitted or processed through the system; or (ii) the rights and obligations of some or all parties to a funds-transfer any part of which is carried out by means of the system. A choice of law made pursuant to clause (ii) is binding on the originator, other sender, or a receiving bank having notice that the funds-transfer system might be used in the funds-transfer, and of the choice of law by the system when the originator, other sender, or receiving bank issued or accepted a payment order. The beneficiary of a funds-transfer is bound by the choice of law if, when the funds-transfer is initiated, the beneficiary has notice that the funds-transfer system might be used in the funds-transfer, and of the choice of law by the system. The law of a jurisdiction selected pursuant to this subsection may govern,...
- A payment order can be oral, electronic or in writing; indeed, in some circumstances it may be transmitted by first class mail. §§ 4A–103(a)(1) & 4A–302(c). Like checks, a payment order is an unconditional (except as to timing) instruction to pay a fixed or determinable amount of money to a beneficiary. § 4A–103(a)(1)(i). Thus an instruction to pay under a letter of credit is not a payment order. § 4A–104, cmt. 3. Nor is a check a payment order because a payment order must be transmitted by the sender, not to the payee, but directly to the receiving bank, or to an agent, funds transfer system, or communication system for transmittal to the receiving bank. §§ 4A–103(a)(1)(iii), & 4A–104, cmt. 5. For the same reason, the concept of payment order excludes payment by credit card. Consumer remittance transfers and payments initiated by debit cards (retail electronic funds transfers) are covered by the federal Electronic Fund Transfer Act, and are excluded from Article 4A.
- If the sender and receiving bank are members of a funds-transfer system that provides for netting mutual obligations, payment will occur when final settlement is received pursuant to the rules of that system. Netting is also allowed, by means of setoff, between banks transmitting offsetting payment orders among themselves pursuant to a netting or settlement agreement. Issues regarding finality of payment not otherwise covered by these rules will be decided according to otherwise applicable law.
- The time and extent of payment as between the originator and the beneficiary may be important as regards discharge of the originator’s underlying obligation to the beneficiary. Generally, between the originator and beneficiary payment occurs: (1) when the payment order is accepted by the beneficiary’s bank; and (2) in an amount equal to the order accepted by the beneficiary’s bank. These rules are subject to other Article 4A provisions governing cancellation or amendment of a payment order, provisional settlement pursuant to a funds-transfer system agreement, and failure of a funds-transfer system to complete settlement pursuant to its rules.
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Chapter 13. Non-UCC Payment Systems: ECCHO and ACH; Virtual Currency 53 results (showing 5 best matches)
- Traditionally, the ACH system was used for the direct deposit of payroll and government benefit payments and for the direct payment of mortgages and loans. ACH has expanded to include one-time debits and check conversion. ACH transactions are payment instructions to either credit or debit a deposit account. Examples of credit payment transactions include payroll direct deposit, Social Security, dividends, and interest payments. Examples of debit transactions include mortgage, loan, insurance premium, and a variety of other consumer payments initiated through merchants or businesses.
- The FRB concluded on the mandatory issue that the benefits of same-day ACH service outweigh the costs institutions would incur to implement such a service. Same-day ACH capability will facilitate the use of the ACH network for certain time-critical payments, accelerate final settlement, and improve funds availability to payment recipients. The Board also concluded that these capabilities will in turn provide a more efficient electronic payment option for person-to-person payments, expedited bill payments, same-day payroll payments, and other types of transactions. Same-day ACH may facilitate certain transactions for which next-day ACH is not feasible. For example, companies with limited windows for processing payroll payments, such as payments to hourly employees, may be able to process transactions via same-day ACH that otherwise would be conducted using checks or prepaid cards. In light of the widespread industry support for a same-day ACH service with an interbank fee, as...
- These differences require enhancements to the Reserve Banks’ existing FedACH SameDay Service that may have a significant longer-run effect on the nation’s payment system. The amended operating rules contain other elements that would require modifications to the Reserve Banks’ current FedACH SameDay Service. The FRB believes these changes are operational in nature and will not have significant longer-run effects on the nation’s payment system. These include updated submission and settlement windows (an estimated morning submission deadline at 10:30 a.m. ET with settlement occurring at 1:00 p.m. ET and an estimated afternoon submission deadline at 3:00 p.m. ET with settlement occurring at 5:00 p.m. ET). International ACH transactions and transactions above $25,000 are not eligible for the same-day service. Therefore, the Board requested comment on the following:
- Strategies for Improving the U.S. Payment System, January 26, 2015, FRB Press Release, http://fedpaymentsimprovements.org/wp-content/uploads/strategies-improving-us-payment-system.pdf, and FRB Financial Services Policy Committee Press Release Nov. 5, 2015, Sixth Triennial Study to Examine U.S. Payments Usage), and enhancements to the Federal Reserve Banks’ (Reserve Banks) same-day automated clearing house (ACH) service.
- The FRB also believed that same-day ACH services, could create a new mechanism to compete with payment methods other than ACH, and may do so at a lower cost. As stated above, for example, same-day ACH capability will facilitate the use of the ACH network for certain time-critical payments, accelerate final settlement, and improve funds availability to payment recipients. The FRB believed that these capabilities will in turn provide a more efficient electronic payment option for person-to-person payments, expedited bill payments, same-day payroll payments, and other types of transactions.
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Chapter 8. Article 4: Provisional and Final Payment 344 results (showing 5 best matches)
- UCC Study Committee on Payment Systems Postponed
- focuses on the return of dishonored checks that have been presented through the banking system. It is this part of Regulation CC that provides the greatest potential for conflict with Article 4, and therefore the greatest potential for preemption of the Article 4 rules. The Expedited Funds Availability Act gives the Federal Reserve Board broad authority to regulate the check collection and processing system, “including the receipt, payment, collection, or clearing of checks and any related function of the payment system. . . .” Thus far, however, the Federal Reserve has acted cautiously in terms of preempting Article 4, in an apparent effort to minimize disruption of the banks collection system. Regulation CC remains interstitial and therefore to date has had only a minimal effect on Article 4 issues and litigation.
- Moreover, even where a payor bank is accountable under § 4–302 or has made final payment under § 4–215 for accountability or final payment, not specified at § 4–302(b) The final payment and accountability rules at §§ 4–215 are designed to provide finality of payment with respect to matters relating to the bank payment system and Article 4, not to immunize parties using that collection system from liability for fraud or other wrongdoing in the same or unrelated transactions. Thus, for example, other claims of the bank against the customer can be set off against the bank’s accountability under § 4–302
- NCCUSL Article 3, 4, and 4A Drafting Committee Highlights Current Payment System and Negotiable Instrument Issues
- NCCUSL Articles 3, 4, and 4A Drafting Committee Highlights Current Payment System and Negotiable Instrument Issues
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Chapter 14. Non-UCC Payment Methods: Paypal, Internet and Mobile 35 results (showing 5 best matches)
- The structure of this chapter is somewhat different than that of the previous chapters dealing with non-UCC payment systems. First, a variety of federal and to some extent state laws, rather than one primary federal law or set of rules, are applicable, although it is still true that a variety of state laws, however sparse in number, are relevant. Second, the focus here is on what may more accurately be called methods rather than systems, as payments here utilize, in most instances, existing systems like credit or debit systems and only vary the method of use of those systems. Thus some issues are different, even absent, leading to an approach that focuses on the method with the understanding the underlying system rules, whether statutory or private rule sets, will provide answers to many if not most of the issues discussed in reference to credit and debit card systems. Agreements among the parties involved play a role and will be mentioned as well. Some former methods such as Mondex...
- The PayPal structure uses technology through a website to facilitate the use of conventional payment networks and thus enables individuals and small merchants who cannot feasibly use the standard credit card system to accept credit card payments. Payments can also be made with a Visa or MasterCard debit card as well. A person can set up an account that can be pre-funded from a deposit or credit card account or from other funds. To transfer funds the person uses the provider’s website to enter an amount and the address of the recipient and then to execute the transfer. The recipient will receive notice that payment has been made into the recipient’s account with the provider, and then can withdraw or leave the funds. Thus, PayPal operates more as a clearinghouse or conduit for payments than as a separate method, and serves as a secure storage and settlement service between buyers and sellers since it operates without ...enjoy protection from insufficient funds and buyer stop payment...
- payment to another person or vendor. An example is the toll road e-payment systems, and transfers from mobile phone users to their telecom service providers to pay, for example, for cell phone games. To the extent a bank is involved and its customer gives direct instructions to the bank to make a payment or to move funds, Regulation E applies to such “mobile banking,” but if the service involves a merchant, a consumer, and a funder, Regulation E applies only if the funder is a bank. These transactions are called “mobile payments.” Of course, mobile transactions extend beyond payments and banks. Accordingly, there are a wide variety of federal and state statutes, regulations, agency “guidelines” and court decisions that may be applicable beyond bank regulatory acts
- This discussion in part is indebted to a deeply thought through paper in the author’s file, “The Legal Framework of Mobile Payments” by Prof. Mark E. Budnitz, dated February 10, 2016, but somewhat out of date given the CFPB rule on prepaid products ( as somewhat dated, Board of Governors of the Federal Reserve System Consumers and Mobile Fiancial Services 2016, but still useful.
- Mobile payment systems require strong authentication procedures to ensure as much as possible that the persons engaging in a transaction that could cause loss of funds or access to information is in fact authorized. The FCC so far has not imposed authentication standards on wireless carriers, but the Federal Financial Institutions Examination Council has issued a guidance. FFIEC Guidance Authentication in Internet Banking Environment, FFIEC–103–2005 (2005). One prosecution for mail fraud and identity theft after the fraudster attempted to open accounts with the stolen identities with a mobile payments provider was successful,
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Chapter 9. The Bank-Customer Relationship 471 results (showing 5 best matches)
- , the credit union continued the freeze for an extended period of time, and also continued the automatic debiting of the deposit account to make payments to the credit union, pursuant to an automatic bill payment system authorized by the depositors before they filed bankruptcy. The Court concluded that the credit union violated the stay in three ways, by: (1) freezing the account without promptly seeking relief from the stay; (2) maintaining the freeze for more than a year; and (3) continuing the automatic payment system (even though the payments were quickly refunded upon the depositors’ demand). However, the
- Under old § 4–303(1)(d), completion of the process of posting was a fourth means to make final payment. Action short of completion of posting could suffice as long as a decision to pay had been made. This rule and old § 4–303(1)(d) were deleted from revised Article 4, eliminating the process of posting (and a related decision to pay) as a means of final payment. A companion revision at § 4–215(a) likewise eliminated the process of posting as a means of determining whether final payment has been made. Old § 4–109, illustrating the process of posting, was also eliminated. These revisions reflect a judgment that the process of posting is too vague a standard to use in defining finality of payment and is unsuitable for a system of automated check collection or electronic presentment. : § 4–215, cmt. 5; § 4–303, cmt. 4; and discussion of final payment,
- , the credit union continued the freeze for an extended period of time, and also continued the automatic debiting of the deposit account to make payments to the credit union, pursuant to an automatic bill payment system authorized by the depositors before they filed bankruptcy. The Court concluded that the credit union violated the stay in three ways, by: (1) freezing the account without promptly seeking relief from the stay; (2) maintaining the freeze for more than a year; and (3) continuing the automatic payment system (even though the payments were quickly refunded upon the depositors’ demand). However, the
- The final rule requires U.S. financial firms that participate in designated payment systems to establish and implement policies and procedures that are reasonably designed to prevent payments to gambling businesses in connection with unlawful Internet gambling. For purposes of the rule, unlawful Internet gambling generally covers the making of a bet or wager that involves use of the Internet and that is unlawful under any applicable federal or state law in the jurisdiction where the bet or wager is initiated, received, or otherwise made. The designated payment systems are: (1) automated clearing house (ACH) transactions; (2) check collection systems; (3) money transmitting businesses; and (4) wire transfer systems. There are exemptions for most participants except those dealing with the gambling business. The Receiving Depository Financial Institution (RAFI) in a credit transaction is not exempt. Neither are Originating Depository Financial Institutions (ODFIs) in a debit...
- The Law of Electronic Fund Transfer Systems
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Chapter 12. Non-UCC Payment Systems: Debit and Stored Value Cards; Remittances 34 results (showing 5 best matches)
- The paper in the check system, although it still may be involved in the inception of the transaction, increasingly is being “truncated” at an early point and the relevant information is sent forward electronically. in §§ 8.5 & 8.6. Thus, truncated checks are practically indistinguishable from an off-line debit system. The remaining differences are likely to continue to be reduced. Nonetheless, as pointed out, , the federal EFT act does not completely exclude consumer transfers that involve paper. Also Article 4A does not require electronic transmission necessarily; a payment order may be transmitted orally, electronically, or in writing. § 4A–103(a)(1). In fact, in proper circumstances a payment order may be transmitted by first class mail. ...transfer,” still excludes a transaction originated by check, draft or similar paper instrument (but not information from the check), and payments covered by Article 4A are commonly referred to as wire transfers, and usually involve some...
- ), and a merchant/cardholder or system issuer agreement with supplementing rules. The NACHA (National Automated Clearing House Association) rules apply here. NACHA is similar to check clearing house arrangements but for electronic payments. EFT also encompasses institutional wire transfers like the Clearing House Interbank Payments System (CHIPS), involving billions of dollars. This type of electronic funds transfer, which may be called a “wholesale funds transfer,” is the subject of UCC Article 4A discussed in a prior chapter.
- A type of payment system in common use is the debit card system involving the use of the card to initiate an electronic fund transfer. There also are electronic commercial fund transfers governed by UCC Article 4A, discussed earlier, and consumer funds transfers, discussed here. Nor do the two meet. , which may be a consumer fund transfer or one governed at least in part by UCC Article 4A, even though it involves a consumer type of fund transfer. Funds transfers through Fedwire run by the Federal Reserve System are commercial and are governed by Regulation J, Subpart B,
- There are certain exclusions from the coverage of the federal EFT Act, such as a transfer through Fedwire or a similar wire transfer system that is used primarily for transfers between financial institutions or between businesses. Regulation E, § 1005.3(c). In , plaintiffs obtained multiple loans and alleged the loan agreement violated Regulation E. It was argued Regulation E only applied when a transaction involved recurring electronic payments and the loans were short term single payment transactions so Regulation E was not applicable. The court disagreed since the loans could be “rolled over” and thus as amounts came due initiated debit entries might be recurring.
- or a paper embodiment of the message such as a debit card slip or a telex may be involved, the essential nature of the transaction is not paper based. Consequently, whether the transfer is accomplished by the use of a debit card to access an account through a debit card slip or an on-line point-of-sale terminal or an automated teller machine, by a wire transfer, by direct deposit through magnetic tapes, or otherwise, the system serves as another mechanism to provide payment or funds transfer from one party to another.
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Table of Cases 19 results (showing 5 best matches)
- Lone Star Nat. Bank, N.A. v. Heartland Payment Systems, Inc., 784
- Aviation Industry Reporting System, Inc. v. Commonwealth of Northern Mariana Islands Travel Agency, Inc., 420, 766, 903, 926, 937
- Bankers Trust Co. v. Litton Systems, Inc., 244
- Computer Personalities Systems, Inc. v. Aspect Computer, 19
- Credit Union National Association v. Board of Governors of the Federal Reserve System, 472
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Summary of Contents 7 results (showing 5 best matches)
- Non-UCC Payment Systems: Credit Cards
- Non-UCC Payment Systems: Debit and Stored Value Cards; Remittances
- Non-UCC Payment Systems: ECCHO and ACH; Virtual Currency
- Diagram of Check Collection System, Including Truncation; Compared to Debit Card, Electronic Check and Stored Value Systems
- The Law Governing Methods of Payment and Evidences of Debt
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Table of Contents 48 results (showing 5 best matches)
- Non-UCC Payment Systems: Credit Cards
- Non-UCC Payment Systems: Debit and Stored Value Cards; Remittances
- Non-UCC Payment Systems: ECCHO and ACH; Virtual Currency
- [b]Payment or Satisfaction and Tender of Payment
- Diagram of Check Collection System, Including Truncation; Compared to Debit Card, Electronic Check and Stored Value Systems
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Chapter 1. The Law Governing Methods of Payment and Evidences of Debt 113 results (showing 5 best matches)
- Outside of the consumer context, purchases for commercial purposes on open account remain common, with the funds transfer in payment occurring later by check or other means. Even though governmental funds transfers (involving such payments as direct deposits of Social Security benefits), corporate funds transfers for payroll and other purposes, and inter-institutional funds transfers increasingly are conducted by electronic methods such as automated clearing house (ACH) and wire systems,
- , the Board of Governors of the Federal Reserve System may regulate of the payment system, including the receipt, payment, collection or clearing of checks, and of the payment system with respect to checks (emphasis supplied). Nonetheless, doubts about the authority of the Federal Reserve to adopt rules that can bind check customers as opposed to banks, given the legislative history relevant to Regulation CC subject matter, led to a proposal to repatriate relevant parts of Regulation CC in the UCC.
- §§ 4–210 & 4–211. The alternative payment systems involving funds transfers and credit cards also will be discussed in some detail later.
- An illustration of the kind of subtle questions that may arise between federal law, other than that involving funds availability, and the UCC and which the attorney who practices in the area of payments law must be alert for, is in connection with the use of a check cashing guarantee card to induce a merchant to accept a check that, when presented for payment, constitutes an overdraft and triggers the operation of a check credit arrangement. The guarantee card on these facts is a credit card Both results, then, are the consequence of a choice to superimpose an aspect of one system on a different system, perhaps with unintended consequences.
- or other law, but this book does not discuss the law applicable to investment securities. Methods for the payment of obligations using checks and drafts, debit and credit cards, and credit (as opposed to debit) funds transfer methods are discussed here, along with newer electronic methods of payment. Where collection of an instrument is necessary, that too is discussed. The law of bank accounts also is covered. Because the law of negotiable instruments and the collection of them through the banking system is the most unified and highly-developed law at this time, that law will be the primary focus.
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Chapter 7. Liability and Rights Not on the Instrument of Parties to Negotiable Instruments 107 results (showing 5 best matches)
- Arguments have been made that the check system should adopt a structure akin to that which governs electronic check conversion under federal Regulation E ( § 8.8, and Clarks’ Bank Deposits and Payments Monthly, Vol. 9, No. 10, March 2001, at 3), in order to prompt the development of superior technology to prevent check fraud; generally these arguments have not been accepted. Experience in this area, discussed later in this book, may or may not inform legal developments for paper checks.
- , Wal-Mart issued a large check to one of its Dallas vendors, which was stolen from the mail and subsequently deposited in Asia Bank by one Pit Foo Wong after the name of the payee was altered to that name. The depositary bank was suspicious because of the size of the check but forwarded it through the Federal Reserve System to Wachovia (the drawee), which checked it against its positive pay system but that system did not detect the name change of the payee. When the fraud was discovered, Wal-Mart was reimbursed for the payment by Wachovia, who then sued the Federal Reserve Bank in warranty which, in turn, claimed against Wal-Mart in negligence. The negligence theory was denied on the ground that negligence under § 3–406
- § 1–207, as amended (now § 1–308), and § 3–311(a) & (b). In recent years there have been a number of cases involving the use of “payment in full” or “full satisfaction” checks (checks with language printed by the drawer above the space for the indorsement, indicating that indorsement constitutes payment in full of the underlying debt) in an effort to achieve an accord and satisfaction by partial payment of a debt or claim. These issues are governed largely by § 3–311, which as noted
- , a check was deposited without the required indorsement of a joint payee. It was sent through the banking system to the payor bank, which gave provisional credit and did not dishonor the item or revoke the credit within its midnight deadline (thereby losing the right to dishonor it under § 4–301 and becoming accountable for the amount of the item under § 4–302. When the missing indorsement was discovered, the payor bank returned the item to the depositary bank and revoked credit for the item, on grounds of breach of warranty. The depositary bank had paid out the funds to its depositor, who was now bankrupt, and the depositary bank sued the payor to recover the payment under the midnight deadline rule at § 4–302. The court correctly noted that recovery by the depositary bank under § 4–302 was barred by the payor bank’s counter-claim (asserted as a defense) for breach of warranty due to the lack of a required indorsement. This represents a straight-forward analysis of what should be...
- , the holder of a cashier’s check presented the check to the issuing bank and requested that the funds be applied to his home equity line of credit (HELOC). A few days later the bank informed the customer that the cashier’s check was counterfeit and that the credit to the HELOC was being reversed. The customer was a holder in due course who had received the check in a sale of his vehicle; he claimed that payment of the cashier’s check was final under §§ 3–418, 4–213 & 4–215 and could not be rescinded. The court held that the customer had breached a transfer warranty and the bank could recover its payment under § 4–207. Note that, while a warranty claim can be asserted after final payment, this analysis is questionable in that the court should have applied the presentment warranties at § 4–208.
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Appendix I. Selected Forms 14 results (showing 5 best matches)
- You may pay the entire amount outstanding at any time. You must pay each month at least the minimum payment shown on your monthly statement. If you overpay or if a credit balance is otherwise created in your account, we will not pay interest on such amounts. Your payment will be allocated in a manner we determine. We may allocate your payments to balances (including new transactions) with lower APRs before balances with higher APRs. This may result in new balances with a lower rate of interest being paid before any other existing balances. All payments will be credited to your account for the billing cycle in which each payment is received; however, your available credit may not be increased by the amount of the payment until your funds have cleared. Minimum monthly payments cannot be made in advance and payments made in any billing cycle which are greater than the minimum payment due will not affect your obligation to make subsequent minimum payments each month. We can reject payments
- Stop payment requests and renewals and revocations thereof must be in writing on a form satisfactory to and served on this Bank. This Bank shall not be liable for unintentional payment through oversight or accident only of a check on which payment has been stopped.
- You will be in default and we can require immediate payment of all amounts you owe if; (1) you fail to make any required payment by the payment due date; (2) your new balance total exceeds your credit limit; or (3) you fail to abide by any other terms of this Agreement.
- The transaction date for cash advances and balance transfers is the date you or the person to whom the pay off check is made payable first deposits or cashes the check. The transaction date for a returned payment (a Bank cash advance) is the date that the corresponding payment is posted to your account.
- : The following fees are assessed as purchases in the billing cycle in which such charges accrue; (1) a late fee; (2) if your account is overlimit on the last day of a billing cycle, an overlimit fee is charged to your account as of the day in the billing cycle that your account went over the credit limit; (3) a returned payment fee if a payment on your account is returned for insufficient funds or for any other reason, even, if it is paid upon subsequent presentment; (4) if your account is open or if you maintain an account balance whether you have active charging privileges or not, an annual fee.
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Chapter 2. Form Requirements for Negotiable Instruments 70 results (showing 5 best matches)
- , where the instrument stated the drawer agreed to payment according to the terms of the Credit Payment Agreement previously executed, and the court construed this to be merely a reference to the Credit Payment Agreement and not a condition to payment. Manning v. Mortgage Electronic Registration Systems, Inc., 90 UCC Rep. Serv. 2d 437, 2016 WL 6534890 (Wash.Ct.App. 2016) (note did not provide borrower would reimburse holder for taxes and other charges at option of holder, and thus did not make a conditional promise to pay an uncertain sum); Bucci v. Northwest Trustee Services, Inc., 91 UCC Rep. Serv. 2d 559, 2016 WL 7468211 (Wash.Ct.App. 2016) (instrument was negotiable if fixed amount could be determined from face of instrument, except for amounts of interest for which reference to information not contained in the instrument was allowable under § 3–112(b)).
- A question likely to arise is how a promise or order to pay in a foreign currency is to be performed. Unless a different medium of payment is specified in the instrument, under old Article 3 payment may be made of that number of dollars which the stated foreign currency will purchase at the buying sight rate for that currency on the day on which the instrument is payable or, if payable on demand, on the day of demand. Current § 3–107 uses the language “current bank offered spot rate at the place of payment for the purchase of dollars on the day on which the instrument is paid.” Thus, if a note is payable in Swiss francs, it could be paid in dollars on the basis of the bank spot rate for Swiss francs at the place of payment on the day on which the note was paid. But if the instrument specifies a foreign currency as the medium of payment, the instrument is payable in that currency.
- (check payable in euros can be negotiable and the amount of settlement in U.S. dollars is determined by the exchange rate on the day of payment), vacated . However, the relevant time for determining what is “money” is when the instrument is made. If the instrument is payable in “currency” or “current funds,” it is payable in money. Regarding electronic “money” and other payment systems,
- for the payment, or evidence a right to the payment, of money; and
- a notation on a check that the drawer agreed to payment according to the terms of the Credit Payment Agreement previously executed did not impair negotiability as it constituted only a reference.
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Chapter 4. Liability on Negotiable Instruments: The Basic Obligors 70 results (showing 5 best matches)
- Accordingly, a demand for payment normally is not necessary to charge the maker of a promissory note, Where the holder wishes to accelerate the debt, however, the absence of a requirement that demand be made upon the maker for payment does not displace any common law rule requiring demand for payment of the past-due installments prior to the exercise of rights under an optional acceleration clause. No demand for payment prior to acceleration is necessary, though, where the instrument contains a provision waiving “presentment for payment, demand, protest, notice thereof and dishonor and diligence in collecting.”
- and that the instrument be indorsed as necessary and be presented for acceptance or payment in accordance with its terms, any applicable agreement or applicable law; or, absent such direction, at any place reasonable in the circumstances, and may require a signed receipt on the instrument for any partial or full payment and its surrender upon full payment. A demand for compliance with any or all of these requirements will not constitute a dishonor, as a failure to comply with any requirement invalidates the presentment and thus due acceptance or payment is not refused.
- payment or acceptance without dishonor may be delayed for up to three business days in the case of an unaccepted documentary draft, and a person entitled to acceptance may agree to late acceptance. Payment may be deferred without dishonor pending reasonable examination to determine whether the instrument is properly payable, but the general rule is payment or settlement must be made before the close of business on the day of presentment.
- The more appropriate analysis of them is that the purchaser of a cashier’s check never has the right to stop payment on it, but the bank, as drawer, may stop payment. When sued by the holder on its drawer’s contract, however, the bank will be unable to use any claim of the purchaser of the instrument in defense unless the purchaser joins the action and asserts the claim (§ 3–305(c) is employed, or the holder acquired the instrument by theft or through one who so acquired it, or payment would not be consistent with a restrictive indorsement of the instrument. for cashier’s, certified and teller’s checks, as the only relevant exceptions from liability on the instrument plus expenses or consequential damages are the bank has a reasonable doubt whether the person demanding payment is entitled to enforce the instrument or payment is prohibited by law. where the liability of an obligated party is not discharged by payment with knowledge it should not be made.
- This is the end result under § 3–418, which makes payment final, and § 3–417, which does not allow a drawee to recover if payment is made on a forged instrument.
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Chapter 6. Defenses to and Discharge of Liability on Negotiable Instruments 92 results (showing 5 best matches)
- No discharge will eventuate from a payment or satisfaction if the payment or satisfaction is made other than to the holder of the instrument. in the 2002 uniform text amendments at § 3–602(b) & (d), payment to a prior holder will not suffice. Absent enactment of these amendments in the applicable jurisdiction, because any discharge resulting from payment or satisfaction is only a personal defense, if the original holder has negotiated the instrument without notice to the party liable upon it, that party may have to pay twice if the instrument is not exhibited at the first payment. This point was cogently made in a Florida case where the maker of notes, who neither required a notation of the payments made on the notes nor demanded their surrender by the original holder, was required to make a second payment in full to a holder in due course to whom the original holder had negotiated the instruments. Moreover, payment to only one of two joint payees will not suffice. ...payment is made...
- Under law prior to the UCC, in order for a payment to discharge the liability of a party the payment had to be made by the party in good faith and without notice that the title of the holder of the instrument might be defective. This rule put the party to pay in a difficult position because that party normally had no way of knowing whether a claim adverse to the holder’s title was good. Enactment of the UCC eliminated the requirement that payment be made in good faith and without notice. The liability of any party may be discharged by payment (or other satisfaction) made by or on behalf of the party obligated to pay to the party entitled to enforce the instrument, even though it is made with knowledge of a claim of another person to the instrument. Thus, to prevent a discharge by a payment or other satisfaction, the person making the adverse claim must either, with one exception, supply indemnity deemed adequate by the party ...have payment or other satisfaction enjoined by order of...
- Tender of payment, as opposed to actual payment or satisfaction, normally will not discharge a party’s liability to pay on an instrument. of full payment to a holder when or after it is due
- Moreover, discharge by payment requires intent of the parties.
- Payment or Satisfaction and Tender of Payment
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Chapter 3. Rights on Negotiable Instruments 90 results (showing 5 best matches)
- The warranty as to the drawer’s signature in § 3–417(a)(3) normally is not breached as it only is a warranty of no guilty knowledge. Since there is normally no breach of warranty and payment is final, the drawee, who should recognize its customer’s signature, bears the loss. The continued viability of this analysis is discussed later in this book, at § 8.2.
- A concept like that of holder in due course plays a second role under the UCC not involving the cutting-off of claims and defenses. This role relates to protection of payment, thus better assuring the goal of finality of payment.
- Except in relation to bank payments under Article 4 and liability for breach of warranty on presentment under § 3–417 payment or acceptancepayment. The reason is that it is highly desirable to end the transaction on an instrument when it is paid (or accepted), rather than leaving the matter continually subject to being reopened, so as to upset a series of commercial transactions at a later date when some objection to the payment (or acceptance) arises. Thus (given the exceptions for various cases in Article 3), it appears that the other principle at work is that losses from improper payment should fall upon the person who is best able to have prevented them, and that, if that person is the payor, the loss ought not to be shifted by a recovery of the payor from the person paid. The UCC Official Comments note that this rule is consistent with the time-honored case of ...draft. The UCC uses the same reasoning to place a loss from an overdraft payment on the drawee, who should best know...
- There are only a handful of transactions that fall outside of the finality of payment rule. That is why Official Comment 1 to § 3–418 explicitly provides for restitutionary recovery where payment or acceptance occurs by mistake because a stop payment order or forged drawer’s signature is overlooked, to the extent permitted by the law governing mistake and restitution; finality occurs where payment is made or acceptance runs to a person who took the instrument in good faith and for value or a reliance payee.
- A corollary of the right to enforce payment is the right to retain payment made. (validating payment to a transferee).
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Chapter 5. LIABILITY ON NEGOTIABLE INSTRUMENTS: ACCOMMODATION AND AGENCY 10 results (showing 5 best matches)
- A guarantor either guarantees payment or collection, depending on the words used. “Payment guaranteed” or equivalent words added to a signature mean the signer will pay the instrument if it is not paid when due without a need for the holder to resort to another party. Words of guaranty that do not otherwise specify guarantee payment. Thus under former law but not under Article 3, an indorser who guarantees payment waives not only presentment, notice of dishonor, and applicable protest, but also all demand upon the maker or drawee, and the liability of the indorser becomes indistinguishable from that of a maker.
- the president of a corporation was found personally liable on a note that recited the corporation promised to pay, but which was signed in a way that did not evidence his representative capacity. The president introduced parol evidence that he intended to sign as a corporate officer, that the debt was that of the corporation, and that corporate checks for installment payments previously had been accepted. The court stated that, in order to avoid personal liability, the necessary showing is that the other party knew that the representative was signing in a representative capacity. On the other hand, the court reached a different conclusion in where payment was not demanded from the individual signer during the life of the payee even though the note became due some four years prior to the payee’s death. The court believed that the evidence supported the conclusion that the parties regarded the instrument as signed only in a representative capacity.
- (liability of guarantor of payment is indistinguishable from that of a co-maker;
- (“personally guarantee the obligation” is a guaranty of payment).
- It thus is inappropriate to think of the instrument as paid by the accommodation party. That would remove the basis for suit. What has been discharged by the accommodation party’s payment is the liability of the accommodation party, and there is no effect on the remaining liability of the accommodated party.
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- Publication Date: September 8th, 2017
- ISBN: 9781628101355
- Subject: Banking/Financial Institutions
- Series: Hornbooks
- Type: Hornbook Treatises
- Description: This book discusses the Uniform Commercial Code (U.C.C.) Articles 3, 4, and 4A in detail. It also explains to what extent provisions and interpretive cases decided prior to the promulgation of Article 4A and prior to the 1990 revision of Articles 3 and 4 are still useful, and why changes made were needed. It discusses issues not generally recognized and treated elsewhere, including the meaning of the new standard of good faith, the relation between "accountability" and "final payment," and consequences of radical truncation. In addition to the discussion of payment Articles in the Uniform Commercial Code, the book contains up to date discussion of other payment systems like credit and debit card systems, and other payment methods including prepaid cards, PayPal, mobile payments, and virtual currency transfers.