Chapter 410

410.207(1) (1) Subject to sub. (2), if, in a payment order received by the beneficiary’s bank, the name, bank account number, or other identification of the beneficiary refers to a nonexistent or unidentifiable person or account, no person has rights as a beneficiary of the order and acceptance of the order cannot occur.

410.207(2) (2) If a payment order received by the beneficiary’s bank identifies the beneficiary both by name and by an identifying or bank account number and the name and number identify different persons, the following rules apply:

410.207(2)(a) (a) Except as otherwise provided in sub. (3), if the beneficiary’s bank does not know that the name and number refer to different persons, it may rely on the number as the proper identification of the beneficiary of the order. The beneficiary’s bank need not determine whether the name and number refer to the same person.

410.207(2)(b) (b) If the beneficiary’s bank pays the person identified by name or knows that the name and number identify different persons, no person has rights as beneficiary except the person paid by the beneficiary’s bank if that person was entitled to receive payment from the originator of the funds transfer. If no person has rights as beneficiary, acceptance of the order cannot occur.

410.207(3) (3) If a payment order described in sub. (2) (intro.) is accepted, the originator’s payment order described the beneficiary inconsistently by name and number and the beneficiary’s bank pays the person identified by number as permitted under sub. (2) (a), the following rules apply:

410.207(3)(a) (a) If the originator is a bank, the originator is obliged to pay its order.

410.207(3)(b) (b) If the originator is not a bank and proves that the person identified by number was not entitled to receive payment from the originator, the originator is not obliged to pay its order unless the originator’s bank proves that the originator, before acceptance of the originator’s order, had notice that payment of a payment order issued by the originator might be made by the beneficiary’s bank on the basis of an identifying or bank account number even if it identifies a person different from the named beneficiary. Proof of notice may be made by any admissible evidence. The originator’s bank satisfies the burden of proof if it proves that the originator, before the payment order was accepted, signed a writing stating the information to which the notice relates.

410.207(4) (4) In a case governed by sub. (2) (a), if the beneficiary’s bank rightfully pays the person identified by number and that person was not entitled to receive payment from the originator, the amount paid may be recovered from that person to the extent allowed by the law governing mistake and restitution as follows:

410.207(4)(a) (a) If the originator is obliged to pay its payment order as stated in sub. (3), the originator has the right to recover.

410.207(4)(b) (b) If the originator is not a bank and is not obliged to pay its payment order, the originator’s bank has the right to recover.

410.207 History History: 1991 a. 304.

410.208 410.208 Misdescription of intermediary bank or beneficiary’s bank.

410.208(1) (1) 

410.208(1)(a) (a) This subsection applies to a payment order identifying an intermediary bank or the beneficiary’s bank only by an identifying number.

410.208(1)(am) (am) The receiving bank may rely on the number as the proper identification of the intermediary bank or the beneficiary’s bank and need not determine whether the number identifies a bank.

410.208(1)(b) (b) The sender is obliged to compensate the receiving bank for any loss and expenses incurred by the receiving bank as a result of its reliance on the number in executing or attempting to execute the order.

410.208(2) (2) 

410.208(2)(a) (a) This subsection applies to a payment order identifying an intermediary bank or the beneficiary’s bank both by name and an identifying number if the name and number identify different persons.

410.208(2)(am) (am) If the sender is a bank, the receiving bank may rely on the number as the proper identification of the intermediary bank or the beneficiary’s bank if the receiving bank, when it executes the sender’s order, does not know that the name and number identify different persons. The receiving bank need not determine whether the name and number refer to the same person or whether the number refers to a bank. The sender is obliged to compensate the receiving bank for any loss and expenses incurred by the receiving bank as a result of its reliance on the number in executing or attempting to execute the order.

410.208(2)(b) (b) If the sender is not a bank and the receiving bank proves that the sender, before the payment order was accepted, had notice that the receiving bank might rely on the number as the proper identification of the intermediary bank or the beneficiary’s bank even if it identifies a person different from the bank identified by name, the rights and obligations of the sender and the receiving bank are governed by sub. (2) (am), as though the sender were a bank. Proof of notice may be made by any admissible evidence. The receiving bank satisfies the burden of proof if it proves that the sender, before the payment order was accepted, signed a writing stating the information to which the notice relates.

410.208(2)(c) (c) Regardless of whether the sender is a bank, the receiving bank may rely on the name as the proper identification of the intermediary bank or the beneficiary’s bank if the receiving bank, at the time it executes the sender’s order, does not know that the name and number identify different persons. The receiving bank need not determine whether the name and number refer to the same person.

410.208(2)(d) (d) If the receiving bank knows that the name and number identify different persons, reliance on either the name or the number in executing the sender’s payment order is a breach of the obligation stated in s. 410.302 (1) (a).

410.208 History History: 1991 a. 304.

410.209 410.209 Acceptance of payment order.

410.209(1) (1) Subject to sub. (4), a receiving bank other than the beneficiary’s bank accepts a payment order when it executes the order.

410.209(2) (2) Subject to subs. (3) and (4), a beneficiary’s bank accepts a payment order at the earliest of the following times:

410.209(2)(a) (a) When the bank pays the beneficiary as stated in s. 410.405 (1) or (2) or notifies the beneficiary of receipt of the order or that the account of the beneficiary has been credited with respect to the order unless the notice indicates that the bank is rejecting the order or that funds with respect to the order may not be withdrawn or used until receipt of payment from the sender of the order.

410.209(2)(b) (b) When the bank receives payment of the entire amount of the sender’s order pursuant to s. 410.403 (1) (a) or (b).

410.209(2)(c) (c) The opening of the next funds-transfer business day of the bank following the payment date of the order if, at that time, the amount of the sender’s order is fully covered by a withdrawable credit balance in an authorized account of the sender or the bank has otherwise received full payment from the sender, unless the order was rejected before that time or is rejected within one hour after that time, or within one hour after the opening of the next business day of the sender following the payment date if that time is later. If notice of rejection is received by the sender after the payment date and the authorized account of the sender does not bear interest, the bank is obliged to pay interest to the sender on the amount of the order for the number of days elapsing after the payment date to the day the sender receives notice or learns that the order was not accepted, counting that day as an elapsed day. If the withdrawable credit balance during that period falls below the amount of the order, the amount of interest payable is reduced accordingly.

410.209(3) (3) Acceptance of a payment order cannot occur before the order is received by the receiving bank. Acceptance does not occur under sub. (2) (b) or (c) if the beneficiary of the payment order does not have an account with the receiving bank, the account has been closed, or the receiving bank is not permitted by law to receive credits for the beneficiary’s account.

410.209(4) (4) A payment order issued to the originator’s bank cannot be accepted until the payment date if the bank is the beneficiary’s bank, or the execution date if the bank is not the beneficiary’s bank. If the originator’s bank executes the originator’s payment order before the execution date or pays the beneficiary of the originator’s payment order before the payment date and the payment order is subsequently canceled pursuant to s. 410.211 (2), the bank may recover from the beneficiary any payment received to the extent allowed by the law governing mistake and restitution.

410.209 History History: 1991 a. 304.

410.210 410.210 Rejection of payment order.

410.210(1) (1) A payment order is rejected by the receiving bank by a notice of rejection transmitted to the sender orally, electronically, or in writing. A notice of rejection need not use any particular words and is sufficient if it indicates that the receiving bank is rejecting the order or will not execute or pay the order. Rejection is effective when the notice is given if transmission is by a means that is reasonable in the circumstances. If notice of rejection is given by a means that is not reasonable, rejection is effective when the notice is received. If an agreement of the sender and receiving bank establishes the means to be used to reject a payment order, any means complying with the agreement is reasonable and any means not complying is not reasonable unless no significant delay in receipt of the notice resulted from the use of the noncomplying means.

410.210(2) (2) This subsection applies if a receiving bank other than the beneficiary’s bank fails to execute a payment order despite the existence on the execution date of a withdrawable credit balance in an authorized account of the sender sufficient to cover the order. If the sender does not receive notice of rejection of the order on the execution date and the authorized account of the sender does not bear interest, the bank is obliged to pay interest to the sender on the amount of the order for the number of days elapsing after the execution date to the earlier of the day the order is canceled pursuant to s. 410.211 (4) or the day the sender receives notice or learns that the order was not executed, counting the final day of the period as an elapsed day. If the withdrawable credit balance during that period falls below the amount of the order, the amount of interest is reduced accordingly.

410.210(3) (3) If a receiving bank suspends payments, all unaccepted payment orders issued to it are considered rejected at the time the bank suspends payments.

410.210(4) (4) Acceptance of a payment order precludes a later rejection of the order. Rejection of a payment order precludes a later acceptance of the order.

410.210 History History: 1991 a. 304.

410.211 410.211 Cancellation and amendment of payment order.

410.211(1) (1) A communication of the sender of a payment order canceling or amending the order may be transmitted to the receiving bank orally, electronically, or in writing. If a security procedure is in effect between the sender and the receiving bank, the communication is not effective to cancel or amend the order unless the communication is verified pursuant to the security procedure or the bank agrees to the cancellation or amendment.

410.211(2) (2) Subject to sub. (1), a communication by the sender canceling or amending a payment order is effective to cancel or amend the order if notice of the communication is received at a time and in a manner affording the receiving bank a reasonable opportunity to act on the communication before the bank accepts the payment order.

410.211(3) (3) 

410.211(3)(a) (a) After a payment order has been accepted, cancellation or amendment of the order is not effective unless the receiving bank agrees or a funds-transfer system rule allows cancellation or amendment without agreement of the bank.

410.211(3)(am) (am) With respect to a payment order accepted by a receiving bank other than the beneficiary’s bank, cancellation or amendment is not effective unless a conforming cancellation or amendment of the payment order issued by the receiving bank is also made.

410.211(3)(b) (b)

410.211(3)(b)1. 1. With respect to a payment order accepted by the beneficiary’s bank, cancellation or amendment is not effective unless the order was issued in execution of an unauthorized payment order, or because of a mistake by a sender in the funds transfer which resulted in the issuance of a payment order that does any of the following:

410.211(3)(b)1.a. a. Duplicates a payment order previously issued by the sender.

410.211(3)(b)1.b. b. Orders payment to a beneficiary not entitled to receive payment from the originator.

410.211(3)(b)1.c. c. Orders payment in an amount greater than the amount the beneficiary was entitled to receive from the originator.

410.211(3)(b)2. 2. If the payment order is canceled or amended, the beneficiary’s bank is entitled to recover from the beneficiary any amount paid to the beneficiary to the extent allowed by the law governing mistake and restitution.

410.211(4) (4) An unaccepted payment order is canceled by operation of law at the close of the 5th funds-transfer business day of the receiving bank after the execution date or payment date of the order.

410.211(5) (5) A canceled payment order cannot be accepted. If an accepted payment order is canceled, the acceptance is nullified and no person has any right or obligation based on the acceptance. Amendment of a payment order is considered to be cancellation of the original order at the time of amendment and issue of a new payment order in the amended form at the same time.

410.211(6) (6) Unless otherwise provided in an agreement of the parties or in a funds-transfer system rule, if the receiving bank, after accepting a payment order, agrees to cancellation or amendment of the order by the sender or is bound by a funds-transfer system rule allowing cancellation or amendment without the bank’s agreement, the sender, whether or not cancellation or amendment is effective, is liable to the bank for any loss and expenses, including reasonable attorney fees, incurred by the bank as a result of the cancellation or amendment or attempted cancellation or amendment.

410.211(7) (7) A payment order is not revoked by the death or legal incapacity of the sender unless the receiving bank knows of the death or of an adjudication of incapacity by a court of competent jurisdiction and has reasonable opportunity to act before acceptance of the order.

410.211(8) (8) A funds-transfer system rule is not effective to the extent it conflicts with sub. (3) (b).

410.211 History History: 1991 a. 304.

410.212 410.212 Liability and duty of receiving bank regarding unaccepted payment order. If a receiving bank fails to accept a payment order that it is obliged by express agreement to accept, the bank is liable for breach of the agreement to the extent provided in the agreement or in this chapter, but does not otherwise have any duty to accept a payment order or, before acceptance, to take any action, or refrain from taking action, with respect to the order except as provided in this chapter or by express agreement. Liability based on acceptance arises only when acceptance occurs as stated in s. 410.209, and liability is limited to that provided in this chapter. A receiving bank is not the agent of the sender or beneficiary of the payment order it accepts, or of any other party to the funds transfer, and the bank owes no duty to any party to the funds transfer except as provided in this chapter or by express agreement.

410.212 History History: 1991 a. 304.

subch. III of ch. 410 SUBCHAPTER III

EXECUTION OF SENDER’S PAYMENT ORDER
BY RECEIVING BANK

410.301 410.301 Execution and execution date.

410.301(1) (1) A payment order is “executed” by the receiving bank when it issues a payment order intended to carry out the payment order received by the bank. A payment order received by the beneficiary’s bank can be accepted but cannot be executed.

410.301(2) (2) “Execution date” of a payment order means the day on which the receiving bank may properly issue a payment order in execution of the sender’s order. The execution date may be determined by instruction of the sender but cannot be earlier than the day the order is received and, unless otherwise determined, is the day the order is received. If the sender’s instruction states a payment date, the execution date is the payment date or an earlier date on which execution is reasonably necessary to allow payment to the beneficiary on the payment date.

410.301 History History: 1991 a. 304.

410.302 410.302 Obligations of receiving bank in execution of payment order.

410.302(1) (1) Except as provided in subs. (2) to (4), if the receiving bank accepts a payment order pursuant to s. 410.209 (1), the bank has the following obligations in executing the order:

410.302(1)(a) (a) The receiving bank is obliged to issue, on the execution date, a payment order complying with the sender’s order and to follow the sender’s instructions concerning any intermediary bank or funds-transfer system to be used in carrying out the funds transfer or concerning the means by which payment orders are to be transmitted in the funds transfer. If the originator’s bank issues a payment order to an intermediary bank, the originator’s bank is obliged to instruct the intermediary bank according to the instruction of the originator. An intermediary bank in the funds transfer is similarly bound by an instruction given to it by the sender of the payment order it accepts.

410.302(1)(b) (b) If the sender’s instruction states that the funds transfer is to be carried out telephonically or by wire transfer or otherwise indicates that the funds transfer is to be carried out by the most expeditious means, the receiving bank is obliged to transmit its payment order by the most expeditious available means, and to instruct any intermediary bank accordingly. If a sender’s instruction states a payment date, the receiving bank is obliged to transmit its payment order at a time and by means reasonably necessary to allow payment to the beneficiary on the payment date or as soon thereafter as is feasible.

410.302(2) (2) Unless otherwise instructed, a receiving bank executing a payment order may use any funds-transfer system if use of that system is reasonable in the circumstances, and may issue a payment order to the beneficiary’s bank or to an intermediary bank through which a payment order conforming to the sender’s order can expeditiously be issued to the beneficiary’s bank if the receiving bank exercises ordinary care in the selection of the intermediary bank. A receiving bank is not required to follow an instruction of the sender designating a funds-transfer system to be used in carrying out the funds transfer if the receiving bank, in good faith, determines that it is not feasible to follow the instruction or that following the instruction would unduly delay completion of the funds transfer.

410.302(3) (3) Unless sub. (1) (b) applies or the receiving bank is otherwise instructed, the bank may execute a payment order by transmitting its payment order by 1st class mail or by any means reasonable in the circumstances. If the receiving bank is instructed to execute the sender’s order by transmitting its payment order by a particular means, the receiving bank may issue its payment order by the means stated or by any means as expeditious as the means stated.

410.302(4) (4) Unless instructed by the sender, the receiving bank may not obtain payment of its charges for services and expenses in connection with the execution of the sender’s order by issuing a payment order in an amount equal to the amount of the sender’s order less the amount of the charges, and may not instruct a subsequent receiving bank to obtain payment of its charges in the same manner.

410.302 History History: 1991 a. 304.

410.303 410.303 Erroneous execution of payment order.

410.303(1) (1) A receiving bank that 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 that 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 under s. 410.402 (3) 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.

410.303(2) (2) 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 s. 410.402 (3) if that subsection is otherwise satisfied and 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.

410.303(3) (3) 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 that 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.

410.303 History History: 1991 a. 304.

410.303 Annotation A bank that received an electronic transfer of funds, with incomplete instructions, and deposited the funds into an account in which the account owner had granted a security interest to a creditor who had a rightful claim to the funds was liable to the secured creditor for the amount of the transfer when the bank subsequently transferred the funds to another account of the account owner who absconded with the funds. General Electric Capital Corp. v. Central Bank, 49 F.3d 280 (1995).

410.304 410.304 Duty of sender to report erroneously executed payment order. If the sender of a payment order that is erroneously executed as stated in s. 410.303 receives notification from the receiving bank that the order was executed or that the sender’s account was debited with respect to the order, the sender has a duty to exercise ordinary care to determine, on the basis of information available to the sender, that the order was erroneously executed and to notify the bank of the relevant facts within a reasonable time not exceeding 90 days after the notification from the bank was received by the sender. If the sender fails to perform that duty, the bank is not obliged to pay interest on any amount refundable to the sender under s. 410.402 (4) for the period before the bank learns of the execution error. The bank is not entitled to any recovery from the sender on account of a failure by the sender to perform the duty stated in this section.

410.304 History History: 1991 a. 304.

410.305 410.305 Liability for late or improper execution or failure to execute payment order.

410.305(1) (1) If a funds transfer is completed but execution of a payment order by the receiving bank in breach of s. 410.302 results in delay in payment to the beneficiary, the bank is obliged to pay interest to either the originator or the beneficiary of the funds transfer for the period of delay caused by the improper execution. Except as provided in sub. (3), additional damages are not recoverable.

410.305(2) (2) If execution of a payment order by a receiving bank in breach of s. 410.302 results in noncompletion of the funds transfer, failure to use an intermediary bank designated by the originator, or issuance of a payment order that does not comply with the terms of the payment order of the originator, the bank is liable to the originator for its expenses in the funds transfer and for incidental expenses and interest losses, to the extent not covered by sub. (1), resulting from the improper execution. Except as provided in sub. (3), additional damages are not recoverable.

410.305(3) (3) In addition to the amounts payable under subs. (1) and (2), damages, including consequential damages, are recoverable to the extent provided in an express written agreement of the receiving bank.

410.305(4) (4) If a receiving bank fails to execute a payment order it was obliged by express agreement to execute, the receiving bank is liable to the sender for its expenses in the transaction and for incidental expenses and interest losses resulting from the failure to execute. Additional damages, including consequential damages, are recoverable to the extent provided in an express written agreement of the receiving bank, but are not otherwise recoverable.

410.305(5) (5) Reasonable attorney fees are recoverable if demand for compensation under sub. (1) or (2) is made and refused before an action is brought on the claim. If a claim is made for breach of an agreement under sub. (4) and the agreement does not provide for damages, reasonable attorney fees are recoverable if demand for compensation under sub. (4) is made and refused before an action is brought on the claim.

410.305(6) (6) Except as stated in this section, the liability of a receiving bank under subs. (1) and (2) may not be varied by agreement.

410.305 History History: 1991 a. 304.

subch. IV of ch. 410 SUBCHAPTER IV