N.Y. Uniform Commercial Code Law § 4-a-210: Rejection of Payment Order

Section 4-A-210. Rejection of Payment Order.

(1) A payment order is rejected by the receiving bank by a notice of

rejection transmitted to the sender orally, or in a record. 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, (i) any means complying with the

agreement is reasonable and (ii) any means not complying is not

reasonable unless no significant delay in receipt of the notice resulted

from the use of the noncomplying means.

(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 cancelled pursuant to

subsection (4) of Section 4-A-211 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.

(3) If a receiving bank suspends payments, all unaccepted payment

orders issued to it are deemed rejected at the time the bank suspends

payments.

(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.