N.Y. Uniform Commercial Code Law § 4-a-405: Payment by Beneficiary's Bank to Beneficiary

Section 4-A-405. Payment by Beneficiary's Bank to Beneficiary.

(1) If the beneficiary's bank credits an account of the beneficiary of

a payment order, payment of the bank's obligation under subsection (1)

of Section 4-A-404 occurs when and to the extent (i) the beneficiary is

notified of the right to withdraw the credit, (ii) the bank lawfully

applies the credit to a debt of the beneficiary, or (iii) funds with

respect to the order are otherwise made available to the beneficiary by

the bank.

(2) If the beneficiary's bank does not credit an account of the

beneficiary of a payment order, the time when payment of the bank's

obligation under subsection (1) of Section 4-A-404 occurs is governed by

principles of law that determine when an obligation is satisfied.

(3) Except as stated in subsections (4) and (5), if the beneficiary's

bank pays the beneficiary of a payment order under a condition to

payment or agreement of the beneficiary giving the bank the right to

recover payment from the beneficiary if the bank does not receive

payment of the order, the condition to payment or agreement is not

enforceable.

(4) A funds-transfer system rule may provide that payments made to

beneficiaries of funds transfers made through the system are provisional

until receipt of payment by the beneficiary's bank of the payment order

it accepted. A beneficiary's bank that makes a payment that is

provisional under the rule is entitled to refund from the beneficiary if

(i) the rule requires that both the beneficiary and the originator be

given notice of the provisional nature of the payment before the funds

transfer is initiated, (ii) the beneficiary, the beneficiary's bank and

the originator's bank agreed to be bound by the rule, and (iii) the

beneficiary's bank did not receive payment of the payment order that it

accepted. If the beneficiary is obliged to refund payment to the

beneficiary's bank, acceptance of the payment order by the beneficiary's

bank is nullified and no payment by the originator of the funds transfer

to the beneficiary occurs under Section 4-A-406.

(5) This subsection applies to a funds transfer that includes a

payment order transmitted over a funds-transfer system that (i) nets

obligations multilaterally among participants, and (ii) has in effect a

loss-sharing agreement among participants for the purpose of providing

funds necessary to complete settlement of the obligations of one or more

participants that do not meet their settlement obligations. If the

beneficiary's bank in the funds transfer accepts a payment order and the

system fails to complete settlement pursuant to its rules with respect

to any payment order in the funds transfer, (i) the acceptance by the

beneficiary's bank is nullified and no person has any right or

obligation based on the acceptance, (ii) the beneficiary's bank is

entitled to recover payment from the beneficiary, (iii) no payment by

the originator to the beneficiary occurs under Section 4-A-406, and (iv)

subject to subsection (5) of Section 4-A-402, each sender in the funds

transfer is excused from its obligation to pay its payment order under

subsection (3) of Section 4-A-402 because the funds transfer has not

been completed.