                                 CODE OF VIRGINIA

PAYMENT BY BENEFICIARY&#8217;S BANK TO BENEFICIARY (§ 8.4A-405)

a. If the beneficiary&#8217;s bank credits an account of the beneficiary of a
payment order, payment of the bank&#8217;s obligation under subsection (a) of
&#xA7; 8.4A-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.

b. If the beneficiary&#8217;s bank does not credit an account of the beneficiary
of a payment order, the time when payment of the bank&#8217;s obligation under
subsection (a) of &#xA7; 8.4A-404 occurs is governed by principles of law that
determine when an obligation is satisfied.

c. Except as stated in subsections (d) and (e) of this section, if the
beneficiary&#8217;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.

d. 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&#8217;s bank of the payment order is accepted. A
beneficiary&#8217;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&#8217;s bank, and the originator&#8217;s bank agreed to be bound by
the rule, and (iii) the beneficiary&#8217;s bank did not receive payment of the
payment order that it accepted. If the beneficiary is obliged to refund payment
to the beneficiary&#8217;s bank, acceptance of the payment order by the
beneficiary&#8217;s bank is nullified and no payment by the originator of the
funds transfer to the beneficiary occurs under &#xA7; 8.4A-406.

e. 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&#8217;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&#8217;s bank is nullified and no person
has any right or obligation based on the acceptance, (ii) the
beneficiary&#8217;s bank is entitled to recover payment from the beneficiary,
(iii) no payment by the originator to the beneficiary occurs under &#xA7;
8.4A-406 and (iv) subject to subsection (e) of &#xA7; 8.4A-402, each sender in
the funds transfer is excused from its obligation to pay its payment order under
subsection (c) of &#xA7; 8.4A-402 because the funds transfer has not been
completed.

HISTORY: 1990, c. 9.