400.4A-202. Authorized and verified payment orders. - Missouri Statutes

Authorized and verified payment orders.

400.4A-202. (a) A payment order received by the receivingbank is the authorized order of the person identified as senderif that person authorized the order or is otherwise bound by itunder the law of agency.

(b) If a bank and its customer have agreed that theauthenticity of payment orders issued to the bank in the name ofthe customer as sender will be verified pursuant to a securityprocedure, a payment order received by the receiving bank iseffective as the order of the customer, whether or notauthorized, if (i) the security procedure is a commerciallyreasonable method of providing security against unauthorizedpayment orders, and (ii) the bank proves that it accepted thepayment order in good faith and in compliance with the securityprocedure and any written agreement or instruction of thecustomer restricting acceptance of payment orders issued in thename of the customer. The bank is not required to follow aninstruction that violates a written agreement with the customeror notice of which is not received at a time and in a manneraffording the bank a reasonable opportunity to act on it beforethe payment order is accepted.

(c) Commercial reasonableness of a security procedure is aquestion of law to be determined by considering the wishes of thecustomer expressed to the bank, the circumstances of the customerknown to the bank, including the size, type, and frequency ofpayment orders normally issued by the customer to the bank,alternative security procedures offered to the customer, andsecurity procedures in general use by customers and receivingbanks similarly situated. A security procedure is deemed to becommercially reasonable if (i) the security procedure was chosenby the customer after the bank offered, and the customer refused,a security procedure that was commercially reasonable for thatcustomer, and (ii) the customer expressly agreed in writing to bebound by any payment order, whether or not authorized, issued inits name and accepted by the bank in compliance with the securityprocedure chosen by the customer.

(d) The term "sender" in this Article includes the customerin whose name a payment order is issued if the order is theauthorized order of the customer under subsection (a), or it iseffective as the order of the customer under subsection (b).

(e) This section applies to amendments and cancellations ofpayment orders to the same extent it applies to payment orders.

(f) Except as provided in this section and in section400.4A-203(a)(1), rights and obligations arising under thissection or section 400.4A-203 may not be varied by agreement.

(L. 1992 S.B. 448)