§ 554.12202

554.12202 Authorized and verified payment orders. 1. A payment order received by the receiving bank is the authorized order of the person identified as sender if that person authorized the order or is otherwise bound by it under thelaw of agency. 2. If a bank and its customer have agreed that the authenticity of payment orders issued to the bank in the name of the customer as sender will be verified pursuant to a securityprocedure, a payment order received by the receiving bank is effective as the order of thecustomer, whether or not authorized, if the security procedure is a commercially reasonablemethod of providing security against unauthorized payment orders, and the bank proves thatit accepted the payment order in good faith and in compliance with the security procedureand any written agreement or instruction of the customer restricting acceptance of paymentorders issued in the name of the customer. The bank is not required to follow an instructionthat violates a written agreement with the customer or notice of which is not received at atime and in a manner affording the bank a reasonable opportunity to act on it before thepayment order is accepted. 3.

ates a written agreement with the customer or notice of which is not received at atime and in a manner affording the bank a reasonable opportunity to act on it before thepayment order is accepted. 3. Commercial reasonableness of a security procedure is a question of law to be determined by considering the wishes of the customer expressed to the bank, thecircumstances of the customer known to the bank, including the size, type, and frequency ofpayment orders normally issued by the customer to the bank, alternative security proceduresoffered to the customer, and security procedures in general use by customers and receivingbanks similarly situated. A security procedure is deemed to be commercially reasonable ifthe security procedure was chosen by the customer after the bank offered, and the customerrefused, a security procedure that was commercially reasonable for that customer, and thecustomer expressly agreed in writing to be bound by any payment order, whether or notauthorized, issued in the customer’s name and accepted by the bank in compliance with thesecurity procedure chosen by the customer. 4.

greed in writing to be bound by any payment order, whether or notauthorized, issued in the customer’s name and accepted by the bank in compliance with thesecurity procedure chosen by the customer. 4. The term 'sender' in this Article includes the customer in whose name a payment order is issued if the order is the authorized order of the customer under subsection 1, or it iseffective as the order of the customer under subsection 2. 5. This section applies to amendments and cancellations of payment orders in the same manner it applies to payment orders. 6. Except as provided in this section and section 554.12203, rights and obligations arising under this section or section 554.12203 may not be varied by agreement. 92 Acts, ch 1146, §10Referred to in §554.12203, 554.12204 Sat Dec 23 11:02:50 2023 Iowa Code 2024, Section 554.12202 (25, 0)