§ 554.12205

554.12205 Erroneous payment orders. 1. If an accepted payment order was transmitted pursuant to a security procedure for the detection of error and the payment order (i) erroneously instructed payment to a beneficiarynot intended by the sender, (ii) erroneously instructed payment in an amount greater than theamount intended by the sender, or (iii) was an erroneously transmitted duplicate of a paymentorder previously sent by the sender, the following rules apply: a. If the sender proves that the sender or a person acting on behalf of the sender pursuant to section 554.12206 complied with the security procedure and that the error would have beendetected if the receiving bank had also complied, the sender is not obligated to pay the orderto the extent stated in subsections 2 and 3. b. If the funds transfer is completed on the basis of an erroneous payment order described in (i) or (iii) of subsection 1, the sender is not obligated to pay the order and the receivingbank is entitled to recover from the beneficiary any amount paid to the beneficiary to theextent allowed by the law governing mistake and restitution. c.

t obligated to pay the order and the receivingbank is entitled to recover from the beneficiary any amount paid to the beneficiary to theextent allowed by the law governing mistake and restitution. c. If the funds transfer is completed on the basis of a payment order described in (ii) of subsection 1, the sender is not obligated to pay the order to the extent the amount received bythe beneficiary is greater than the amount intended by the sender. In that case, the receivingbank is entitled to recover from the beneficiary the excess amount received to the extentallowed by the law governing mistake and restitution. 2. If the sender of an erroneous payment order described in subsection 1 is not obligated to pay all or part of the order, and the sender receives notification from the receiving bankthat the order was accepted by the bank or that the sender’s account was debited with respectto the order, the sender has a duty to exercise ordinary care, on the basis of informationavailable to the sender, to discover the error with respect to the order and to advise the bankof the relevant facts within a reasonable time, not exceeding ninety days, after the bank’snotification was received

the sender, to discover the error with respect to the order and to advise the bankof the relevant facts within a reasonable time, not exceeding ninety days, after the bank’snotification was received by the sender. If the bank proves that the sender failed to performthis duty, the sender is liable to the bank for the loss the bank proves it incurred as a resultof the failure, not to exceed the amount of the sender’s order. 3. This section applies to amendments to payment orders in the same manner it applies to payment orders. 92 Acts, ch 1146, §13Referred to in §554.12402 Sat Dec 23 11:02:51 2023 Iowa Code 2024, Section 554.12205 (25, 0)