(a) In this article:
(1) "Authorized account" means a deposit account of a customer in a
bank designated by the customer as a source of payment of payment orders issued
by the customer to the bank. If a customer does not so designate an account,
any account of the customer is an authorized account if payment of a payment
order from that account is not inconsistent with a restriction on the use
of that account.
(2) "Bank" means a person engaged in the business of banking and includes
a savings bank, savings and loan association, credit union, and trust company.
A branch or separate office of a bank is a separate bank for purposes of this
(3) "Customer" means a person, including a bank, having an account with
a bank or from whom a bank has agreed to receive payment orders.
(4) "Funds-transfer business day" of a receiving bank means the part
of a day during which the receiving bank is open for the receipt, processing,
and transmittal of payment orders and cancellations and amendments of payment
(5) "Funds-transfer system" means a wire transfer network, automated
clearinghouse, or other communication system of a clearinghouse or other association
of banks through which a payment order by a bank may be transmitted to the
bank to which the order is addressed.
(6) "Good faith" means honesty in fact and the observance of reasonable
commercial standards of fair dealing.
(7) "Prove" with respect to a fact means to meet the burden of establishing
the fact (section 1-201(b)(8)).
(b) Other definitions applying to this article and the sections in which
they appear are:
|"Funds-transfer system rule".
|"Payment by beneficiary's bank
| to beneficiary".
|"Payment by originator to beneficiary".
|"Payment by sender to receiving bank".
(c) The following definitions in article 4 apply to this article:
(d) In addition article 1 contains general definitions and principles
of construction and interpretation applicable throughout this article.
Source:Laws 1991, LB 160, § 6; Laws 2005, LB 570, § 53.
1. The definition of "bank" in subsection (a)(2) includes some institutions
that are not commercial banks. The definition reflects the fact that many
financial institutions now perform functions previously restricted to commercial
banks, including acting on behalf of customers in funds transfers. Since many
funds transfers involve payment orders to or from foreign countries the definition
also covers foreign banks. The definition also includes Federal Reserve banks.
Funds transfers carried out by Federal Reserve banks are described in comments
1 and 2 to section 4A-107.
2. Funds-transfer business is frequently transacted by banks outside
of general banking hours. Thus, the definition of banking day in section 4-104(a)(3)
cannot be used to describe when a bank is open for funds-transfer business.
Subsection (a)(4) defines a new term, "funds-transfer business day", which
is applicable to article 4A. The definition states, "is open for the receipt,
processing, and transmittal of payment orders and cancellations and amendments
of payment orders". In some cases it is possible to electronically transmit
payment orders and other communications to a receiving bank at any time. If
the receiving bank is not open for the processing of an order when it is received,
the communication is stored in the receiving bank's computer for retrieval
when the receiving bank is open for processing. The use of the conjunctive
makes clear that the defined term is limited to the period during which all
functions of the receiving bank can be performed, i.e., receipt, processing,
and transmittal of payment orders, cancellations, and amendments.
3. Subsection (a)(5) defines "funds-transfer system". The term includes
a system such as CHIPS which provides for transmission of a payment order
as well as settlement of the obligation of the sender to pay the order. It
also includes automated clearinghouses, operated by a clearinghouse or other
association of banks, which process and transmit payment orders of banks to
other banks. In addition the term includes organizations that provide only
transmission services such as SWIFT. The definition also includes the wire
transfer network and automated clearinghouses of Federal Reserve banks. Systems
of the Federal Reserve banks, however, are treated differently from systems
of other associations of banks. Funds-transfer systems other than systems
of the Federal Reserve banks are treated in article 4A as a means of communication
of payment orders between participating banks. Section 4A-206. The comment
to that section and the comment to section 4A-107 explain how Federal Reserve
banks function under article 4A. Funds-transfer systems are also able to promulgate
rules binding on participating banks that, under section 4A-501, may supplement
or in some cases may even override provisions of article 4A.
4. Subsection (d) incorporates definitions stated in article 1 as well
as principles of construction and interpretation stated in that article. Included
is section 1-103. The last paragraph of the comment to section 4A-102 is addressed
to the issue of the extent to which general principles of law and equity should
apply to situations covered by provisions of article 4A.