Also known as: funds transfers · fund transfer · fund transfers · wire transfer · electronic funds transfer
Written by attorneys · grounded in primary & secondary sources — see below
A series of transactions beginning with an originator's payment order and made for the purpose of making payment to the beneficiary of the order. The term includes any payment order issued by the originator's bank or an intermediary bank intended to carry out the originator's payment order. A funds transfer is completed by acceptance by the beneficiary's bank of a payment order for the benefit of the beneficiary.
Felix Franco receives a foreclosure notice on his home after missing several mortgage payments. Two days before the scheduled sale, he directs his bank to send the full cure amount via electronic funds transfer to the lender's account. The lender accepts the payment order, satisfying the monetary default and halting the foreclosure proceedings.
Franklin Foundry owes a supplier for equipment and instructs its bank to issue a payment order transferring the invoice amount to the supplier's account at a different bank. The originator's bank sends the order through an intermediary to the beneficiary's bank, which accepts the order and credits the supplier's account, completing the funds transfer and discharging the debt.
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A funds transfer begins with the originator's payment order and ends when the beneficiary's bank accepts a payment order for the beneficiary's benefit.
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Article 4A generally does not apply to funds transfers governed by the Electronic Fund Transfer Act, though it covers remittance transfers unless they qualify as electronic fund transfers under that federal statute.
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If the beneficiary's bank does not know the name and number refer to different persons, it may rely on the number as proper identification and pay accordingly, with the originator remaining obligated unless specific conditions are met.
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A receiving bank has no duty to accept a payment order absent an express agreement, and liability for breach of such an agreement is limited to the terms of the agreement or Article 4A.
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…at 189. In a thorough and well reasoned opinion, the New York Court of Appeals canvassed the emerging law governing electronic fund transfers and concluded that “the ‘discharge for value’ rule as set forth at Section 14 of the Restatement of Restitution , should be applied in the circumstances in this case.” Id. at 376, 568…