If a receiving bank has received payment from its customer with respect to a payment order issued in the name of the customer as sender and accepted by the bank, and the customer received notification reasonably identifying the order, the customer is precluded from asserting that the bank is not entitled to retain the payment unless the customer notifies the bank of the customer's objection to the payment within one year after the notification was received by the customer.

History: 1978 Comp., § 55-4A-505, enacted by Laws 1992, ch. 114, § 232.

OFFICIAL COMMENTS

UCC Official Comments by ALI & the NCCUSL. Reproduced with permission of the PEB for the UCC. All rights reserved.

This section is in the nature of a statute of repose for objecting to debits made to the customer's account. A receiving bank that executes payment orders of a customer may have received payment from the customer by debiting the customer's account with respect to a payment order that the customer was not required to pay. For example, the payment order may not have been authorized or verified pursuant to Section 4A-202 [55-4A-202 NMSA 1978] or the funds transfer may not have been completed. In either case the receiving bank is obliged to refund the payment to the customer and this obligation to refund payment cannot be varied by agreement. Section 4A-204 and Section 4A-402 [55-4A-204 and 55-4A-402 NMSA 1978, respectively]. Refund may also be required if the receiving bank is not entitled to payment from the customer because the bank erroneously executed a payment order. Section 4A-303 [55-4A-303 NMSA 1978]. A similar analysis applies to that case. Section 4A-402(d) and (f) [55-4A-202 NMSA 1978] require refund and the obligation to refund may not be varied by agreement. Under 4A-505 [55-4A-505 NMSA 1978], however, the obligation to refund may not be asserted by the customer if the customer has not objected to the debiting of the account within one year after the customer received notification of the debit.

Effective dates. — Laws 1992, ch. 114, § 238 made the act effective July 1, 1992.