Section 4-A-406. Payment by Originator to Beneficiary; Discharge of Underlying Obligation

(1) Subject to subsection (5) of Section 4-A-211 and  subsections  (4)
  and  (5) of Section 4-A-405, the originator of a funds transfer pays the
  beneficiary of the originator's payment order (i) at the time a  payment
  order   for   the   benefit  of  the  beneficiary  is  accepted  by  the
  beneficiary's bank in the funds transfer and (ii) in an amount equal  to
  the amount of the order accepted by the beneficiary's bank, but not more
  than the amount of the originator's order.
    (2)  If payment under subsection (1) is made to satisfy an obligation,
  the obligation is discharged to the same extent discharge  would  result
  from  payment to the beneficiary of the same amount in money, unless (i)
  the payment under subsection (1) was made by a means prohibited  by  the
  contract  of  the  beneficiary  with respect to the obligation, (ii) the
  beneficiary, within a reasonable time after receiving notice of  receipt
  of  the  order by the beneficiary's bank, notified the originator of the
  beneficiary's refusal of the payment, (iii) funds with  respect  to  the
  order  were not withdrawn by the beneficiary or applied to a debt of the
  beneficiary, and (iv) the beneficiary would suffer  a  loss  that  could
  reasonably  have  been  avoided  if  payment  had  been  made by a means
  complying with the contract. If  payment  by  the  originator  does  not
  result  in discharge under this section, the originator is subrogated to
  the rights of the beneficiary to receive payment from the  beneficiary's
  bank under subsection (1) of Section 4-A-404.
    (3)  For the purpose of determining whether discharge of an obligation
  occurs under subsection (2), if the beneficiary's bank accepts a payment
  order in an amount equal to the amount of the originator's payment order
  less charges of one or more  receiving  banks  in  the  funds  transfer,
  payment  to  the  beneficiary  is  deemed  to  be  in  the amount of the
  originator's order unless upon demand by the beneficiary the  originator
  does not pay the beneficiary the amount of the deducted charges.
    (4) Rights of the originator or of the beneficiary of a funds transfer
  under this section may be varied only by agreement of the originator and
  the beneficiary.