Okla. Stat. tit. 12A § 3-418

Current through Laws 2024, c. 378.

Section 3-418 - Payment or Acceptance by Mistake

(a) Except as provided in subsection (c) of this section, if the drawee of a draft pays or accepts the draft and the drawee acted on the mistaken belief that (i) payment of the draft had not been stopped pursuant to Section 4-403 of this title or (ii) the signature of the drawer of the draft was authorized, the drawee may recover the amount of the draft from the person to whom or for whose benefit payment was made or, in the case of acceptance, may revoke the acceptance. Rights of the drawee under this subsection are not affected by failure of the drawee to exercise ordinary care in paying or accepting the draft.

(b) Except as provided in subsection (c) of this section, if an instrument has been paid or accepted by mistake and the case is not covered by subsection (a) of this section, the person paying or accepting may, to the extent permitted by the law governing mistake and restitution, (i) recover the payment from the person to whom or for whose benefit payment was made or (ii) in the case of acceptance, may revoke the acceptance.

(c) The remedies provided by subsection (a) or (b) of this section may not be asserted against a person who took the instrument in good faith and for value or who in good faith changed position in reliance on the payment or acceptance. This subsection does not limit remedies provided by Section 3-417 or 4-407 of this title.

(d) Notwithstanding Section 4-215 of this title, if an instrument is paid or accepted by mistake and the payor or acceptor recovers payment or revokes acceptance under subsection (a) or (b) of this section, the instrument is deemed not to have been paid or accepted and is treated as dishonored, and the person from whom payment is recovered has rights as a person entitled to enforce the dishonored instrument.

Okla. Stat. tit. 12A, § 3-418

Laws 1961, p. 114, § 3-418; Amended by Laws 1991, SB 25, c. 117, § 81, eff. 1/1/1992.

Oklahoma Code Comment

1. This Section provides a finality of payment rule for Article 3 and 4 transactions, barring rescission of any payment made to (or accepted by) a party protected under sub section 3-418(c) . However, Sections 3-417 , 4-207 and 4-407 remain applicable. Sub sections 3-418(a) and (b) qualify the final payment rule, including the rule for banking institutions in Section 4-215 , by allowing a payor to rescind payment made under the circumstances set out in (a) or pursuant to the law of mistake and restitution.

2. Sub section 3-418(a) allows revocation of payment where the only mistake was a belief either that the drawer had not stopped payment or the drawer's signature was authorized. This qualifies the rule of Price v. Neal (see UCC § 3-417, Oklahoma and Official Comments), to the extent applicable. However, under sub section 3-418(c), this cannot be exercised against a person who took the instrument in good faith and for value, or who in good faith changed position in reliance on the payment (or acceptance). Sub section 3-418(b) allows revocation of payment based on any mistake that would provide a basis for restitution under the common law, again subject to sub section 3-418(c) .

3. Subject to the protection of sub section 3-418(c), these provisions allow a payor bank to rescind final payment in circumstances where there is no breach of presentment warranty under Section 3-417 , potentially altering the result in cases like Kirby v. First & Merchants Nat'l Bank, 210 Va. 88, 168 S.E.2d 273 (1969). See UCC § 4 - 301, Official Comment 7; F. MILLER & A. HARRELL, THE LAW OF MODERN PAYMENT SYSTEMS AND NOTES 18.02[4| (2d ed. 1992). Section 3-418 also rejects the pre-Code rule of 48 O.S. § 143 (repealed), which precluded recovery by the payor when a draft was paid on a forged drawer's signature.

4. This Section has a counterpart, of sorts, at sub section 4-302(b) , which allows a payor bank to defend on certain restitutionary grounds against liability for missing its midnight deadline, even in the absence of a breach of warranty. See UCC § 4-302, Official Comment 3.

5. See generally F. MILLER & A. HARRELL, THE LAW OF MODERN PAYMENT SYSTEMS AND NOTES 7.02[3] (2d ed. 1992).