(810 ILCS 5/4A-205)
(from Ch. 26, par. 4A-205)
Erroneous payment orders.
(a) If an accepted payment order was transmitted pursuant to a security
procedure for the detection of error and the payment order (i) erroneously
instructed payment to a beneficiary not intended by the sender, (ii)
erroneously instructed payment in an amount greater than the amount
intended by the sender, or (iii) was an erroneously transmitted duplicate
of a payment order previously sent by the sender, the following rules apply:
(1) If the sender proves that the sender or a person
acting on behalf of the sender pursuant to Section 4A-206 complied with the security procedure and that the error would have been detected if the receiving bank had also complied, the sender is not obliged to pay the order to the extent stated in paragraphs (2) and (3).
(2) If the funds transfer is completed on the basis
of an erroneous payment order described in clause (i) or (iii) of subsection (a), the sender is not obliged to pay the order and the receiving bank is entitled to recover from the beneficiary any amount paid to the beneficiary to the extent allowed by the law governing mistake and restitution.
(3) If the funds transfer is completed on the basis
of a payment order described in clause (ii) of subsection (a), the sender is not obliged to pay the order to the extent the amount received by the beneficiary is greater than the amount intended by the sender. In that case, the receiving bank is entitled to recover from the beneficiary the excess amount received to the extent allowed by the law governing mistake and restitution.
(b) If (i) the sender of an erroneous payment order described in
subsection (a) is not obliged to pay all or part of the order, and (ii) the
sender receives notification from the receiving bank that the order was
accepted by the bank or that the sender's account was debited with respect
to the order, the sender has a duty to exercise ordinary care, on the basis
of information available to the sender, to discover the error with respect
to the order and to advise the bank of the relevant facts within a
reasonable time, not exceeding 90 days, after the bank's notification was
received by the sender. If the bank proves that the sender failed to
perform that duty, the sender is liable to the bank for the loss the bank
proves it incurred as a result of the failure, but the liability of the
sender may not exceed the amount of the sender's order.
(c) This Section applies to amendments to payment orders to the same
extent it applies to payment orders.
(Source: P.A. 86-1291.)