The Vermont Statutes Online
The Statutes below include the actions of the 2025 session of the General Assembly.
NOTE: The Vermont Statutes Online is an unofficial copy of the Vermont Statutes Annotated that is provided as a convenience.
(Cite as: 9A V.S.A. § 4A-202)
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§ 4A—202. Authorized and verified payment orders.
(a) A payment order received by the receiving bank is the authorized order of the person
identified as sender if that person authorized the order or is otherwise bound by
it under the law of agency.
(b) If a bank and its customer have agreed that the authenticity of payment orders issued
to the bank in the name of the customer as sender will be verified pursuant to a security
procedure, a payment order received by the receiving bank is effective as the order
of the customer, whether or not authorized, if (i) the security procedure is a commercially
reasonable method of providing security against unauthorized payment orders, and (ii)
the bank proves that it accepted the payment order in good faith and in compliance
with the bank’s obligations under the security procedure and any agreement or instruction
of the customer, evidenced by a record, restricting acceptance of payment orders issued
in the name of the customer. The bank is not required to follow an instruction that
violates an agreement with the customer, evidenced by a record, or notice of which
is not received at a time and in a manner affording the bank a reasonable opportunity
to act on it before the payment order is accepted.
(c) Commercial reasonableness of a security procedure is a question of law to be determined
by considering the wishes of the customer expressed to the bank, the circumstances
of the customer known to the bank, including the size, type, and frequency of payment
orders normally issued by the customer to the bank, alternative security procedures
offered to the customer, and security procedures in general use by customers and receiving
banks similarly situated. A security procedure is deemed to be commercially reasonable
if (i) the security procedure was chosen by the customer after the bank offered, and
the customer refused, a security procedure that was commercially reasonable for that
customer, and (ii) the customer expressly agreed in a record to be bound by any payment
order, whether or not authorized, issued in its name and accepted by the bank in compliance
with the bank’s obligations under the security procedure chosen by the customer.
(d) The term “sender” in this article includes the customer in whose name a payment order
is issued if the order is the authorized order of the customer under subsection (a)
of this section, or it is effective as the order of the customer under subsection
(b) of this section.
(e) This section applies to amendments and cancellations of payment orders to the same
extent it applies to payment orders.
(f) Except as provided in this section and in subdivision 4A—203(a)(1) of this title, rights and obligations arising under this section or section 4A—203 of this title may not be varied by agreement. (Added 1993, No. 158 (Adj. Sess.), § 14, eff. Jan. 1, 1995; amended 2025, No. 17, § 5, eff. July 1, 2025.)