§ 11210 Payment Order Rejection

This law says a bank has to tell you when it won’t carry out a payment order, and if it doesn’t, the bank may have to pay you interest on the amount.

Key Takeaways

•A rejection notice can be spoken or written; it just has to say the bank won’t do the payment.
•If the notice is sent in a reasonable way (like a phone call or email), it’s effective when sent; otherwise it’s effective when you actually get it.
•If the bank doesn’t reject the order but fails to pay even though your account has enough money, the bank must pay you interest on the amount until you learn of the failure or the order is cancelled.
•When a bank stops all payments, any pending orders are automatically treated as rejected.
•Once a bank accepts a payment order, it can’t later reject it, and once it rejects, it can’t later accept it.

Example

You tell your bank to send $1,000 to a friend. The bank decides not to send it and calls you to say it won’t do the payment.

Because the bank gave you a notice that it’s rejecting the order, the rejection is official as soon as the call is made (since a phone call is a reasonable way to tell you). If the bank never told you and the money stayed in your account, the bank would have to pay you interest on the $1,000 until you find out the payment didn’t happen.

(a) A payment order is rejected by the receiving bank by a notice of rejection transmitted to the sender orally or in a record. A notice of rejection need not use any particular words and is sufficient if it indicates that the receiving bank is rejecting the order or will not execute or pay the order. Rejection is effective when the notice is given if transmission is by a means that is reasonable in the circumstances. If notice of rejection is given by a means that is not reasonable, rejection is effective when the notice is received. If an agreement of the sender and receiving bank establishes the means to be used to reject a payment order, (i) any means complying with the agreement is reasonable and (ii) any means not complying is not reasonable unless no significant delay in receipt of the notice resulted from the use of the noncomplying means. (b) This subdivision applies if a receiving bank other than the beneficiary’s bank fails to execute a payment order despite the existence on the execution date of a withdrawable credit balance in an authorized account of the sender sufficient to cover the order. If the sender does not receive notice of rejection of the order on the execution date and the authorized account of the sender does not bear interest, the bank is obliged to pay interest to the sender on the amount of the order for the number of days elapsing after the execution date to the earlier of the day the order is canceled pursuant to subdivision (d) of Section 11211 or the day the sender receives notice or learns that the order was not executed, counting the final day of the period as an elapsed day. If the withdrawable credit balance during that period falls below the amount of the order, the amount of interest is reduced accordingly. (c) If a receiving bank suspends payments, all unaccepted payment orders issued to it are deemed rejected at the time the bank suspends payments. (d) Acceptance of a payment order precludes a later rejection of the order. Rejection of a payment order precludes a later acceptance of the order. (Amended by Stats. 2023, Ch. 210, Sec. 87. (SB 95) Effective January 1, 2024.)

This law says a bank has to tell you when it won’t carry out a payment order, and if it doesn’t, the bank may have to pay you interest on the amount.

Key Takeaways

•A rejection notice can be spoken or written; it just has to say the bank won’t do the payment.
•If the notice is sent in a reasonable way (like a phone call or email), it’s effective when sent; otherwise it’s effective when you actually get it.
•If the bank doesn’t reject the order but fails to pay even though your account has enough money, the bank must pay you interest on the amount until you learn of the failure or the order is cancelled.
•When a bank stops all payments, any pending orders are automatically treated as rejected.
•Once a bank accepts a payment order, it can’t later reject it, and once it rejects, it can’t later accept it.

Example

You tell your bank to send $1,000 to a friend. The bank decides not to send it and calls you to say it won’t do the payment.

Key Takeaways

Example

Key Terms

References

§ 11210 Payment Order Rejection

Key Takeaways

Example

Key Terms

References

Key Takeaways

Example

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Related Statutes

References

Key Takeaways

Example

Key Terms

Related Statutes

References