NMSA 55-4A-105. Other definitions

55-4A-105. Other definitions. (a) In this article: (1) "authorized account" means a deposit account of a customer in a bank designated by the customer as a source of payment of payment orders issued by the customer to the bank; if a customer does not so designate an account, any account of the customer is an authorized account if payment of a payment order from that account is not inconsistent with a restriction on the use of that account; (2) "bank" means a person engaged in the business of banking and includes a savings bank, savings and loan association, credit union and trust company; a branch or separate office of a bank is a separate bank for purposes of this article; (3) "customer" means a person, including a bank, having an account with a bank or from whom a bank has agreed to receive payment orders; (4) "funds-transfer business day" of a receiving bank means the part of a day during which the receiving bank is open for the receipt, processing and transmittal of payment orders and cancellations and amendments of payment orders; (5) "funds-transfer system" means a wire transfer network, automated clearing house or other communication system of a clearing house or other association of banks through which a payment order by a bank may be transmitted to the bank to which the order is addressed; (6) [Reserved]; and (7) "prove" with respect to a fact means to meet the burden of establishing the fact (Paragraph (8) of Subsection (b) of Section 55-1-201 NMSA 1978). (b) Other definitions applying to this article and the sections in which they appear are: "acceptance" Section 55-4A-209 NMSA 1978; "beneficiary" Section 55-4A-103 NMSA 1978; "beneficiary's bank" Section 55-4A-103 NMSA 1978; "executed" Section 55-4A-301 NMSA 1978; "execution date" Section 55-4A-301 NMSA 1978; "funds transfer" Section 55-4A-104 NMSA 1978; "funds-transfer system rule" Section 55-4A-501 NMSA 1978; "intermediary bank" Section 55-4A-104 NMSA 1978; "originator" Section 55-4A-104 NMSA 1978; "originator's bank" Section 55-4A-104 NMSA 1978; "payment by beneficiary's bank to Section 55-4A-405 NMSA 1978; beneficiary" "payment by originator to beneficiary" Section 55-4A-406 NMSA 1978; "payment by sender to receiving bank" Section 55-4A-403 NMSA 1978; "payment date" Section 55-4A-401 NMSA 1978; "payment order" Section 55-4A-103 NMSA 1978; "receiving bank" Section 55-4A-103 NMSA 1978; "security procedure" Section 55-4A-201 NMSA 1978; and "sender" Section 55-4A-103 NMSA 1978. (c) The following definitions in Chapter 55, Article 4 NMSA 1978 apply to this article: "clearing house" Section 55-4-104 NMSA 1978; "item" Section 55-4-104 NMSA 1978; and "suspends payments" Section 55-4-104 NMSA 1978. (d) In addition, Chapter 55, Article 1 NMSA 1978 contains general definitions and principles of construction and interpretation applicable throughout this article. History: 1978 Comp., § 55-4A-105, enacted by Laws 1992, ch. 114, § 201; 2005, ch. 144, § 48; 2009, ch. 234, § 17. OFFICIAL COMMENTS UCC Official Comments © by ALI & the NCCUSL. Reproduced with permission of the PEB for the UCC. All rights reserved. 1. The definition of "bank" in Subsection (a)(2) includes some institutions that are not commercial banks. The definition reflects the fact that many financial institutions now perform functions previously restricted to commercial banks, including acting on behalf of customers in funds transfers. Since many funds transfers involve payment orders to or from foreign countries the definition also covers foreign banks. The definition also includes Federal Reserve Banks. Funds transfers carried out by Federal Reserve Banks are described in Comments 1 and 2 to Section 4A-107 [55-4A-107 NMSA 1978]. 2. Funds transfer business is frequently transacted by banks outside of general banking hours. Thus, the definition of banking day in Section 4-104(1)(c) [55-4A-104 NMSA 1978] cannot be used to describe when a bank is open for funds transfer business. Subsection (a)(4) defines a new term, "funds transfer business day," which is applicable to Article 4A. The definition states, "is open for the receipt, processing, and transmittal of payment orders and cancellations and amendments of payment orders." In some cases it is possible to electronically transmit payment orders and other communications to a receiving bank at any time. If the receiving bank is not open for the processing of an order when it is received, the communication is stored in the receiving bank's computer for retrieval when the receiving bank is open for processing. The use of the conjunctive makes clear that the defined term is limited to the period during which all functions of the receiving bank can be performed, i.e., receipt, processing, and transmittal of payment orders, cancellations and amendments. 3. Subsection (a)(5) defines "funds transfer system." The term includes a system such as CHIPS which provides for transmission of a payment order as well as settlement of the obligation of the sender to pay the order. It also includes automated clearing houses, operated by a clearing house or other association of banks, which process and transmit payment orders of banks to other banks. In addition the term includes organizations that provide only transmission services such as SWIFT. The definition also includes the wire transfer network and automated clearing houses of Federal Reserve Banks. Systems of the Federal Reserve Banks, however, are treated differently from systems of other associations of banks. Funds transfer systems other than systems of the Federal Reserve Banks are treated in Article 4A as a means of communication of payment orders between participating banks. Section 4A-206 [55-4A- 206 NMSA 1978]. The Comment to that section and the Comment to Section 4A-107 explain how Federal Reserve Banks function under Article 4A. Funds transfer systems are also able to promulgate rules binding on participating banks that, under Section 4A- 501 [55-4A-501 NMSA 1978], may supplement or in some cases may even override provisions of Article 4A. 4. Subsection (d) incorporates definitions stated in Article 1 as well as principles of construction and interpretation stated in that Article. Included is Section 1-103 [55-1-103 NMSA 1978]. The last paragraph of the Comment to Section 4A-102 [55-4A-102 NMSA 1978] is addressed to the issue of the extent to which general principles of law and equity should apply to situations covered by provisions of Article 4A.