Official Comments
 Article #  

 
6.1.8
(Payment by funds transfer)

(1) Unless the obligee has indicated a particular account, payment may be made by a transfer to any of the financial institutions in which the obligee has made it known that it has an account.
(2) In case of payment by a transfer the obligation of the obligor is discharged when the transfer to the obligee's financial institution becomes effective.


 
Official Comment
 1. Admissibility of funds transfers

Although the principle enunciated in Article 6.1.6 that payment of a monetary obligation should be made at the obligee’s place of business still stands, paragraph (1) of this Article provides that it can also be made to one of the financial institutions in which the obligee has made it known that it keeps an account. If however the obligee has indicated a particular account, payment should then be made to that account. Naturally, the obligee can also make it known that it does not wish payment to be made by transfer.

Illustration

1. A, a shipyard established in country X, repairs a ship belonging to B, a company from country Y, and the bill is sent on a letter-head that mentions a bank account in country X and another in country Y. Unless A states that payment has to be made to the account in country X, or by a means other than a bank transfer, B is entitled to make payment to the account in country Y.

2. Time at which the obligor’s obligation is discharged by a funds transfer

Paragraph (2) of this Article deals with the difficult question of determining when a payment by funds transfer is to be considered as completed, i.e. when the obligor’s obligation is discharged. This matter is of importance, for example when deciding whether a payment was made in time, or in the event of one of the banks not forwarding the funds it has received. The choice of a satisfactory solution has been the centre of considerable controversy in many countries and international fora. Various possible times have been suggested, such as that of the debiting of the account of the transferor, the crediting to the account of the transferee bank, the notice of credit to that account, the decision of the transferee bank to accept a credit transfer, the entry of credit to the transferee’s account, the notice of credit to the transferee, etc. The matter is further complicated by the changes in the procedures for the transfer of funds entailed by new electronic transfer mechanisms, while bank practices may also differ from one case to another.
This uncertainty makes it extremely difficult to establish a definite rule providing when payment by a transfer is completed. Paragraph (2) of this Article nevertheless serves a useful purpose in that it states the basic principle which will permit the finding of a more precise rule in each case. Such a payment will be effective when the transfer to the obligee’s financial institution becomes effective, a solution founded on the notion that the institution acts as the obligee’s agent. This means that the payment will not be effective simply because an order has been given to the transferor’s financial institution, and the transferor’s account has been debited. However, payment is effective before the transferee is notified or credited with it by its financial institution, although the precise moment at which payment to the obligee’s financial institution can be considered as being effective will depend on banking practices in the case concerned.

Illustration

2. A, a licensee, gives its bank, C, a transfer order for USD 5,000, royalties due to B, a licensor, who has an account with bank D. C debits A’s account, but fails to forward the funds to D and becomes bankrupt. A has not effectively paid B.