1. A payment order received by the receiving bank isthe authorized order of the person identified as sender ifthat person authorized the order or isotherwise bound by itunder the law of agency. 2. 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, ifthe security procedure isa commercially reasonable method of providing security against unauthorized payment orders, and the bank proves that itaccepted 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 ata time and in a manner affording the bank a reasonable opportunity to act on it before the payment order isaccepted. 3. 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 tothe 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 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 the customer expressly agreed in a record to be bound by any payment order, whether or not authorized, issued in the customer’s name and accepted by the bank in compliance with the bank’s obligations under the security procedure chosen by the customer. 4. The term “sender” in this Article includes the customer in whose name a payment order isissued ifthe order is the authorized order of the customer under subsection 1, or itis effective as the order of the customer under subsection 2. 5. This section applies to amendments and cancellations of payment orders in the same manner it applies to payment orders. 6. Except as provided in thissection and section 554.12203, rights and obligations arising under this section or section 554.12203 may not be varied by agreement.
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