SB 1206
Initials PB Page 1 Commerce
ARIZONA HOUSE OF REPRESENTATIVES
Fifty-seventh Legislature
First Regular Session
Senate: FIN DPA/SE 7-0-0-0 | 3
rd
Read 29-0-1-0
SB 1206: banks; special deposits; requirements
Sponsor: Senator Bolick, LD 2
Committee on Commerce
Overview
Adopts the Uniform Laws Commission's (ULC) Uniform Special Deposits Act which allows a
beneficiary to receive payments from a special deposit after the occurrence of an event.
History
The ULC provides states with non-partisan legislation that brings clarity and stability to
critical areas of state statutory law. The ULC drafted the Uniform Special Deposits Act which
addresses deposits at a bank where the identity of the person entitled to payment is not
determined until the occurrence of a contingency identified at the time that the deposit is
created.
Provisions
Special Deposits
1. Establishes the Uniform Special Deposits Act (Act) which applies to a special deposit
under an account agreement that states the intention of the parties to establish a special
deposit governed by the Act, regardless of whether a party to the account agreement or a
transaction related to the special deposit, or the special deposit itself, has a reasonable
relation to this state. (Sec. 1)
2. Specifies a special deposit is:
a) a deposit of funds in a bank under an account agreement;
b) for the benefit of at least two beneficiaries, one or more of which may be a depositor;
c) denominated in a medium of exchange that is currently authorized or adopted by a
domestic or foreign government;
d) for a permissible purpose as stated in the account agreement; and
e) subject to a contingency. (Sec. 1)
3. Requires a special deposit to serve at least one permissible purpose stated in the account
agreement from the creation to the termination of the special deposit. (Sec. 1)
4. Specifies that, prior to termination of a special deposit, if a determination is made that
the special deposit no longer satisfies at least one permissible purpose:
a) certain provisions of the Act cease to apply to any funds deposited in the special
deposit; and
b) a bank may take necessary action, including terminating the special deposit. (Sec. 1)
5. Specifies a depositor or a beneficiary does not have a property interest in a special deposit.
(Sec. 1)
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6. Stipulates that, if a bank is obligated to pay a beneficiary, a property interest in the
special deposit is only in the right to receive payment and not in the special deposit itself.
(Sec. 1)
7. Specifies a special deposit terminates five years after the date it was first funded. (Sec. 1)
8. Stipulates that a bank, upon termination of a special deposit, must pay any remaining
balance to the depositor if the bank cannot identify or locate a beneficiary entitled to
payment. (Sec. 1)
9. Specifies that a bank that pays the remaining balance of a special deposit to the depositor
has no further obligation to the special deposit. (Sec. 1)
Account Agreements
10. Allows the parties of an account agreement to choose a forum in Arizona for settling a
dispute regarding a special deposit regardless of whether a party to the account
agreement or an associated transaction has a reasonable relation to the state. (Sec. 1)
11. Allows a bank and depositor to amend an account agreement without the consent of the
beneficiary if:
a) the beneficiary is a party to the agreement, and the agreement expressly permits an
amendment;
b) the beneficiary is not a party to the account agreement and the bank and depositor
know that the beneficiary has knowledge of the agreement's terms, and the
amendment does not adversely and materially affect a payment right of the
beneficiary; or
c) the beneficiary is not a party to the account agreement and the bank and depositor do
not know whether the beneficiary has knowledge of the account agreement's terms,
and the amendment is made in good faith. (Sec. 1)
Bank Obligations; Payment
12. Requires a bank to pay a beneficiary if there are sufficient actually and finally collected
funds in the balance of the special deposit. (Sec. 1)
13. Stipulates a beneficiary may elect to be paid from the available funds or receive a pro rata
share of the funds when there is more than one beneficiary if the current funds are
insufficient to cover an obligation to pay the beneficiary. (Sec. 1)
14. Adds that the beneficiary's election to be paid from the available funds discharges the
bank's obligation to pay and does not constitute an accord and satisfaction regarding
another person's obligation to the beneficiary. (Sec. 1)
15. Asserts a bank's obligation to pay a beneficiary as immediately due and payable. (Sec. 1)
16. Provides conditions for which a bank may discharge its obligation to pay a beneficiary.
(Sec. 1)
17. Stipulates that if the bank's obligation to pay a beneficiary incurs an obligation of another
person, the other person's obligation is discharged if a bank's action would constitute a
discharge of the other person's obligation. (Sec. 1)
Bank Duties and Liabilities
18. Asserts a bank does not have a fiduciary duty to any person with respect to a special
deposit. (Sec. 1) SB 1206
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19. Specifies a debtor-creditor relationship arises between the bank and a beneficiary when
the bank holding the special deposit becomes obligated to pay the beneficiary. (Sec. 1)
20. Asserts a bank that holds a special deposit:
a) has a duty to a beneficiary to comply with the account agreement and the Act;
b) is liable to a depositor or a beneficiary for any damages, except for consequential,
special or punitive damages, that are caused by the bank's noncompliance with the
account agreement or the Act; and
c) may rely on records that comply with an account agreement to determine whether the
bank is obligated to pay a beneficiary. (Sec. 1)
21. Instructs the bank, for account agreements that require payment on presentation of a
record, to determine whether the record is sufficient to require payment. (Sec. 1)
22. Specifies the bank, for account agreements that require action by the bank on
presentation of a record, is not liable for relying in good faith on the genuineness of the
record. (Sec. 1)
23. Asserts the bank is not required to determine the existence of a permissible purpose
stated in the agreement. (Sec. 1)
Enforceability of Creditor Process
24. Specifies a creditor process, with respect to a special deposit, is not enforceable against
the bank holding the special deposit, unless the creditor process, with respect to the
amount the bank is obligated to pay:
a) is served on the bank;
b) provides sufficient information that allows a bank to identify the depositor or the
beneficiary from the bank's books and records; and
c) gives the bank reasonable opportunity to act on the creditor process. (Sec. 1)
25. Outlines certain stipulations relating to creditor process creating a right of the creditor
against the bank and creating a lien against the beneficiary. (Sec. 1)
Miscellaneous
26. Specifies the Act does not affect:
a) a right or obligation that relates to a deposit other than a special deposit; or
b) the voidability of a deposit or transfer that is fraudulent or voidable under the law.
(Sec. 1)
27. Specifies which Act provisions may be varied by agreement. (Sec. 1)
28. Deems a provision in an account agreement that substantially excuses liability or limits
remedies for failure to perform an obligation as insufficient to vary the effect of the Act.
(Sec. 1)
29. Allows a court to enjoin a bank from paying a depositor or beneficiary only if the payment
would constitute or facilitate a material fraud with respect to a special deposit. (Sec. 1)
30. Prohibits a bank from exercising a right of recoupment or setoff against a special deposit,
except that a bank holding a special deposit may exercise such right against an obligation
to pay a beneficiary, even if the bank funds payment from the special deposit. (Sec. 1)
31. Allows an account agreement to authorize the bank to debit a special deposit:
a) when the bank becomes obligated to pay a beneficiary in an amount that does not
exceed the amount necessary to discharge the obligation; SB 1206
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b) for an overdraft fee;
c) for costs incurred by the bank that relate directly to a special deposit; or
d) to reverse an earlier credit posted by the bank to the balance of the special deposit, if
the reversal occurs under an event governing mistake and restitution. (Sec. 1)
32. Adds that certain statutes and laws, except to the extent of inconsistences, supplement
the Act. (Sec. 1)
33. Instructs a court, in applying and construing the Act, to consider the promotion of
uniformity of the law among enacting jurisdictions. (Sec. 1)
34. Specifies the special deposits to which the Act applies. (Sec. 1)
35. Defines pertinent terms. (Sec. 1)
36. Contains a severability clause. (Sec. 1)