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Alabama Law Review



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Electronic funds transfer, Uniform Commercial Code, United States Federal Reserve Communications System, UNICTRAL, New York Clearing House Interbank Payments System, U.C.C. Article 3, U.C.C. Article 4


Two pieces of proposed legislation that will affect the same subject matter are proceeding down parallel tracks. If all goes as planned, the tracks will at some time turn inward and there may be a collision. Each piece has as its core concern the subject of electronic funds transfers ("EFTs"), the modern device that has overtaken checks as the principal form of money transfer.' Basically, however, before the promulgation of Article 4A there was no legislation, either in the United States or abroad, that governed EFTs in the way that Articles 3 and 4 of the Uniform Commercial Code ("U.C.C.") govern check transfers in the United States and that the Geneva Convention Providing a Uniform Law for Cheques' governs checks in Europe. The vacuum creates untold risks to both banks and the users of the various systems; consequently, two drafting bodies have taken action to fill the vacuum and sup ply the needed legislation. Although entitled "Model Law," the future evolution of the UNCITRAL drafts is unclear. Ostensibly, the drafters of Article 4A and of the Model Law were designing a statute to cover the same general form of funds transfer. In actuality, the drafters used different models to guide their thinking and the focus of their drafts. Those responsible for Article 4A perceived a high speed, low cost, high volume funds transfer system as the basic standard. As they thought and wrote, they had something like the United States Federal Reserve Communications System ("FedWire") and the New York Clearing House Interbank Payments System ("CHIPS") systems before them. Those that gathered from around the world to write the Model Law worked with something less specific in mind. It is not unfair to suggest that they were unsure of what they were writing about and that they were preparing a law for all sorts of evolved and evolving systems that will ultimately take their places as established forms of payment. These different conceptions had much to do with creating the basic problem to which we shall return.