The Clearing House Association, L.L.C. (TCH), joined by Nacha, submitted an amicus brief in the U.S. 4th Circuit Court of Appeals case of Studco Building Systems US, LLC v. 1st Advantage Federal Credit Union.  The brief argues that the district court erred in finding for the originator of a funds transfer (Studco) as against the beneficiary’s bank (1st Advantage Federal Credit Union) under both Article 4A and common-law bailment.  In particular, the brief asserts that the district court ignored Article 4A’s privity requirement and wrongly applied the actual knowledge standard required by 4A-207 regarding a misdescription of a beneficiary.  The brief also argues common law claims like bailment are displaced by Article 4A and that funds transfers do not satisfy the common-law elements of bailment.

To read the full brief click here.