D. Extent to which Model Law is Mandatory

19. Article 4 provides that "Except as otherwise provided in this law, the rights and obligations of parties to a credit transfer may be varied by their agreement." This simple sentence embodies three propositions:

In principle, the Model Law is not mandatory law. The parties to a credit transfer may vary their rights and obligations by agreement.

The agreement must be between the parties whose rights and obligations are affected. That means, for example, that the agreement of a group of banks in regard to the transactions between them could modify the rights and obligations of those banks as they are set out in the Model Law. However, the agreement would have no effect on the rights and obligations of their customers, unless the customers had also agreed to such a modification of their rights and obligations. This rule is somewhat modified in articles 12(9) and 14(6), both of which provide that specific paragraphs in the Model Law governing the means of making a refund under certain limited circumstances "do not apply to a bank if they would affect the bank's rights or obligations under any agreement or any rule of a funds transfer system". Certain rights and obligations of the parties may not be varied by agreement, or may be varied only to a limited extent or under limited circumstances. Examples are to be found in articles 5(3), 14(2) and 17(7).