4. Bank's liability for failure to perform one of its obligations

43. It has already been noted that the originator's bank must refund to the originator the amount of the transfer plus interest if the credit transfer is not completed. That so-called "money-back guarantee" is, however, in the nature of restitution and is not in the nature of liability for failure to perform an obligation.

44. Upon closer analysis of the credit transfer transaction, it becomes clear that, if the credit transfer is completed, the only kind of failure by a bank that could occur is one that results in a delay in completion of the credit transfer. No matter which receiving bank causes the delay, the originator's account would be debited at the time expected, but the beneficiary's account would be credited later than expected. Therefore, the Model Law takes the position in article 17(1) that the liability of the receiving bank in delay runs to the beneficiary. That position is taken even though the beneficiary does not have a contractual relationship with any bank in the credit transfer chain other than the beneficiary's bank.

45. The liability of the bank for causing delay is to pay interest. It is current practice in many credit transfer arrangements for a bank that delays implementing a payment order received to issue its payment order for the amount of the transfer plus the appropriate amount of interest for the delay. If the bank does so, its receiving bank is obligated to pass on that interest to the beneficiary. Since the delaying bank has acted in a manner calculated to compensate the beneficiary, the delaying bank is discharged of its liability. If the interest is not passed on to the beneficiary as contemplated by article 17, the beneficiary has a direct right to recover the interest from the bank that holds it.

46. If the purpose of the credit transfer was to discharge an obligation owed by the originator to the beneficiary, the beneficiary may have recovered interest from the originator for delay in discharging that obligation. In such a case article 17(3) permits the originator, rather than the beneficiary, to recover interest from the delaying bank.

47. With one exception, the remedy of recovery of interest stated in article 17 is the exclusive remedy available to the originator or the beneficiary. No other remedy that may exist under other doctrines of law is permitted. According to article 18 the one exception is when the failure to execute the payment order, or to execute it properly, occurred "(a) with the specific intent to cause loss, or (b) recklessly and with actual knowledge that loss would be likely to result". In those unusual circumstances of egregious behavior on the part of the bank, recovery may be based on whatever doctrines of law may be available in the legal system outside the Model Law.