“By Wire Transfer of Immediately Available Funds”

I’d appreciate your thoughts on the phrase “by wire transfer of immediately available funds”.

Are wire-transfer funds always immediately available? If not, why not? Is it a function of the person paying or the person receiving? What, if anything, does the Uniform Commercial Code have to say? How do things work outside the U.S.? Would some other formulation be clearer?

About the author

Ken Adams is the leading authority on how to say clearly whatever you want to say in a contract. He’s author of A Manual of Style for Contract Drafting, and he offers online and in-person training around the world. He’s also chief content officer of LegalSifter, Inc., a company that combines artificial intelligence and expertise to assist with review of contracts.

7 thoughts on ““By Wire Transfer of Immediately Available Funds””

  1. If you send the funds into an escrow, for example, they won’t be immediately available.  Maybe say “unconditionally available”?

  2. It relates to the Federal Reserve System.  I suggest you speak with a treasury expert before you tilt at this windmill.

  3. A buyer can issue wire instructions on Day 1, specifying a value date of (e.g.) Day 3.  I’m all in favor of concise drafting, but the 4 words  – “of immediately available funds” – do serve a function, namely to clarify that it is the receipt of the funds by the seller that satisfies the closing obligation.

    • Andrew: I think your concern could be addressed more directly. But more generally, I’m not saying get rid of any reference to “immediately available funds.” Instead, I just want to understand how wire transfers work so that I can be sure that the reference makes sense. Ken

  4. “Immediately available funds” are funds that do not have to clear before they can be invested. A synonym is “fed funds.”  They are funds that commercial banks have deposited with Federal Reserve banks and when they are transferred from one bank to another (“wired”), they do not have to clear before someone can draw on them. They can be distinguished from “Clearing House funds,” which take two or three days to “settle” or “clear.”  If parties are not in the same city, drafters need to specify the location of where the funds should be immediately available. Time zones matter.  Some drafters use “cash” rather than “immediately available funds.” That’s problematic because of case law that interprets “cash” to mean “currency.” If immediately available funds are required, a seller can reject a certified or bank check.


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