وكالت آن لاين ( آنلاين ) | وکیل | سایت وکیل | وکالت | سایت وکالت | وب سایت وکیل | وکیل دادگستری | وکیل با سابقه |دفتر وکالت | مشاوره حقوقی | مشاوره آنلاین حقوقی | مشاوره تلفنی با وکیل | مشاوره تلفنی حقوقی | مشاوره با وکیل | قبول کلیه دعاوی حقوی | بانک قوانین ایران | فروشگاه کتاب نرم افزار حقوقی
   
|وکــــیـــــل پایه یک|وکیل|وکالت| وکیل دادگستری|سایت حقوقی|وکلای دادگستری|مشاوره حقوقی |وکــــیـــــل پایه یک|وکیل|وکالت| وکیل دادگستری|سایت حقوقی|وکلای دادگستری|مشاوره حقوقی |وکــــیـــــل پایه یک|وکیل|وکالت| وکیل دادگستری|سایت حقوقی|وکلای دادگستری|مشاوره حقوقی
امروز جمعه 10 فروردین 1403
    قبول دعاوی حقوقی سوالات حقوقی مشاوره تلفنی امور موکلین صفحه اصلی
کانال رسمی سایت حقوقی خوشیاران در تلگرام
صفحه اصلی Google
خبرگزاری میزان
کانون ملی وکلا
پرتال جامع قوه قضائیه جمهوری اسلامی ایران
معاونت آموزش
مأوی
سازمان پزشکی قانونی کشور
دادگستری کل استان تهران(معاونت آموزش)
آدرس و تلفن دفاتر خدمات قضائی
مرکز ارتباط مردمی قوه قضائیه
دیوان عدالت
سایت قوانین
قضاوت
اداره کل امور فرهنگی و اجتماعی قوه قضائیه
دادستانی کل کشور
وزارت دادگستری
مرکز امور شوراهای حل اختلاف
سازمان قضایی نیروهای مسلح
ستاد دیه
روزنامه رسمی کشور
اداره کل امور بین الملل
سازمان ثبت اسناد و املاک کشور
سازمان بازرسی کل کشور
سازمان زندان ها و اقدامات تامینی و تربیتی کشور
دادسرای عمومی و انقلاب تهران
شورای حل اختلاف استان تهران
کانون سردفتران و دفتریاران
سامان ثبت احوال کشور
روزنامه حمایت
خبرگزاری قسط
سامانه ملی قوانین و مقررات
اداره کل ثبت احوال استان تهران
خبرگزاری مجلس شورای اسلامی
مجلس شورای اسلامی
دیوان محاسبات کشور
شورای نگهبان
نرم افزار لوح حق
قانون همراه
ستاد حقوق بشر قوه قضائیه
درگاه خدمات الکترونیک قضایی
آدرس دفتر وکالت
تهران، ضلع غربی چهارراه ولیعصر، خ برادران مظفر (صبای شمالی)، ساختمان صبا، پلاک ١٠١، طبقه ٨، واحد ٣٩ پذیرش : شنبه تا چهارشنبه از ساعت 17 الی 21 :شماره های تماس 09122208184
دفاتر ثبت اسناد و املاک
جستجوی سردفتران
سایت موسسه حقوقی رضا خوشیاران
جدیدترین مصوبات قانونی و انتشار اخبار حقوقی و مقالات
سردفتران ازدواج و طلاق
جستجوی سردفتران ازدواج و طلاق
خدمات اطلاع رسانی الکترونیک
راهنمای امور مراجعین سازمان ثبت املاک و اسناد کشور
 
  ***کاربر گرامی لطفا برای بازدید از وبسایت از مرورگر فایر فاکس و یا گوگل کروم استفاده نمایید***
قانون متحدالشکل تجاری امریکا(قسمت دوم)
تاریخ انتشار : 26-03-1391

قانون متحدالشکل تجاری امریکا(قسمت دوم)

(2)    If reasonable grounds for insecurity arise with respect to the performance of either party, the insecure party may demand in writing adequate assurance of due performance.    Until  the  insecure  party  receives  that  assurance,  if  commercially reasonable the insecure party may suspend any performance for which he [or she] has not already received the agreed return.

(3)    A repudiation of the lease contract occurs if assurance of due performance adequate under the  circumstances of the particular case is not provided to the insecure party within a reasonable time, not  to  exceed 30 days after receipt of a demand by the other party.

(4)    Between merchants,  the  reasonableness of grounds  for  insecurity  and  the adequacy of any  assurance offered must be determined according to commercial standards.

(5)  Acceptance of any nonconforming delivery or payment does not prejudice the aggrieved party's right to demand adequate assurance of future performance.

§ 2A-402.  ANTICIPATORY REPUDIATION.

If either party repudiates a  lease contract with respect to a performance not yet due under the lease contract, the loss of which performance will substantially impair the value of the lease contract to the other, the aggrieved party may:

(a)  for  a  commercially  reasonable  time,  await  retraction  of  repudiation  and performance by the repudiating party;
 
(b) make demand pursuant to Section 2A-401 and await assurance of future performance adequate under the circumstances of the particular case; or

(c) resort to any right or remedy upon default under the lease contract or this Article, even though the aggrieved party has notified the repudiating party that the aggrieved party would await the repudiating  party's performance and assurance and has urged retraction.    In addition, whether or not the aggrieved  party is pursuing  one  of  the  foregoing  remedies,  the  aggrieved  party  may  suspend performance or, if the aggrieved party is the  lessor, proceed in accordance with the provisions of this Article on the  lessor's right to identify goods to the lease contract notwithstanding default or to salvage unfinished goods (Section 2A-524).

§ 2A-403.  RETRACTION OF ANTICIPATORY REPUDIATION.

(1)  Until the repudiating party's next performance is due, the repudiating party can retract  the  repudiation  unless,  since  the  repudiation,  the  aggrieved  party  has cancelled the  lease contract or materially changed the aggrieved party's position or otherwise indicated that the aggrieved party considers the repudiation final.

(2)  Retraction may be by any method that clearly indicates to the aggrieved party that the repudiating party intends to perform under the  lease contract and includes any assurance demanded under Section 2A-401.

(3)  Retraction reinstates a repudiating party's rights under a  lease contract with due excuse and allowance  to  the aggrieved party for any delay occasioned by the repudiation.

§ 2A-404.  SUBSTITUTED PERFORMANCE.

(1)  If without  fault of the  lessee, the  lessor and the  supplier, the agreed berthing, loading, or unloading facilities fail or the agreed type of carrier becomes unavailable or the agreed manner of delivery otherwise becomes commercially impracticable, but a commercially reasonable substitute is available, the substitute performance must be tendered and accepted.

(2)  If the agreed means or manner of payment fails because of domestic or foreign governmental regulation:

(a) the  lessor may withhold or stop delivery or cause the  supplier to withhold or stop delivery unless the lessee provides a means or manner of payment that is commercially a substantial equivalent; and
 
(b) if delivery has already been taken, payment by the means or in the manner provided by the regulation discharges the  lessee's obligation unless the regulation is discriminatory, oppressive, or predatory.

§ 2A-405.  EXCUSED PERFORMANCE.

Subject to Section  2A-404 on substituted performance, the following rules apply:

(a)  Delay in delivery or nondelivery in whole or in part by a  lessor or a  supplier who complies with paragraphs (b) and (c) is not a default under the  lease contract if performance as agreed has been made  impracticable by the occurrence of a contingency the nonoccurrence of which was a basic assumption  on which the lease contract was made or by compliance in good faith with any applicable foreign  or  domestic  governmental  regulation  or  order,  whether  or  not  the regulation or order later proves to be invalid.

(b)  If the causes mentioned in paragraph (a) affect only part of the  lessor's or the supplier's capacity to perform, he [or she] shall allocate production and deliveries among his [or her] customers but at his  [or her] option may include regular customers not then under contract for sale or  lease as well as his [or her] own requirements for further manufacture.  He [or she] may so allocate in any manner that is fair and reasonable.

(c)  The  lessor seasonably shall notify the  lessee and in the case of a  finance lease the  supplier seasonably shall notify the  lessor and the lessee, if known, that there will be delay or nondelivery and, if allocation is required under paragraph (b), of the estimated quota thus made available for the lessee.

§ 2A-406.  PROCEDURE ON EXCUSED PERFORMANCE.

(1) If the lessee receives notification of a material or indefinite delay or an allocation justified under Section 2A-405, the lessee may by written notification to the  lessor as to any  goods involved, and with respect to all of the  goods if under an  installment lease contract the value of the whole  lease contract is substantially impaired (Section
2A-510):

(a) terminate the  lease contract (Section  2A-505(2)); or

(b) except in a finance lease that is not a consumer lease, modify the lease contract by accepting the available quota in substitution, with due allowance from the rent payable for the balance of the  lease term for the deficiency but without further right against the lessor.
 
(2) If, after receipt of a notification from the lessor under Section  2A-405, the  lessee fails so to modify the lease agreement within a reasonable time not exceeding 30 days, the lease contract lapses with respect to any deliveries affected.

§ 2A-407.  IRREVOCABLE PROMISES:  FINANCE LEASES.

(1)  In the case of a  finance lease that is not a  consumer lease the  lessee's promises under the lease contract  become irrevocable and independent upon the lessee's acceptance of the  goods.
(2) A promise that has become irrevocable and independent under subsection (1): (a) is effective and  enforceable between the parties, and by or against third
parties including assignees of the parties ; and

(b) is not subject to  cancellation,  termination, modification, repudiation, excuse, or substitution without the consent of the party to whom the promise runs.

(3)  This section does not affect the validity under any other law of a covenant in any  lease contract making the  lessee's promises irrevocable and independent upon the lessee's acceptance of the  goods.

PART 5.  DEFAULT [Table of Contents]

A. IN GENERAL  [Table of Contents]

§ 2A-501.  DEFAULT: PROCEDURE.

(1)    Whether  the  lessor  or  the  lessee  is  in  default  under  a  lease contract  is determined by the lease agreement and this Article.

(2)    If the lessor or the lessee is in default under the lease contract, the party seeking enforcement has rights and remedies as provided in this Article and, except as limited by this Article, as provided in the lease agreement.

(3)    If the lessor or the lessee is in default under the lease contract, the party seeking enforcement may reduce the party's claim to judgment, or otherwise enforce the lease contract by self-help or any  available judicial procedure or nonjudicial procedure, including administrative proceeding, arbitration, or the like, in accordance with this Article.

(4)    Except as otherwise provided in Section 1-106(1) or this Article or the lease agreement, the rights  and remedies referred to in subsections (2) and (3) are cumulative.
 
(5)  If the  lease agreement covers both real property and  goods, the party seeking enforcement may proceed under this Part as to the goods, or under other applicable law as to both the real property and the goods in accordance with that party's rights and remedies in respect of the real property, in which case this Part does not apply.

§ 2A-502.  NOTICE AFTER DEFAULT.

Except as otherwise provided in this Article or the lease agreement, the lessor or lessee in default under the lease contract is not entitled to notice of default or notice of enforcement from the other party to the lease agreement.

§ 2A-503.  MODIFICATION OR IMPAIRMENT OF RIGHTS AND REMEDIES.

(1)  Except as otherwise provided in this Article, the  lease agreement may include rights and remedies for default in addition to or in substitution for those provided in this Article and may limit or alter the measure of damages recoverable under this Article.

(2)    Resort to a remedy provided under this Article or in the lease agreement is optional unless the  remedy is expressly agreed to be exclusive.    If circumstances cause an exclusive or limited remedy to fail of its essential purpose, or provision for an exclusive remedy is  unconscionable, remedy may be had as provided in this Article.

(3)    Consequential  damages  may  be  liquidated  under  Section  2A-504,  or  may otherwise  be  limited,  altered,  or  excluded  unless  the  limitation,  alteration,  or exclusion is unconscionable.    Limitation,  alteration, or exclusion of consequential damages for injury to the person in the case of consumer  goods is prima facie unconscionable but limitation, alteration, or exclusion of damages where the loss is commercial is not prima facie unconscionable.

(4)  Rights and remedies on default by the  lessor or the  lessee with respect to any obligation or promise collateral or ancillary to the  lease contract are not impaired by this Article.

§ 2A-504.  LIQUIDATION OF DAMAGES.

(1)    Damages payable by either party for default, or any other act or omission, including indemnity for  loss or diminution of anticipated tax benefits or loss or damage to  lessor's residual interest, may be liquidated in the  lease agreement but only at an amount or by a formula that is reasonable in light of the then anticipated harm caused by the default or other act or omission.
 
(2)  If the  lease agreement provides for liquidation of damages, and such provision does not comply with  subsection (1), or such provision is an exclusive or limited remedy that circumstances cause to fail of its essential purpose, remedy may be had as provided in this Article.

(3)    If the lessor justifiably withholds or stops delivery of goods because of the lessee's default or insolvency (Section  2A-525 or  2A-526), the lessee is entitled to restitution of any amount by which the sum of his [or her] payments exceeds:

(a) the amount to which the  lessor is entitled by virtue of terms liquidating the lessor's damages in accordance with subsection (1); or

(b) in the absence of those terms, 20 percent of the then present value of the total rent the  lessee was obligated to pay for the balance of the  lease term, or, in the case of a  consumer lease, the lesser of such amount or $500.

(4)    A lessee's right to restitution under subsection (3) is subject to offset to the extent the  lessor establishes:

(a) a right to recover damages under the provisions of this Article other than subsection (1); and

(b) the amount or value of any benefits received by the  lessee directly or indirectly by reason of the lease contract.

§    2A-505.    CANCELLATION    AND    TERMINATION    AND    EFFECT    OF CANCELLATION,  TERMINATION,  RESCISSION,  OR  FRAUD  ON  RIGHTS AND REMEDIES.

(1)  On  cancellation of the  lease contract, all obligations that are still executory on both sides are  discharged, but any right based on prior default or performance survives, and the cancelling party also retains any remedy for default of the whole lease contract or any unperformed balance.

(2)  On  termination of the  lease contract, all obligations that are still executory on both sides are  discharged but any right based on prior default or performance survives.

(3)    Unless    the    contrary    intention    clearly    appears,    expressions    of "cancellation,""rescission," or the like of the  lease contract may not be construed as a renunciation or discharge of any claim in damages for an antecedent default.

(4)    Rights and remedies for material misrepresentation or fraud include all rights and remedies available under this Article for default.
 
(5)  Neither rescission nor a claim for rescission of the  lease contract nor rejection or return of the  goods may bar or be deemed inconsistent with a claim for damages or other right or remedy.

§ 2A-506.  STATUTE OF LIMITATIONS.

(1)    An action for default under a lease contract, including breach of warranty or indemnity, must be commenced within 4 years after the cause of action accrued.  By the original lease contract the parties may reduce the period of limitation to not less than one year.

(2)    A cause of action for default accrues when the act or omission on which the default or breach of  warranty is based is or should have been discovered by the aggrieved party, or when the default occurs, whichever is later.  A cause of action for indemnity accrues when the act or omission on which the claim for indemnity is based is or should have been discovered by the indemnified party, whichever is later.

(3)    If  an  action  commenced  within  the  time  limited  by  subsection  (1)  is  so terminated as to leave available a remedy by another action for the same default or breach of warranty or indemnity, the other  action may be commenced after the expiration of the time limited and within 6 months after the termination of the first action  unless  the  termination  resulted  from  voluntary  discontinuance  or  from dismissal for failure or neglect to prosecute.

(4)  This section does not alter the law on tolling of the statute of limitations nor does it apply to  causes  of action that have accrued before this Article becomes effective.

§ 2A-507.  PROOF OF MARKET RENT:  TIME AND PLACE.

(1)    Damages based on market rent (Section 2A-519 or 2A-528) are determined according to the rent for the use of the  goods concerned for a  lease term identical to the remaining lease term of the original  lease agreement and prevailing at the  times specified in Sections 2A-519 and  2A-528.

(2)  If evidence of rent for the use of the  goods concerned for a  lease term identical to the remaining lease term of the original  lease agreement and prevailing at the times or places described in this Article is not readily available, the rent prevailing within any reasonable time before or after the time described or at any other place or for a different lease term which in commercial judgment or under usage of trade would serve as a reasonable substitute for the one described may be used, making any proper allowance for the difference, including the cost of transporting the goods to or from the other place.
 
(3) Evidence of a relevant rent prevailing at a time or place or for a  lease term other than the one described in this Article offered by one party is not admissible unless and until he [or she] has given the other party notice the court finds sufficient to prevent unfair surprise.

(4)  If the prevailing rent or value of any  goods regularly  leased in any established market is in issue, reports in official publications or trade journals or in newspapers or periodicals of general circulation  published as the reports of that market are admissible in evidence.  The circumstances of the preparation of the report may be shown to affect its weight but not its admissibility.

B. DEFAULT BY LESSOR  [Table of Contents]

§ 2A-508.  LESSEE'S REMEDIES.

(1)  If a  lessor fails to deliver the  goods in conformity to the  lease contract (Section
2A-509) or repudiates the lease contract (Section 2A-402), or a lessee rightfully rejects the goods  (Section  2A-509) or justifiably revokes acceptance of the goods (Section  2A-517), then with respect to any goods involved, and with respect to all of the goods if under an installment lease contract the value of  the whole lease
contract is substantially impaired (Section  2A-510), the lessor is in default under the
lease contract and the lessee may:

(a) cancel the lease contract (Section  2A-505(1));

(b) recover so much of the rent and security as has been paid and is just under the circumstances;

(c) cover and recover damages as to all  goods affected whether or not they have been identified to the  lease contract (Sections 2A-518 and 2A-520), or recover damages for nondelivery (Sections 2A-519 and 2A-520);

(d) exercise any other rights or pursue any other remedies provided in the  lease contract.

(2)    If a lessor fails to deliver the goods in conformity to the lease contract or repudiates the lease contract, the  lessee may also:

(a) if the goods have been identified, recover them (Section  2A-522); or

(b) in a proper case, obtain specific performance or replevy the  goods (Section  2A-
521).
 
(3) If a  lessor is otherwise in default under a lease contract, the lessee may exercise the rights and pursue  the remedies provided in the lease contract, which may include a right to cancel the lease, and  in Section 2A-519(3).

(4)  If a  lessor has breached a warranty, whether express or implied, the  lessee may recover damages (Section 2A-519(4)).

(5)    On rightful rejection or justifiable revocation of acceptance, a lessee has a security interest in  goods in the lessee's possession or control for any rent and security that has been paid and any expenses reasonably incurred in their inspection, receipt, transportation, and care and custody and may hold those goods and dispose of them in good faith and in a commercially reasonable manner, subject to  Section
2A-527(5).

(6)  Subject to the provisions of Section  2A-407, a  lessee, on notifying the  lessor of the lessee's intention to do so, may deduct all or any part of the damages resulting from any default under the  lease contract from any part of the rent still due under the same lease contract.

§    2A-509.    LESSEE'S    RIGHTS    ON    IMPROPER    DELIVERY;    RIGHTFUL REJECTION.

(1)    Subject to the provisions of Section 2A-510 on default in installment lease contracts, if the  goods or the tender or delivery fail in any respect to conform to the lease contract, the  lessee may reject or accept the goods or accept any  commercial unit or units and reject the rest of the goods.

(2) Rejection of  goods is ineffective unless it is within a reasonable time after tender or delivery of the goods and the lessee seasonably notifies the lessor.

§    2A-510.    INSTALLMENT    LEASE    CONTRACTS:    REJECTION    AND DEFAULT.

(1)    Under an installment lease contract a lessee may reject any delivery that is nonconforming if the nonconformity substantially impairs the value of that delivery and cannot be cured or the nonconformity is a defect in the required documents; but if the nonconformity does not fall within subsection (2) and the  lessor or the  supplier gives adequate assurance of its cure, the lessee must accept that delivery.

(2)    Whenever nonconformity or default with respect to one or more deliveries substantially impairs the value of the  installment lease contract as a whole there is a default    with    respect    to    the    whole.    But,    the    aggrieved    party    reinstates    the installment lease contract as a whole if the aggrieved party accepts a nonconforming delivery without seasonably notifying of  cancellation or brings an action with respect only to past deliveries or demands performance as to future deliveries.

§ 2A-511.  MERCHANT LESSEE'S DUTIES AS TO RIGHTFULLY REJECTED GOODS.

(1)  Subject to any security interest of a  lessee (Section  2A-508(5)), if a  lessor or a supplier has no agent or place of business at the market of rejection, a  merchant lessee, after rejection of  goods in his [or her] possession or control, shall follow any reasonable instructions received from the lessor or the supplier with respect to the goods.    In  the  absence  of  those  instructions,  a  merchant  lessee  shall  make reasonable efforts to sell,  lease, or otherwise dispose of the goods for the lessor's account if they threaten to decline in value speedily.  Instructions are not reasonable if on demand indemnity for expenses is not forthcoming.

(2)    If a merchant lessee (subsection (1)) or any other lessee (Section 2A-512) disposes of  goods, he [or she] is entitled to reimbursement either from the  lessor or the  supplier or out of the proceeds for  reasonable expenses of caring for and disposing of the goods and, if the expenses include no disposition commission, to such commission as is usual in the trade, or if there is none, to a reasonable sum not exceeding 10 percent of the gross proceeds.

(3)  In complying with this section or Section  2A-512, the  lessee is held only to good faith.    Good faith conduct  hereunder is neither acceptance or conversion nor the basis of an action for damages.

(4)  A  purchaser who  purchases in good faith from a  lessee pursuant to this section or Section  2A-512 takes the  goods free of any rights of the  lessor and the  supplier even though the lessee fails to comply with one or more of the requirements of this Article.

§ 2A-512.  LESSEE'S DUTIES AS TO RIGHTFULLY REJECTED GOODS.

(1)  Except as otherwise provided with respect to  goods that threaten to decline in value speedily (Section  2A-511) and subject to any security interest of a lessee (Section 2A-508(5)):

(a) the  lessee, after rejection of  goods in the lessee's possession, shall hold them with reasonable care at the  lessor's or the  supplier's disposition for a reasonable time after the lessee's seasonable notification of rejection;

(b) if the  lessor or the  supplier gives no instructions within a reasonable time after notification of rejection, the  lessee may store the rejected  goods for the lessor's or the supplier's account or ship them to the lessor or the supplier or dispose of them  for  the  lessor's or  the  supplier's account  with  reimbursement in  the  manner provided in Section 2A-511; but

(c) the  lessee has no further obligations with regard to goods rightfully rejected. (2)  Action by the lessee pursuant to subsection (1) is not acceptance or conversion.
§ 2A-513.    CURE  BY  LESSOR  OF  IMPROPER  TENDER  OR  DELIVERY; REPLACEMENT.

(1)    If any tender or delivery by the lessor or the supplier is rejected because nonconforming and the time for performance has not yet expired, the lessor or the supplier may seasonably notify the  lessee of the lessor's or the supplier's intention to cure and may then make a  conforming delivery within the time provided in the  lease contract.

(2)  If the  lessee rejects a nonconforming tender that the  lessor or the  supplier had reasonable    grounds    to    believe    would    be    acceptable    with    or    without    money allowance,  the  lessor  or  the  supplier  may  have  a  further  reasonable  time  to substitute a  conforming tender if he [or she] seasonably notifies the lessee.

§ 2A-514.  WAIVER OF LESSEE'S OBJECTIONS.

(1)In  rejecting  goods,  a  lessee's  failure  to  state  a  particular  defect  that  is ascertainable by  reasonable inspection precludes the lessee from relying on the defect to justify rejection or to establish default:

(a) if, stated seasonably, the lessor or the supplier could have cured it (Section  2A-
513); or

(b) between merchants if the lessor or the supplier after rejection has made a request in writing for a full and final written statement of all defects on which the lessee proposes to rely.

(2)    A lessee's failure to reserve rights when paying rent or other consideration against documents precludes recovery of the payment for defects apparent in the documents.

§ 2A-515.  ACCEPTANCE OF GOODS.

(1) Acceptance of goods occurs after the  lessee has had a reasonable opportunity to inspect the goods and
 
(a) the  lessee signifies or acts with respect to the  goods in a manner that signifies to the  lessor or the supplier that the goods are  conforming or that the lessee will take or retain them in spite of their nonconformity; or

(b) the lessee fails to make an effective rejection of the goods (Section 2A-
509(2)).

(2) Acceptance of a part of any commercial unit is acceptance of that entire unit.

§ 2A-516.    EFFECT OF ACCEPTANCE OF GOODS; NOTICE OF DEFAULT; BURDEN OF  ESTABLISHING DEFAULT AFTER ACCEPTANCE; NOTICE OF CLAIM OR LITIGATION TO PERSON ANSWERABLE OVER.

(1)    A lessee must pay rent for any  goods accepted in accordance with the lease contract, with due allowance for goods rightfully rejected or not delivered.

(2)  A  lessee's acceptance of  goods precludes rejection of the goods accepted.  In the case of a  finance lease, if made with knowledge of a nonconformity, acceptance cannot be revoked because of it.  In any other case, if made with knowledge of a nonconformity, acceptance cannot be revoked because of it unless the acceptance was on the reasonable assumption that the nonconformity would be seasonably cured.    Acceptance does not of itself impair any other remedy provided by this Article or the  lease agreement for nonconformity.

(3) If a tender has been accepted:

(a) within a reasonable time after the  lessee discovers or should have discovered any default, the lessee shall notify the  lessor and the  supplier, if any, or be barred from any remedy against the party not notified;

(b) except in the case of a consumer lease, within a reasonable time after the lessee receives notice of litigation for infringement or the like (Section  2A-211) the lessee shall notify the lessor or be barred  from any remedy over for liability established by the litigation; and

(c) the burden is on the lessee to establish any default.

(4)  If a  lessee is sued for breach of a warranty or other obligation for which a  lessor or a  supplier is answerable over the following apply:

(a)  The  lessee may give the  lessor or the  supplier, or both, written notice of the litigation.  If the notice states that the  person notified may come in and defend and that if the  person notified does not do so  that person will be bound in any action against  that person by the lessee by any determination of fact common to  the two litigations, then unless the  person notified after seasonable receipt of the notice does come in and defend  that person is so bound.

(b)  The  lessor or the  supplier may demand in writing that the  lessee turn over control of the litigation including settlement if the claim is one for infringement or the like (Section  2A-211) or else be barred from any remedy over.  If the demand states that the lessor or the supplier agrees to bear all expense and to satisfy any adverse judgment, then unless the lessee after seasonable receipt of the demand does turn over control the lessee is so barred.

(5)  Subsections (3) and (4) apply to any obligation of a  lessee to hold the  lessor or the  supplier harmless against infringement or the like (Section 2A-211).

§ 2A-517.  REVOCATION OF ACCEPTANCE OF GOODS.

(1) A    lessee    may    revoke    acceptance    of    a    lot    or    commercial unit     whose nonconformity substantially impairs its value to the lessee if  the lessee has accepted it:

(a) except in the case of a  finance lease, on the reasonable assumption that its nonconformity would be cured and it has not been seasonably cured; or

(b)  without  discovery  of  the  nonconformity  if  the  lessee's  acceptance  was reasonably induced either by the  lessor's assurances or, except in the case of a finance lease, by the difficulty of discovery before acceptance.

(2)  Except in the case of a  finance lease that is not a  consumer lease, a  lessee may revoke acceptance of a lot or  commercial unit if the  lessor defaults under the  lease contract and the default substantially impairs the value of that lot or commercial unit to the lessee.

(3)  If the  lease agreement so provides, the  lessee may revoke acceptance of a  lot or commercial unit because of other defaults by the lessor.

(4)  Revocation of acceptance must occur within a reasonable time after the  lessee discovers or should  have discovered the ground for it and before any substantial change  in  condition  of  the  goods  which  is  not  caused  by  the  nonconformity. Revocation is not effective until the lessee notifies the  lessor of the present value as of the same date of the total rent for the then remaining  lease term of the original lease agreement, and    (ii) any incidental or consequential damages, less expenses saved in consequence of the lessor's default.

§ 2A-518. COVER; SUBSTITUTE GOODS.
 
(1) After a default by a lessor under the lease contract of the type described in Section  2A-508(1), or, if agreed, after other default by the lessor, the  lessee may cover by making any purchase or lease of or contract to purchase or lease goods in substitution for those due from the lessor.

(2) Except as otherwise provided with respect to damages liquidated in the lease agreement (Section 2A-504) or otherwise determined pursuant to agreement of the parties (Sections 1-302 and 2A-503), if a  lessee's cover is by a lease agreement substantially similar to the original lease agreement and the new lease agreement is made in good faith and in a commercially reasonable manner, the lessee may recover from the lessor as damages (i) the present value, as of the date of the commencement of the term of the new lease agreement, of the rent under the new lease agreement applicable to that period of the new lease term which is comparable to the then remaining term of the original lease agreement minus the present value as of the same date of the total rent for the then remaining lease term of the original  lease agreement, and (ii) any incidental or consequential damages, less expenses saved in consequence of the lessor's default.

(3)  If a  lessee's cover is by  lease agreement that for any reason does not qualify for treatment under  subsection (2), or is by purchase or otherwise, the lessee may recover from the  lessor as if the lessee had elected not to cover and Section  2A-519 governs.

§ 2A-519.LESSEE'S  DAMAGES  FOR  NON-DELIVERY,  REPUDIATION, DEFAULT,    AND    BREACH    OF    WARRANTY IN REGARD TO ACCEPTED GOODS.

(1)  Except as otherwise provided with respect to damages liquidated in the  lease agreement (Section 2A-504) or otherwise determined  pursuant to agreement of the parties ( Sections 1-302 and 2A-503), if a  lessee elects not to cover or a lessee elects to cover and the cover is by lease agreement that for any reason does not qualify for treatment under Section  2A-518(2), or is by  purchase or otherwise, the measure of damages for non-delivery or repudiation by the  lessor or for rejection or revocation of acceptance by the lessee is the  present value, as of the date of the default, of the  then market rent  minus the present value as of the same date of the original rent, computed for the remaining  lease term of the original lease agreement, together  with  incidental    and    consequential    damages,  less  expenses  saved    in consequence of the lessor's default.

(2)    Market rent is to be determined as of the place for tender or, in cases of rejection after arrival or revocation of acceptance, as of the place of arrival.

(3)    Except  as  otherwise  agreed,  if  the  lessee  has  accepted  goods  and  given notification (Section 2A-516(3)), the measure of damages for non-conforming tender  or delivery or other default by a  lessor is the loss resulting in the ordinary course of events from the  lessor's  default as determined in any manner that is reasonable together  with  incidental    and    consequential    damages,  less  expenses  saved    in consequence of the lessor's default.

(4)  Except as otherwise agreed, the measure of damages for breach of warranty is the  present value at the time and place of acceptance of the difference between the value of the use of the  goods accepted and the value if they had been as warranted for the lease term, unless special circumstances show proximate  damages of a different    amount,    together    with    incidental    and    consequential    damages,    less expenses saved in consequence of the lessor's default or breach of warranty.

§ 2A-520.  LESSEE'S INCIDENTAL AND CONSEQUENTIAL DAMAGES.

(1) Incidental damages resulting from a lessor's default include expenses reasonably incurred  in  inspection,  receipt,  transportation,  and  care  and  custody  of  goods rightfully rejected or goods the acceptance of  which is justifiably revoked, any commercially  reasonable  charges,  expenses  or  commissions  in  connection  with effecting cover, and any other reasonable expense incident to the default.

(2) Consequential damages resulting from a lessor's default include:

(a) any loss resulting from general or particular requirements and needs of which the  lessor at the time  of contracting had reason to know and which could not reasonably be prevented by cover or otherwise; and

(b) injury to person or property proximately resulting from any breach of warranty.

§ 2A-521.  LESSEE'S RIGHT TO SPECIFIC PERFORMANCE OR REPLEVIN.

(1)  Specific performance may be decreed if the  goods are unique or in other proper circumstances.

(2)  A decree for specific performance may include any terms and conditions as to payment of the rent, damages, or other relief that the court deems just.

(3)  A  lessee has a right of replevin, detinue, sequestration, claim and delivery, or the like for  goods identified to the  lease contract if after reasonable effort the lessee is unable to effect cover for those goods or the circumstances reasonably indicate that the effort will be unavailing.

§ 2A-522.  LESSEE'S RIGHT TO GOODS ON LESSOR'S INSOLVENCY.

(1)  Subject to subsection (2) and even though the  goods have not been shipped, a lessee who has paid a part or all of the rent and security for goods identified to a lease contract (Section  2A-217) on making and keeping good a tender of any unpaid portion of the rent and security due under the lease contract may recover the goods identified from the  lessor if the lessor becomes insolvent within 10 days after receipt of the first installment of rent and security.

(2)  A  lessee acquires the right to recover  goods identified to a  lease contract only if they conform to the lease contract.

C. DEFAULT BY LESSEE  [Table of Contents]

§ 2A-523.  LESSOR'S REMEDIES.

(1)  If a  lessee wrongfully rejects or revokes acceptance of  goods or fails to make a payment when due or  repudiates with respect to a part or the whole, then, with respect to any goods involved, and with  respect  to all of the goods if under an installment lease contract the value of the whole lease contract  is  substantially impaired (Section  2A-510), the lessee is in default under the lease contract and the lessor may:

(a) cancel the lease contract (Section  2A-505(1));
(b) proceed respecting  goods not identified to the lease contract (Section  2A-524); (c)  withhold  delivery  of  the  goods  and  take  possession  of  goods  previously
delivered (Section 2A-525);

(d) stop delivery of the goods by any bailee (Section 2A-526);

(e) dispose of the goods and recover damages (Section 2A-527), or retain the goods and recover  damages (Section 2A-528), or in a proper case recover rent (Section 2A-529);

(f) exercise any other rights or pursue any other remedies provided in the  lease contract.

(2)  If a  lessor does not fully exercise a right or obtain a remedy to which the lessor is entitled under  subsection (1), the lessor may recover the loss resulting in the ordinary course of events from the  lessee's default as determined in any reasonable manner, together with incidental damages, less expenses saved in consequence of the lessee's default.

(3) If a  lessee is otherwise in default under a lease contract, the lessor may exercise the rights and pursue  the remedies provided in the lease contract , which may include a right to cancel the lease.    In addition,  unless otherwise provided in the lease contract:
 (a) if the default substantially impairs the value of the  lease contract to the  lessor, the    lessor    may    exercise    the    rights    and    pursue    the    remedies    provided    in subsections (1) or (2); or

(b) if the default does not substantially impair the value of the  lease contract to the  lessor, the lessor may recover as provided in subsection (2).

§ 2A-524.  LESSOR'S RIGHT TO IDENTIFY GOODS TO LEASE CONTRACT.

(1)    After default by the lessee under the lease contract of the type described in Section  2A-523(1) or Section  2A-523(3)(a) or, if agreed, after other default by the lessee, the lessor may:

(a) identify to the  lease contract conforming goods not already identified if at the time the  lessor learned of the default they were in the lessor's or the  supplier's possession or control; and

(b) dispose of  goods (Section  2A-527(1)) that demonstrably have been intended for the particular lease contract even though those goods are unfinished.

(2)  If the  goods are unfinished, in the exercise of reasonable commercial judgment for the purposes of avoiding loss and of effective realization, an aggrieved  lessor or the  supplier may either complete manufacture and wholly identify the goods to the lease contract or cease manufacture and lease, sell, or  otherwise dispose of the goods for scrap or salvage value or proceed in any other reasonable manner.

§ 2A-525.  LESSOR'S RIGHT TO POSSESSION OF GOODS.

(1)  If a  lessor discovers the  lessee to be insolvent, the lessor may refuse to deliver the  goods.

(2)  After a default by the  lessee under the  lease contract of the type described in Section  2A-523(1) or 2A-523(3)(a) or, if agreed, after other default by the lessee, the  lessor has the right to take possession of the  goods.    If the lease contract so provides, the lessor may require the lessee to assemble the goods and make them available to the lessor at a place to be designated by the lessor which is reasonably convenient to both parties.    Without removal, the lessor may render unusable any goods employed in trade or business, and may dispose of goods on the  lessee's premises (Section 2A-527).

(3)  The  lessor may proceed under subsection (2) without judicial process if  it can be done without breach of the peace or the lessor may proceed by action.
 
§    2A-526.    LESSOR'S    STOPPAGE    OF    DELIVERY    IN    TRANSIT    OR OTHERWISE.

(1)  A  lessor may stop delivery of  goods in the possession of a carrier or other bailee if the lessor discovers the  lessee to be insolvent and may stop delivery of carload, truckload,  planeload,  or  larger  shipments  of  express  or  freight  if  the  lessee repudiates or fails to make a payment due before delivery, whether for rent, security or otherwise under the  lease contract, or for any other reason the lessor has a right to withhold or take possession of the goods.

(2) In pursuing its remedies under subsection (1), the  lessor may stop delivery until

(a) receipt of the  goods by the lessee;

(b) acknowledgment to the  lessee by any bailee of the  goods, except a carrier, that the bailee holds the goods for the lessee; or

(c) such an acknowledgment to the lessee by a carrier via reshipment or as warehouse.

(3)(a)  To stop delivery, a  lessor shall so notify as to enable the bailee by reasonable diligence to prevent delivery of the goods.

(b)  After notification, the bailee shall hold and deliver the  goods according to the directions of the  lessor,  but the lessor is liable to the bailee for any ensuing charges or damages.

(c)  A carrier who has issued a nonnegotiable bill of lading is not obliged to obey a notification to stop received from a person other than the consignor.

§ 2A-527.  LESSOR'S RIGHTS TO DISPOSE OF GOODS.

(1)    After a default by a lessee under the lease contract of the type described in Section  2A-523(1) or  2A-523(3)(a) or after the lessor refuses to deliver or takes possession of  goods (Section  2A-525 or 2A-526), or, if agreed, after other default by a lessee, the lessor may dispose of the goods concerned or the undelivered balance thereof by  lease, sale, or otherwise.

(2)  Except as otherwise provided with respect to damages liquidated in the  lease agreement (Section 2A-504) or otherwise determined  pursuant to agreement of the parties ( Sections 1-302 and 2A-503),  if  the disposition is by lease agreement substantially similar to the original lease agreement and the new lease agreement is made in good faith and in a commercially reasonable manner, the lessor may recover from the  lessee as damages  (i) accrued and unpaid rent as of the date of the commencement of the term of the new lease agreement,  (ii) the  present value, as of the same date,    of the    total rent for the then remaining lease term of the original lease agreement  minus the present value, as of the same date, of the rent under the new lease agreement applicable to  that period of the new lease term which is comparable to the then remaining term of the original lease  agreement, and  (iii) any incidental damages allowed under Section  2A-530, less expenses saved in consequence of the lessee's default.

(3)  If the  lessor's disposition is by  lease agreement that for any reason does not qualify for treatment under subsection (2), or is by sale or otherwise, the lessor may recover from the  lessee as if the lessor had elected not to dispose of the  goods and Section 2A-528 governs.

(4)  A subsequent buyer or  lessee who buys or  leases from the  lessor in good faith for value as a result of a disposition under this section takes the  goods free of the original  lease contract and any rights of the original lessee even though the lessor fails to comply with one or more of the requirements of this Article.

(5)    The  lessor  is  not  accountable  to  the  lessee  for  any  profit  made  on  any disposition.    A lessee  who has rightfully rejected or justifiably revoked acceptance shall account to the lessor for any excess over the amount of the lessee's security interest (Section  2A-508(5)).

§ 2A-528.    LESSOR'S  DAMAGES  FOR  NON-ACCEPTANCE,  FAILURE  TO PAY, REPUDIATION, OR OTHER DEFAULT.

(1)  Except as otherwise provided with respect to damages liquidated in the  lease agreement (Section 2A-504) or otherwise determined  pursuant to agreement of the parties ( Sections 1-302 and  2A-503), if a lessor elects to retain the  goods or a lessor elects to dispose of the goods and the disposition is by lease agreement that for any reason does not qualify for treatment under Section 2A-527(2), or is by sale or otherwise, the lessor may recover from the  lessee as damages for  a default of the type described in Section  2A-523(1) or  2A-523(3)(a), or, if agreed, for other default of the lessee,  (i) accrued and unpaid rent as of the date of default if the lessee has never taken possession of the goods, or, if the lessee has taken possession of the goods, as of the date the lessor repossesses the goods or an earlier date on which the lessee makes a tender of the goods to the lessor,  (ii) the  present value as of the date  determined under clause (i) of the  total rent for the then remaining  lease term of the original  lease agreement  minus the present value as of the same date of the market rent at the  place  where the  goods are located computed for the same lease term, and  (iii) any incidental damages allowed under Section  2A-530, less expenses saved in consequence of the lessee's default.
 
(2)  If the measure of damages provided in subsection (1) is inadequate to put a lessor in as good a position as performance would have, the measure of damages is the  present value of the profit, including reasonable overhead, the lessor would have made from full performance by the lessee, together with any  incidental damages allowed under Section  2A-530, due allowance for costs reasonably incurred and due credit for payments or proceeds of disposition.

§ 2A-529.  LESSOR'S ACTION FOR THE RENT.

(1)    After default by the lessee under the lease contract of the type described in Section  2A-523(1)) or 2A-523(3)(a) or, if agreed, after other default by the lessee, if the  lessor complies with subsection (2), the lessor may recover from the lessee as damages:

(a) for  goods accepted by the  lessee and not repossessed by or tendered to the lessor,    and    for    conforming    goods    lost    or    damaged    within    a    commercially reasonable time after risk of loss passes to the lessee (Section  2A-219), (i) accrued and unpaid rent as of the date of  entry of judgment in favor of the lessor, (ii) the present value as of the same date  of the rent for the then remaining  lease term of the  lease agreement, and (iii) any incidental damages allowed under Section  2A-
530, less expenses saved in consequence of the lessee's default; and

(b)  for  goods  identified  to  the  lease contract  if  the  lessor  is  unable  after reasonable effort to dispose of them at a reasonable price or the circumstances reasonably indicate that effort will be unavailing, (i) accrued and unpaid rent as of the date of  entry of judgment in favor of the lessor, (ii) the present value as of the  same  date of    the  rent for  the  then remaining  lease  term of  the  lease agreement, and (iii) any incidental damages allowed under Section  2A-530, less expenses saved in consequence of the lessee's default.

(2)  Except as provided in subsection (3), the  lessor shall hold for the  lessee for the remaining  lease term of the  lease agreement any  goods that have been identified to the  lease contract and are in the lessor's control.

(3)    The lessor may dispose of the goods at any time before collection of the judgment for damages  obtained pursuant to subsection (1).    If the disposition is before the end of the remaining  lease term of the

U.C.C. - ARTICLE 3 - NEGOTIABLE INSTRUMENTS

PART 1.  GENERAL PROVISIONS AND DEFINITIONS  [Table of Contents]
 
§ 3-101.  SHORT TITLE.

This Article may be cited as Uniform Commercial Code -- Negotiable Instruments.

§ 3-102.  SUBJECT MATTER.

(a)  This Article applies to  negotiable instruments.  It does not apply to money, to payment orders governed by Article 4A, or to securities governed by Article 8.

(b)    If there is conflict between this Article and Article 4 or 9, Articles 4 and 9 govern.

(c)    Regulations of the Board of Governors of the Federal Reserve System and operating    circulars    of    the    Federal    Reserve    Banks    supersede    any    inconsistent provision of this Article to the extent of the inconsistency.

§ 3-103.  DEFINITIONS.

(a) In this Article:

(1) "Acceptor" means a  drawee who has accepted a draft.

(2) "Consumer account" means an account established by an individual primarily for personal, family, or household purposes.

(3) "Consumer transaction" means a transaction in which an individual incurs an obligation primarily for personal, family, or household purposes.

(4) "Drawee" means a person ordered in a draft to make payment.

(5)  "Drawer" means a person who signs or is identified in a  draft as a person ordering payment.

(6) [reserved]

(7)    "Maker" means a person who signs or is identified in a note as a person undertaking to pay.

(8)    "Order" means a written instruction to pay money signed by the person giving the instruction.  The instruction may be addressed to any person, including the person giving the instruction, or to one  or more persons jointly or in the alternative but not in succession.  An authorization to pay is not an order unless the person authorized to pay is also instructed to pay.
 
(9)    "Ordinary  care"  in  the  case  of  a  person  engaged  in  business  means observance of reasonable commercial standards, prevailing in the area in which the  person  is  located,  with  respect  to  the  business  in  which  the  person  is engaged.    In the case of a bank that takes an instrument  for processing for collection or payment by automated means, reasonable commercial standards do not require the bank to examine the instrument if the failure to examine does not violate the bank's prescribed procedures and the bank's procedures do not vary unreasonably from general banking usage not disapproved by this Article or Article
4.

(10) "Party" means a party to an instrument.

(11)    "Principal    obligor,"    with    respect    to    an    instrument,    means    the accommodated  party  or  any  other  party  to  the  instrument  against  whom  a secondary obligor has recourse under this article.

(12)  "Promise" means a written undertaking to pay money signed by the person undertaking to pay.  An acknowledgment of an obligation by the obligor is not a promise unless the obligor also undertakes to pay the obligation.

(13)  "Prove" with respect to a fact means to meet the burden of establishing the fact (Section 1-201(b)(8)).

(14) [reserved]

(15)  "Remitter" means a person who purchases an  instrument from its  issuer if the instrument is payable to an identified person other than the purchaser.

(16) "Remotely-created consumer item" means an item drawn on a consumer account, which is not created by the payor bank and does not bear a handwritten signature purporting to be the signature of the drawer.

(17) "Secondary obligor," with respect to an instrument, means (a) an indorser or an accommodation  party, (b) a drawer having the obligation described in Section  3-414(d), or (c) any other party to  the instrument that has recourse against another party to the instrument pursuant to Section  3-116(b).

(b)  Other definitions applying to this Article and the sections in which they appear are:

"Acceptance"    Section 3-409

"Accommodated party"    Section 3-419

"Accommodation party"    Section 3-419
 
"Account"    Section 4-104

"Alteration"    Section 3-407

"Anomalous indorsement"    Section 3-205

"Blank indorsement"    Section 3-205

"Cashier's check"    Section 3-104

"Certificate of deposit"    Section 3-104

"Certified check"    Section 3-409

"Check"    Section 3-104

"Consideration"    Section 3-303

"Draft"    Section 3-104

"Holder in due course"    Section 3-302

"Incomplete instrument"    Section 3-115

"Indorsement"    Section 3-204

"Indorser"    Section 3-204

"Instrument"    Section 3-104

"Issue"    Section 3-105

"Issuer"    Section 3-105

"Negotiable instrument"    Section 3-104

"Negotiation"    Section 3-201

"Note"    Section 3-104

"Payable at a definite time"    Section 3-108

"Payable on demand"    Section 3-108

"Payable to bearer"    Section 3-109
 


"Payable to order"    Section 3-109

"Payment"    Section 3-602

"Person entitled to enforce"    Section 3-301

"Presentment"    Section 3-501

"Reacquisition"    Section 3-207

"Special indorsement"    Section 3-205

"Teller's check"    Section 3-104

"Transfer of instrument"    Section 3-203

"Traveler's check"    Section 3-104

"Value"    Section 3-303

(c) The following definitions in other Articles apply to this Article:

"Banking day"    Section 4-104

"Clearing house"    Section 4-104

"Collecting bank"    Section 4-105

"Depositary bank"    Section 4-105

"Documentary draft"    Section 4-104

"Intermediary bank"    Section 4-105

"Item"    Section  4-104

"Payor bank"    Section 4-105

"Suspends payments"    Section 4-104

(d)  In addition, Article 1 contains general definitions and principles of construction and interpretation applicable throughout this Article.

§ 3-104.  NEGOTIABLE INSTRUMENT.
 
(a)    Except  as  provided  in  subsections  (c)  and  (d),  "negotiable  instrument" means an unconditional promise or  order to pay a fixed amount of money, with or without interest or other charges described in the promise or order, if it:

(1) is payable to bearer or to order at the time it is issued or first comes into possession of a holder;

(2) is payable on demand or at a definite time; and

(3) does not state any other undertaking or instruction by the person promising or ordering payment to  do  any act in addition to the payment of money, but the promise or  order may contain (i) an undertaking or power to give, maintain, or protect collateral to secure payment, (ii) an authorization or power to the holder to confess judgment or realize on or dispose of collateral, or (iii) a waiver of the benefit of any law intended for the advantage or protection of an obligor.

(b) "Instrument" means a  negotiable instrument.

(c)  An  order that meets all of the requirements of subsection (a), except paragraph (1),  and  otherwise  falls  within  the  definition  of  "check"  in  subsection  (f)  is  a negotiable instrument and a  check.

(d)  A  promise or  order other than a  check is not an  instrument if, at the time it is issued  or  first  comes  into  possession  of  a  holder,  it  contains  a  conspicuous statement,  however  expressed,  to  the  effect  that  the  promise  or  order  is  not negotiable or is not an instrument governed by this Article.

(e)  An  instrument is a "note" if it is a  promise and is a "draft" if it is an  order.  If an instrument falls within the definition of both "note" and "draft," a  person entitled to enforce the instrument may treat it as either.

(f)  "Check" means (i) a  draft, other than a documentary draft, payable on demand and drawn on a bank or (ii) a  cashier's check or  teller's check.  An  instrument may be a  check even though it is described on its face by another term, such as "money order."

(g)  "Cashier's check" means a  draft with respect to which the  drawer and  drawee are the same bank or branches of the same bank.

(h)  "Teller's check" means a  draft drawn by a bank (i) on another bank, or (ii)
payable at or through a bank.

(i)  "Traveler's check" means an  instrument that (i) is payable on demand, (ii) is drawn on or payable at or through a bank, (iii) is designated by the term "traveler's  check" or  by  a  substantially  similar  term, and  (iv)  requires,  as  a  condition  to payment, a countersignature by a person whose specimen signature appears on the instrument.

(j)  "Certificate of deposit" means an  instrument containing an acknowledgment by a bank that a sum of money has been received by the bank and a  promise by the bank to repay the sum of money.  A certificate of deposit is a  note of the bank.

§ 3-105.  ISSUE OF INSTRUMENT.

(a)    "Issue" means the first delivery of an instrument by the maker or drawer, whether to a holder or nonholder, for the purpose of giving rights on the instrument to any person.

(b)    An    unissued    instrument,    or    an    unissued    incomplete instrument     that     is completed, is binding on the  maker or  drawer, but nonissuance is a defense.    An instrument that is conditionally issued or is issued for a special purpose is binding on the maker or drawer, but failure of the condition or special purpose to be fulfilled is a defense.

(c)    "Issuer" applies to issued and unissued instruments and means a maker or drawer of an instrument.

§ 3-106.  UNCONDITIONAL PROMISE OR ORDER.

(a)    Except as provided in this section, for the purposes of Section 3-104(a), a promise  or  order  is  unconditional  unless  it  states  (i)  an  express  condition  to payment, (ii) that the promise or order is subject to or governed by another record, or (iii) that rights or obligations with respect to the promise or order are stated in another record.  A reference to another record does not of itself make the promise or order conditional.

(b)  A  promise or  order is not made conditional (i) by a reference to another record for a statement of rights with respect to collateral, prepayment, or acceleration, or (ii) because payment is limited to resort to a particular fund or source.

(c)  If a  promise or  order requires, as a condition to payment, a countersignature by a person whose specimen signature appears on the promise or order, the condition does not make the promise or order  conditional for the purposes of Section 3-
104(a).  If the person whose specimen signature appears on an  instrument fails to countersign the instrument, the failure to countersign is a defense to the obligation of the  issuer, but the failure does not prevent a transferee of the instrument from becoming a holder of the instrument.
 
(d)  If a  promise or  order at the time it is  issued or first comes into possession of a holder contains a statement, required by applicable statutory or administrative law, to the effect that the rights of a holder  or transferee are subject to claims or defenses that the  issuer could assert against the original payee, the promise or order is not thereby made conditional for the purposes of Section 3-104(a); but if the promise or order is an  instrument, there cannot be a  holder in due course of the instrument.

§ 3-107.  INSTRUMENT PAYABLE IN FOREIGN MONEY.

Unless the instrument otherwise provides, an instrument that states the amount payable in foreign  money may be paid in the foreign money or in an equivalent amount in dollars calculated by using the current bank-offered spot rate at the place of payment for the purchase of dollars on the day on which the instrument is paid.

§ 3-108.  PAYABLE ON DEMAND OR AT DEFINITE TIME.

(a)  A  promise or  order is "payable on demand" if it (i) states that it is payable on demand or at sight, or otherwise indicates that it is payable at the will of the holder, or (ii) does not state any time of payment.

(b)  A  promise or  order is "payable at a definite time" if it is payable on elapse of a definite period of time after sight or  acceptance or at a fixed date or dates or at a time or times readily ascertainable at the time the promise or order is  issued, subject to rights of (i) prepayment, (ii) acceleration, (iii) extension at the  option  of the holder, or (iv) extension to a further definite time at the option of the maker or acceptor or automatically upon or after a specified act or event.

(c)  If an  instrument, payable at a fixed date, is also payable upon demand made before the fixed date, the instrument is payable on demand until the fixed date and, if demand for payment is not made before that date, becomes payable at a definite time on the fixed date.

§ 3-109.  PAYABLE TO BEARER OR TO ORDER.

(a) A  promise or order is payable to bearer if it:

(1) states that it is payable to bearer or to the order of bearer or otherwise indicates that the  person  in possession of the promise or order is entitled to payment;

(2) does not state a payee; or
 
(3) states that it is payable to or to the  order of cash or otherwise indicates that it is not payable to an identified person.

(b)    A promise or order that is not payable to bearer is payable to order if it is payable (i) to the order  of an identified person or (ii) to an identified person or order.    A promise or order that is payable to  order  is payable to the identified person.

(c)  An  instrument payable to bearer may become payable to an identified person if it is specially indorsed pursuant to Section  3-205(a).  An instrument payable to an identified person may become payable to bearer if it is indorsed in blank pursuant to Section 3-205(b).

§ 3-110.    IDENTIFICATION  OF  PERSON  TO  WHOM  INSTRUMENT  IS PAYABLE.

(a)    The person to whom an instrument is initially payable is determined by the intent of the person, whether or not authorized, signing as, or in the name or behalf of, the  issuer of the instrument.  The instrument is payable to the person intended by the signer even if that person is identified in the instrument by a name or other identification that is not that of the intended person.  If more than one person signs in the name or behalf of the issuer of an instrument and all the signers do not intend the same person as payee, the instrument is payable to any person intended by one or more of the signers.

(b)  If the signature of the  issuer of an instrument is made by automated means, such as a check-writing machine, the payee of the instrument is determined by the intent of the person who supplied the name or identification of the payee, whether or not authorized to do so.

(c)    A person to whom an instrument is payable may be identified in any way, including by name, identifying number, office, or account number.  For the purpose of determining the holder of an instrument, the following rules apply:

(1)  If an  instrument is payable to an account and the account is identified only by number, the instrument is payable to the person to whom the account is payable. If an instrument is payable to an account identified by number and by the name of a person, the instrument is payable to the named person,  whether or not that person is the owner of the account identified by number.

(2) If an instrument is payable to:
 (i) a trust, an estate, or a person described as trustee or representative of a trust or estate, the instrument is payable to the trustee, the representative, or a successor of either, whether or not the beneficiary or estate is also named;

(ii)  a  person  described  as  agent  or  similar  representative  of  a  named  or identified person, the  instrument is payable to the represented person, the representative, or a successor of the representative;

(iii) a fund or organization that is not a legal entity, the  instrument is payable to a representative of the members of the fund or organization; or

(iv) an office or to a person described as holding an office, the instrument is payable to the named person, the incumbent of the office, or a successor to the incumbent.

(d)  If an  instrument is payable to two or more persons alternatively, it is payable to any of them and may be negotiated, discharged, or enforced by any or all of them in possession of the instrument.  If an instrument is payable to two or more persons not alternatively, it is payable to all of them and may be negotiated, discharged, or enforced only by all of them.  If an instrument payable to two or more persons is ambiguous as to whether it is payable to the persons alternatively, the instrument is payable to the persons alternatively.

§ 3-111.  PLACE OF PAYMENT.

Except as otherwise provided for items in Article 4, an  instrument is payable at the place of payment  stated  in the instrument.    If no place of payment is stated, an instrument  is  payable  at  the  address  of  the  drawee  or  maker  stated  in  the instrument.  If no address is stated, the place of payment is the place of business of the drawee or maker.  If a drawee or maker has more than one place of business, the place of payment is any place of business of the drawee or maker chosen by the person entitled to enforce the instrument.  If the drawee or maker has no place of business, the place of payment is the residence of the drawee or maker.

§ 3-112.  INTEREST.

(a)    Unless otherwise provided in the instrument, (i) an instrument is not payable with interest, and (ii) interest on an interest-bearing instrument is payable from the date of the instrument.

(b)  Interest may be stated in an  instrument as a fixed or variable amount of money or it may be expressed as a fixed or variable rate or rates.  The amount or rate of interest may be stated or described in the  instrument in any manner and may require reference to information not contained in the instrument.  If an instrument 
provides for interest, but the amount of interest payable cannot be ascertained from the description, interest  is payable at the judgment rate in effect at the place of payment of the instrument and at the time interest first accrues.

§ 3-113.  DATE OF INSTRUMENT.

(a)  An  instrument may be antedated or postdated.  The date stated determines the time of payment if the instrument is payable at a fixed period after date.  Except as provided in Section 4-401(c), an instrument  payable on demand is not payable before the date of the instrument.

(b)  If an  instrument is undated, its date is the date of its  issue or, in the case of an unissued instrument, the date it first comes into possession of a holder.

§ 3-114.  CONTRADICTORY TERMS OF INSTRUMENT.

If an  instrument contains contradictory terms, typewritten terms prevail over printed terms, handwritten terms prevail over both, and words prevail over numbers.

§ 3-115.  INCOMPLETE INSTRUMENT.

(a)  "Incomplete instrument" means a signed writing, whether or not  issued by the signer, the contents of which show at the time of signing that it is incomplete but that the signer intended it to be completed by the addition of words or numbers.

(b)    Subject to subsection (c), if an incomplete instrument is an  instrument under Section  3-104, it may be enforced according to its terms if it is not completed, or according to its terms as augmented by completion.  If an incomplete instrument is not an instrument under Section  3-104, but, after completion, the requirements of Section  3-104 are met, the instrument may be enforced according to its terms as augmented by completion.

(c)  If words or numbers are added to an incomplete instrument without authority of the signer, there is an alteration of the incomplete instrument under Section 3-407.

(d)  The burden of establishing that words or numbers were added to an incomplete instrument without  authority of the signer is on the person asserting the lack of authority.

§ 3-116.  JOINT AND SEVERAL LIABILITY; CONTRIBUTION.

(a)  Except as otherwise provided in the  instrument, two or more persons who have the same liability on an  instrument as makers,  drawers,  acceptors,  indorsers who indorse as joint payees, or  anomalous indorsers are jointly and severally liable in the capacity in which they sign.
 
(b)  Except as provided in Section  3-419(e) or by agreement of the affected parties, a  party having joint  and several liability who pays the instrument is entitled to receive from any party having the same joint  and several liability contribution in accordance with applicable law.

§ 3-117.  OTHER AGREEMENTS AFFECTING INSTRUMENT.

Subject  to  applicable  law  regarding  exclusion  of  proof  of  contemporaneous  or previous  agreements,  the  obligation  of  a  party  to  an  instrument  to  pay  the instrument may be modified, supplemented, or nullified by a separate agreement of the obligor and a person entitled to enforce the instrument, if the  instrument is issued or the obligation is incurred in reliance on the agreement or as part of the same  transaction giving rise to the agreement.    To the extent an obligation is modified,  supplemented,  or  nullified  by  an  agreement  under  this  section,  the agreement is a defense to the obligation.

§ 3-118.  STATUTE OF LIMITATIONS.

(a)  Except as provided in subsection (e), an action to enforce the obligation of a party to pay a  note payable at a definite time must be commenced within six years after the due date or dates stated in the note or, if a due date is accelerated, within six years after the accelerated due date.

(b)  Except as provided in subsection (d) or (e), if demand for payment is made to the  maker of a  note payable on demand, an action to enforce the obligation of a party to pay the note must be commenced within six years after the demand.  If no demand for payment is made to the maker, an action to enforce the note is barred if neither principal nor interest on the note has been paid for a continuous period of 10 years.

(c)  Except as provided in subsection (d), an action to enforce the obligation of a party to an unaccepted draft to pay the draft must be commenced within three years after dishonor of the draft or 10 years after the date of the draft, whichever period expires first.

(d)  An action to enforce the obligation of the  acceptor of a  certified check or the issuer of a  teller's check,  cashier's check, or  traveler's check must be commenced within three years after demand for payment is made to the acceptor or issuer, as the case may be.

(e)  An action to enforce the obligation of a  party to a  certificate of deposit to pay the  instrument must be commenced within six years after demand for payment is made to the  maker, but if the instrument states a due date and the maker is not  required to pay before that date, the six-year period begins when a demand for payment is in effect and the due date has passed.

(f)  An action to enforce the obligation of a  party to pay an accepted  draft, other than a  certified check, must be commenced (i) within six years after the due date or dates stated in the draft or  acceptance if the obligation of the  acceptor is payable at a definite time, or (ii) within six years after the date of the  acceptance if the obligation of the acceptor is payable on demand.

(g)  Unless governed by other law regarding claims for indemnity or contribution, an action (i) for conversion of an  instrument, for money had and received, or like action based on conversion, (ii) for breach of  warranty, or (iii) to enforce an obligation, duty, or right arising under this Article and not governed by this  section must be commenced within three years after the [cause of action] accrues.

§ 3-119.  NOTICE OF RIGHT TO DEFEND ACTION.

In an action for breach of an obligation for which a third person is answerable over pursuant to this Article or Article 4, the defendant may give the third person notice of the litigation in a record, and the person notified may then give similar notice to any other person who is answerable over.  If the notice states (i) that the person notified may come in and defend and (ii) that failure to do so will bind the person notified  in  an  action later  brought  by  the person  giving  the notice  as  to  any determination of fact common to the two litigations, the person notified is so bound unless after seasonable receipt of the notice the person notified does come in and defend.

PART 2.  NEGOTIATION, TRANSFER, AND INDORSEMENT  [Table of Contents]

§ 3-201.  NEGOTIATION.

(a)    "Negotiation"    means    a    transfer    of    possession,    whether    voluntary    or involuntary, of an instrument by a person other than the issuer to a person who thereby becomes its holder.

(b)  Except for  negotiation by a  remitter, if an  instrument is payable to an identified person,  negotiation  requires  transfer  of  possession  of  the  instrument  and  its indorsement  by  the holder.    If an  instrument  is  payable to  bearer,  it  may  be negotiated by transfer of possession alone.

§ 3-202.  NEGOTIATION SUBJECT TO RESCISSION.
 
(a)    Negotiation  is  effective  even  if  obtained  (i)  from  an  infant,  a  corporation exceeding its powers, or a person without capacity, (ii) by fraud, duress, or mistake, or (iii) in breach of duty or as part of an illegal transaction.

(b)  To the extent permitted by other law,  negotiation may be rescinded or may be subject to other  remedies, but those remedies may not be asserted against a subsequent holder in due course or a person paying the  instrument in  good faith  and without knowledge of facts that are a basis for rescission or other remedy.

§    3-203.    TRANSFER    OF    INSTRUMENT;    RIGHTS    ACQUIRED    BY TRANSFER.

(a)    An instrument is transferred when it is delivered by a person other than its issuer for the purpose of giving to the person receiving delivery the right to enforce the instrument.

(b)  Transfer of an  instrument, whether or not the transfer is a  negotiation, vests in the transferee any right of the transferor to enforce the instrument, including any right as a  holder in due course, but the transferee cannot acquire rights of a holder in due course by a transfer, directly or indirectly, from a holder in due course if the transferee engaged in fraud or illegality affecting the instrument.

(c)    Unless otherwise agreed, if an instrument is transferred for value and the transferee  does  not  become  a  holder  because  of  lack  of  indorsement  by  the transferor, the transferee has a specifically  enforceable right to the unqualified indorsement of the transferor, but  negotiation of the instrument does not occur until the indorsement is made.

(d)  If a transferor purports to transfer less than the entire  instrument,  negotiation of the instrument does not occur.  The transferee obtains no rights under this Article and has only the rights of a partial assignee.

§ 3-204.  INDORSEMENT.

(a)    "Indorsement" means a signature, other than that of a signer as maker, drawer, or acceptor,  that alone or accompanied by other words is made on an instrument for the purpose of (i) negotiating the instrument, (ii) restricting payment of  the  instrument,  or  (iii)  incurring  indorser's  liability  on  the  instrument,  but regardless of the intent of the signer, a signature and its accompanying words is an indorsement unless the accompanying words, terms of the instrument, place of the signature, or other  circumstances unambiguously indicate that the signature was made  for  a  purpose  other  than  indorsement.    For  the  purpose  of  determining whether a signature is made on an instrument, a paper affixed to the instrument is a part of the instrument.
 
(b) "Indorser" means a person who makes an indorsement.

(c)    For the purpose of determining whether the transferee of an instrument is a holder, an indorsement that transfers a security interest in the instrument is effective as an unqualified indorsement of the instrument.

(d) If an  instrument is payable to a holder under a name that is not the name of the holder,  indorsement  may  be  made  by  the  holder  in  the  name  stated  in  the instrument or in the holder's name or both,  but signature in both names may be required by a person paying or taking the instrument for value or collection.

§ 3-205.  SPECIAL INDORSEMENT; BLANK INDORSEMENT; ANOMALOUS INDORSEMENT.

(a)  If an  indorsement is made by the holder of an  instrument, whether payable to an identified person or payable to bearer, and the indorsement identifies a person to whom it makes the instrument payable, it is  a "special indorsement."    When specially indorsed, an instrument becomes payable to the identified person and may be negotiated only by the indorsement of  that person.    The principles stated in Section 3-110 apply to special indorsements.

(b)  If an  indorsement is made by the holder of an  instrument and it is not a special indorsement, it is a "blank indorsement."  When indorsed in blank, an instrument becomes payable to bearer and may be negotiated by transfer of possession alone until specially indorsed.

(c)  The holder may convert a blank indorsement that consists only of a signature into a special  indorsement by writing, above the signature of the indorser, words identifying the person to whom the instrument is made payable.

(d)  "Anomalous indorsement" means an  indorsement made by a person who is not the holder of the  instrument.    An anomalous indorsement does not affect the manner in which the instrument may be negotiated.

§ 3-206.  RESTRICTIVE INDORSEMENT.

(a)  An  indorsement limiting payment to a particular person or otherwise prohibiting further transfer or negotiation of the  instrument is not effective to prevent further transfer or negotiation of the instrument.

(b)    An indorsement stating a condition to the right of the indorsee to receive payment does not  affect the right of the indorsee to enforce the instrument.A person paying the instrument or taking it for value or collection may disregard the  condition,  and the rights and liabilities of that person are not affected by whether the condition has been fulfilled.

(c)  If an  instrument bears an  indorsement (i) described in Section  4-201(b), or (ii) in blank or to a  particular bank using the words "for deposit," "for collection," or other words indicating a purpose of having the instrument collected by a bank for the  indorser or for a particular account, the following rules apply:

(1)  A person, other than a bank, who purchases the  instrument when so indorsed converts the instrument unless the amount paid for the instrument is received by the  indorser or applied consistently with the  indorsement.

(2)    A depositary bank that purchases the instrument or takes it for collection when so indorsed  converts the instrument unless the amount paid by the bank with respect to the instrument is received by the  indorser or applied consistently with the indorsement.

(3)  A payor bank that is also the depositary bank or that takes the  instrument for immediate payment over the counter from a person other than a collecting bank converts the instrument unless the proceeds of the instrument are received by the indorser or applied consistently with the indorsement.

(4)  Except as otherwise provided in paragraph (3), a payor bank or intermediary bank may disregard  the indorsement and is not liable if the proceeds of the instrument  are not received  by  the  indorser  or  applied  consistently  with  the indorsement.

(d)  Except for an  indorsement covered by subsection (c), if an  instrument bears an indorsement using words to the effect that payment is to be made to the indorsee as agent, trustee, or other  fiduciary for the benefit of the  indorser or another person, the following rules apply:

(1)  Unless there is notice of breach of  fiduciary duty as provided in Section  3-307, a person who purchases the  instrument from the indorsee or takes the instrument from the indorsee for collection or payment may pay the proceeds of payment or the value given for the instrument to the indorsee without regard to whether the indorsee violates a fiduciary duty to the indorser.

(2)  A subsequent transferee of the  instrument or person who pays the instrument is neither given notice nor otherwise affected by the restriction in the  indorsement unless the transferee or payor knows that the fiduciary dealt with the instrument or its proceeds in breach of fiduciary duty.
 


(e)  The presence on an  instrument of an  indorsement to which this section applies does not prevent a  purchaser of the instrument from becoming a holder in due course of the instrument unless the purchaser is a converter under subsection (c) or has notice or knowledge of breach of fiduciary duty as stated in subsection (d).

(f)    In an action to enforce the obligation of a party to pay the instrument, the obligor has a defense if payment would violate an  indorsement to which this section applies and the payment is not permitted by this section.

§ 3-207.  REACQUISITION.

Reacquisition of an instrument occurs if it is transferred to a former holder, by negotiation or otherwise.  A former holder who reacquires the instrument may cancel indorsements made after the reacquirer first became a holder of the instrument.  If the cancellation causes the instrument to be payable to the reacquirer or to bearer, the reacquirer may negotiate the instrument.    An indorser whose indorsement is canceled is discharged, and the discharge is effective against any subsequent holder.

PART 3.  ENFORCEMENT OF INSTRUMENTS  [Table of Contents]

§ 3-301.  PERSON ENTITLED TO ENFORCE INSTRUMENT.

"Person  entitled  to  enforce"    an    instrument    means    (i)    the    holder    of    the instrument, (ii) a nonholder in possession of the instrument who has the rights of a holder, or (iii) a person not in possession of the instrument who is entitled to enforce the instrument pursuant to Section 3-309 or 3-418(d).  A person may be a person entitled to enforce the instrument even though the person is not the owner of the instrument or is in wrongful possession of the instrument.

§ 3-302.  HOLDER IN DUE COURSE.

(a)  Subject to subsection (c) and Section  3-106(d), "holder in due course" means the holder of an instrument if:

(1) the  instrument when issued or negotiated to the holder does not bear such apparent evidence of  forgery or alteration or is not otherwise so irregular or incomplete as to call into question its authenticity; and

(2) the holder took the instrument (i) for value, (ii) in good faith, (iii) without notice that the instrument is overdue or has been dishonored or that there is an uncured default with respect to payment of another instrument  issued as part of the same series, (iv) without notice that the instrument contains an unauthorized signature or has been altered, (v) without notice of any claim to the instrument described in Section  3-306, and (vi) without notice that any  party has a defense or claim in recoupment described in Section 3-305(a).

(b) Notice of discharge of a  party, other than discharge in an insolvency proceeding, is not notice of a defense under subsection (a), but discharge is effective against a person who became a  holder in due course with notice of the discharge.  Public filing or recording of a document does not of itself constitute notice of a defense, claim in recoupment, or claim to the instrument.

(c)    Except to the extent a transferor or predecessor in interest has rights as a holder in due course, a person does not acquire rights of a holder in due course of an  instrument taken (i) by legal process or by purchase in an execution, bankruptcy, or creditor's sale or similar proceeding, (ii) by purchase as part of a bulk transaction not in ordinary course of business of the transferor, or (iii) as the successor in interest to an estate or other organization.

(d)    If,    under    Section    3-303(a)(1),    the    promise    of    performance    that    is    the consideration for an  instrument has been partially performed, the holder may assert rights as a  holder in due course of the instrument only to the fraction of the amount payable under the instrument equal to the value of the partial performance divided by the value of the promised performance.

(e)  If (i) the  person entitled to enforce an  instrument has only a security interest in the instrument and (ii)  the person obliged to pay the instrument has a defense, claim in recoupment, or claim to the instrument that may be asserted against the person  who  granted  the  security  interest,  the  person  entitled  to  enforce  the instrument may assert rights as a  holder in due course only to an amount payable under the instrument which, at the time of enforcement of the instrument, does not exceed the amount of the unpaid obligation secured.

(f)  To be effective, notice must be received at a time and in a manner that gives a reasonable opportunity to act on it.

(g)  This section is subject to any law limiting status as a  holder in due course in particular classes of transactions.

§ 3-303.  VALUE AND CONSIDERATION.

(a) An instrument is issued or transferred for value if:

(1) the  instrument is  issued or transferred for a  promise of performance, to the extent the promise has been performed;
 
(2) the transferee acquires a security interest or other lien in the  instrument other than a lien obtained by judicial proceeding;

(3) the  instrument is  issued or transferred as payment of, or as security for, an antecedent claim against any person, whether or not the claim is due;

(4)    the    instrument    is    issued    or    transferred    in    exchange    for    a    negotiable instrument; or

(5) the instrument is issued or transferred in exchange for the incurring of an irrevocable obligation to a third party by the person taking the instrument.

(b)    "Consideration"  means  any  consideration  sufficient  to  support  a  simple contract.  The  drawer or  maker of an  instrument has a defense if the instrument is issued    without    consideration.    If    an    instrument    is    issued    for    a    promise    of performance, the issuer has a defense to the extent performance of the promise is due and the promise has not been performed.  If an instrument is issued for value as stated in subsection (a), the instrument is also issued for consideration.

§ 3-304.  OVERDUE INSTRUMENT.

(a)    An instrument payable on demand becomes overdue at the earliest of the following times:

(1) on the day after the day demand for payment is duly made; (2) if the instrument is a  check, 90 days after its date; or
(3) if the  instrument is not a  check, when the instrument has been outstanding for a period of time after its date which is unreasonably long under the circumstances of the particular case in light of the nature  of the instrument and usage of the trade.

(b)    With respect to an instrument payable at a definite time the following rules apply:

(1)    If the principal is payable in installments and a due date has not been accelerated, the instrument becomes overdue upon default under the instrument for nonpayment of an installment, and the instrument remains overdue until the default is cured.

(2)  If the principal is not payable in installments and the due date has not been accelerated, the instrument becomes overdue on the day after the due date.
 
(3)  If a due date with respect to principal has been accelerated, the  instrument becomes overdue on the day after the accelerated due date.

(c)  Unless the due date of principal has been accelerated, an  instrument does not become overdue if there is default in payment of interest but no default in payment of principal.

§ 3-305.  DEFENSES AND CLAIMS IN RECOUPMENT.

(a)  Except as otherwise provided in this section, the right to enforce the obligation of a  party to pay an instrument is subject to the following:

(1) a defense of the obligor based on (i) infancy of the obligor to the extent it is a defense to a simple contract, (ii) duress, lack of legal capacity, or illegality of the transaction which, under other law, nullifies the obligation of the obligor, (iii) fraud that  induced  the  obligor  to  sign  the  instrument  with  neither  knowledge  nor reasonable opportunity to learn of its character or its essential terms, or (iv) discharge of the obligor in insolvency proceedings;

(2) a defense of the obligor stated in another section of this Article or a defense of the obligor that would be available if the  person entitled to enforce the  instrument were enforcing a right to payment under a simple contract; and

(3)  a  claim  in  recoupment  of  the  obligor  against  the  original  payee  of  the instrument if the claim arose from the transaction that gave rise to the instrument; but the claim of the obligor may be asserted against a transferee of the instrument only to reduce the amount owing on the instrument at the time  the action is brought.

(b)  The right of a  holder in due course to enforce the obligation of a  party to pay the  instrument is subject to defenses of the obligor stated in subsection (a)(1), but is not subject to defenses of the obligor stated  in  subsection (a)(2) or claims in recoupment stated in subsection (a)(3) against a person other than the holder.

(c)  Except as stated in subsection (d), in an action to enforce the obligation of a party to pay the instrument, the obligor may not assert against the  person entitled to enforce the instrument a defense, claim in recoupment, or claim to the instrument (Section  3-306) of another person, but the other person's claim to the instrument may be asserted by the obligor if the other person is joined in the action and personally asserts the claim against the person entitled to enforce the instrument. An obligor is not obliged to pay the instrument if the person seeking enforcement of the instrument does not have rights of a  holder in due course and the obligor  proves that the instrument is a lost or stolen instrument.
 


(d)    In an action to enforce the obligation of an accommodation party to pay an instrument, the  accommodation party may assert against the person entitled to enforce the instrument any defense or  claim in recoupment under subsection (a) that the accommodated party could assert against the person entitled to enforce the instrument, except the defenses of discharge in insolvency proceedings, infancy, and lack of legal capacity.

(e)  In  a  consumer transaction,  if  law  other  than  this  article  requires  that  an instrument include a statement to the effect that the rights of a holder or transferee are subject to a claim or defense that the  issuer could assert against the original payee, and the instrument does not include such a statement: (1)  the instrument has the same effect as if the instrument included such a statement; (2) the issuer may assert against the holder or transferee all claims and defenses that would have been available if the instrument included such a statement; and (3) the extent to which claims may be asserted against the holder or transferee is determined as if the instrument included such a statement.

(f) This section is subject to law other than this article that establishes a different rule for consumer transactions.

§ 3-306.  CLAIMS TO AN INSTRUMENT.

A person taking an  instrument, other than a person having rights of a  holder in due course, is subject to a claim of a property or possessory right in the instrument or its proceeds, including a claim to rescind a negotiation and to recover the instrument or its proceeds. A person having rights of a holder in due course takes free of the claim to the instrument.

§ 3-307.  NOTICE OF BREACH OF FIDUCIARY DUTY.

(a) In this section:

(1)  "Fiduciary" means an agent, trustee, partner, corporate officer or director, or other representative owing a fiduciary duty with respect to an instrument.

(2)    "Represented    person"    means    the    principal,    beneficiary,    partnership, corporation, or other person to whom the duty stated in paragraph (1) is owed.

(b)    If (i) an  instrument is taken from a fiduciary for payment or collection or for value, (ii) the taker has knowledge of the fiduciary status of the fiduciary, and (iii) the represented person makes a claim to the instrument or its proceeds on the basis that the transaction of the fiduciary is a breach of fiduciary duty, the following rules apply:
 
(1)  Notice of breach of fiduciary duty by the fiduciary is notice of the claim of the represented person.

(2)In the case of an instrument payable to the represented person or the fiduciary as such, the  taker has notice of the breach of fiduciary duty if the instrument is (i) taken in payment of or as security for a debt known by the taker to be the personal debt of the fiduciary, (ii) taken in a transaction known by the taker to be for the personal benefit of the fiduciary, or (iii) deposited to an account other than an account of the fiduciary, as such, or an account of the represented person.

(3)  If an  instrument is  issued by the represented person or the fiduciary as such, and made payable to the fiduciary personally, the taker does not have notice of the breach of fiduciary duty unless the taker knows of the breach of fiduciary duty.

(4)  If an  instrument is  issued by the represented person or the fiduciary as such, to the taker as payee, the taker has notice of the breach of fiduciary duty if the instrument is (i) taken in payment of or as security for a debt known by the taker to be the personal debt of the fiduciary, (ii) taken in a transaction known by the taker to be for the personal benefit of the fiduciary, or (iii) deposited to an account other than an account of the fiduciary, as such, or an account of the represented person.

§ 3-308.    PROOF  OF  SIGNATURES  AND  STATUS  AS  HOLDER  IN  DUE COURSE.

(a)  In an action with respect to an  instrument, the authenticity of, and authority to make, each signature on the instrument is admitted unless specifically denied in the pleadings.    If the validity of a signature is  denied in the pleadings, the burden of establishing validity is on the person claiming validity, but the signature is presumed to be authentic and authorized unless the action is to enforce the liability of the purported signer and the signer is dead or incompetent at the time of trial of the issue of validity of the signature.  If an action to enforce the instrument is brought against a person as the undisclosed principal of a person who signed the instrument as a party to the instrument, the plaintiff has the burden of  establishing that the defendant is liable on the instrument as a represented person under Section 3-
402(a).

(b)  If the validity of signatures is admitted or  proved and there is compliance with subsection (a), a  plaintiff producing the instrument is entitled to payment if the plaintiff proves entitlement to enforce the  instrument under Section 3-301, unless the defendant proves a defense or claim in recoupment.    If a defense or claim in recoupment is proved, the right to payment of the plaintiff is subject to the defense
 
or claim, except to the extent the plaintiff proves that the plaintiff has rights of a holder in due course which are not subject to the defense or claim.

§    3-309.    ENFORCEMENT OF LOST, DESTROYED, OR STOLEN INSTRUMENT.

(a)  A person not in possession of an  instrument is entitled to enforce the instrument if:

(1) the person seeking to enforce the instrument

(A) was entitled to enforce it the instrument when loss of possession occurred, or

(B) has directly or indirectly acquired ownership of the instrument from a person who was entitled to enforce the instrument when loss of possession occurred;

(2) the loss of possession was not the result of a transfer by the person or a lawful seizure; and

(3) the person cannot reasonably obtain possession of the instrument because the instrument was destroyed, its whereabouts cannot be determined, or it is in the wrongful possession of an unknown person or a person that cannot be found or is not amenable to service of process.

(b)    A person seeking enforcement of an instrument under subsection (a) must prove the terms of the instrument and the person's right to enforce the instrument. If that proof is made, Section 3-308 applies to  the case as if the person seeking enforcement had produced the instrument.    The court may not enter  judgment in favor of the person seeking enforcement unless it finds that the person required to pay the instrument is adequately protected against loss that might occur by reason of a claim by another person to enforce the instrument.  Adequate protection may be provided by any reasonable means.

§ 3-310.  EFFECT OF INSTRUMENT ON OBLIGATION FOR WHICH TAKEN.

(a)  Unless otherwise agreed, if a  certified check,  cashier's check, or  teller's check is taken for an obligation, the obligation is discharged to the same extent discharge would result if an amount of money equal to  the  amount of the instrument were taken in payment of the obligation.  Discharge of the obligation does not affect any liability that the obligor may have as an indorser of the instrument.

(b)  Unless otherwise agreed and except as provided in subsection (a), if a  note or an uncertified  check is  taken for an obligation, the obligation is suspended to the same extent the obligation would be discharged if an amount of money equal to the amount of the instrument were taken, and the following rules apply:

(1)    In the case of an uncertified check, suspension of the obligation continues until dishonor of the check or until it is paid or certified.  Payment or certification of the check results in discharge of the obligation to the extent of the amount of the check.

(2)  In the case of a  note, suspension of the obligation continues until dishonor of the note or until it is  paid.    Payment of the note results in discharge of the obligation to the extent of the payment.

(3)  Except as provided in paragraph (4), if the  check or  note is dishonored and the obligee of the  obligation for which the instrument was taken is the person entitled to enforce the instrument, the obligee may enforce either the instrument or  the  obligation.    In  the  case  of  an  instrument  of a  third  person  which  is negotiated  to  the  obligee  by  the  obligor,  discharge  of  the  obligor  on  the instrument also discharges the obligation.

(4)  If the  person entitled to enforce the  instrument taken for an obligation is a person other than the obligee, the obligee may not enforce the obligation to the extent the obligation is suspended.  If the obligee is the person entitled to enforce the instrument but no longer has possession of it because it was lost, stolen, or destroyed,  the obligation may  not be enforced to  the extent of the amount payable on the instrument, and to that extent the obligee's rights against the obligor are limited to enforcement of the instrument.

(c)  If an  instrument other than one described in subsection (a) or (b) is taken for an obligation, the effect is (i) that stated in subsection (a) if the instrument is one on which a bank is liable as  maker or  acceptor, or (ii) that stated in subsection (b) in any other case.

§ 3-311.  ACCORD AND SATISFACTION BY USE OF INSTRUMENT.

(a)  If a person against whom a claim is asserted  proves that (i) that person in  good faith  tendered an instrument to the claimant as full satisfaction of the claim, (ii) the amount of the claim was unliquidated or subject to a bona fide dispute, and (iii) the claimant obtained payment of the instrument, the following subsections apply.

(b)    Unless subsection (c) applies, the claim is discharged if the person against whom the claim is asserted  proves that the  instrument or an accompanying written communication contained a conspicuous statement to the effect that the instrument was tendered as full satisfaction of the claim.
 


(c) Subject to subsection (d), a claim is not discharged under subsection (b) if either of the following applies:

(1)    The claimant, if an organization, proves that (i) within a reasonable time before the tender,  the claimant sent a conspicuous statement to the person against whom the claim is asserted that  communications concerning disputed debts, including an  instrument tendered as full satisfaction of a debt, are to be sent  to    a    designated    person,    office,    or    place,    and  (ii)    the    instrument    or accompanying communication was not received by that designated person, office, or place.

(2)  The claimant, whether or not an organization,  proves that within 90 days after payment of the instrument, the claimant tendered repayment of the amount of the instrument to the person against  whom  the claim is asserted.    This paragraph does  not apply if the claimant is an organization that that sent a statement complying with paragraph (1)(i).

(d) A claim is discharged if the person against whom the claim is asserted proves that within a reasonable time before collection of the instrument was initiated, the claimant, or an agent of the claimant having direct responsibility with respect to the disputed obligation, knew that the instrument was tendered in full satisfaction of the claim.

§ 3-312.    LOST, DESTROYED, OR STOLEN CASHIER'S CHECK, TELLER'S CHECK, OR CERTIFIED CHECK.

(a) In this section:

(1) "Check" means a  cashier's check,  teller's check, or certified check.

(2) "Claimant" means a person who claims the right to receive the amount of a cashier's check,  teller's check, or certified check that was lost, destroyed, or stolen.

(3) "Declaration of loss" means a statement, made in a record under penalty of perjury, to the effect  that (i) the declarer lost possession of a check, (ii) the declarer is the  drawer or payee of the check, in the case of a  certified check, or the remitter or payee of the check, in the case of a cashier's check  or teller's check, (iii) the loss of possession was not the result of a transfer by the declarer or a lawful seizure, and (iv) the declarer cannot reasonably obtain possession of the check because the check was destroyed, its whereabouts cannot be determined, or it is in the wrongful possession of an unknown person or a person that cannot be found or is not amenable to service of process.
 
(4) "Obligated bank" means the issuer of a  cashier's check or  teller's check or the acceptor of a certified check.

(b)  A claimant may assert a claim to the amount of a check by a communication to the obligated bank  describing the check with reasonable certainty and requesting payment of the amount of the check, if (i) the claimant is the  drawer or payee of a certified check or the  remitter or payee of a  cashier's check or teller's check, (ii) the communication contains or is accompanied by a declaration of loss of the claimant with respect to the check, (iii) the communication is received at a time and in a manner affording the bank a reasonable time to act on it before the check is paid, and (iv) the claimant provides reasonable identification if requested by the obligated bank.  Delivery of a declaration of loss is a warranty of the truth of the statements made in the declaration.  If a claim is asserted in compliance with this subsection, the following rules apply:

(1)    The claim becomes enforceable at the later of (i) the time the claim is asserted, or (ii) the  90th day following the date of the check, in the case of a cashier's check  or  teller's check,  or  the  90th  day  following  the  date  of  the acceptance, in the case of a  certified check.

(2)  Until the claim becomes enforceable, it has no legal effect and the obligated bank may pay the check or, in the case of a  teller's check, may permit the  drawee to pay the check. Payment to a  person entitled to enforce the check discharges all liability of the obligated bank with respect to the check.

(3)  If the claim becomes enforceable before the check is presented for payment, the obligated bank is not obliged to pay the check.

(4)  When the claim becomes enforceable, the obligated bank becomes obliged to pay the amount of the check to the claimant if payment of the check has not been made to a  person entitled to enforce the check.  Subject to Section  4-302(a)(1), payment to the claimant discharges all liability of the obligated bank with respect to the check.

(c)  If the  obligated bank pays the amount of a check to a claimant under subsection (b)(4) and the check is presented for payment by a person having rights of a  holder in due course, the claimant is obliged to (i)  refund the payment to the obligated bank if the check is paid, or (ii) pay the amount of the check to the person having rights of a holder in due course if the check is dishonored.

(d)  If a claimant has the right to assert a claim under subsection (b) and is also a person entitled to enforce a  cashier's check,  teller's check, or  certified check which is lost, destroyed, or stolen, the claimant may assert rights with respect to the check either under this section or Section 3-309.
 
PART 4.  LIABILITY OF PARTIES  [Table of Contents]

§ 3-401.  SIGNATURE.

(a)    A  person is not liable  on an instrument  unless (i) the person signed  the instrument, or (ii) the  person is represented by an agent or representative who signed the instrument and the signature is binding on the  represented person under Section 3-402.

(b)  A signature may be made (i) manually or by means of a device or machine, and (ii) by the use of any name, including a trade or assumed name, or by a word, mark, or symbol executed or adopted by a person with present intention to authenticate a writing.

§ 3-402.  SIGNATURE BY REPRESENTATIVE.

(a)  If a person acting, or purporting to act, as a representative signs an  instrument by signing either the name of the  represented person or the name of the signer, the represented person is bound by the signature to the same extent the represented person  would  be  bound  if  the  signature  were  on  a  simple  contract.    If  the represented person is bound, the signature of the representative is the "authorized signature of the  represented person" and the represented person is liable on the instrument, whether or not identified in the instrument.

(b)  If a representative signs the name of the representative to an  instrument and the signature is an  authorized signature of the represented person, the following rules apply:

(1)  If the form of the signature shows unambiguously that the signature is made on behalf of the  represented person who is identified in the instrument, the representative is not liable on the instrument.

(2)    Subject to subsection (c), if (i) the form of the signature does not show unambiguously that the signature is made in a representative capacity or (ii) the represented person is not identified in the instrument, the representative is liable on the instrument to a holder in due course that took the  instrument without notice that the representative was not intended to be liable on the instrument. With respect to any other person, the representative is liable on the instrument unless  the  representative  proves  that  the  original  parties  did  not  intend  the representative to be liable on the instrument.

(c)  If a representative signs the name of the representative as  drawer of a  check without indication of  the representative status and the check is payable from an account of the  represented person who is identified on the check, the signer is not liable on the check if the signature is an authorized signature of the represented person.

§ 3-403.  UNAUTHORIZED SIGNATURE.

(a)  Unless otherwise provided in this Article or Article 4, an unauthorized signature is ineffective except as the signature of the unauthorized signer in favor of a person who in good faith  pays the instrument or  takes it for value.    An unauthorized signature may be ratified for all purposes of this Article.

(b)  If the signature of more than one person is required to constitute the authorized signature of an organization, the signature of the organization is unauthorized if one of the required signatures is lacking.

(c)  The civil or criminal liability of a person who makes an unauthorized signature is not affected by any provision of this Article which makes the unauthorized signature effective for the purposes of this Article.

§ 3-404.  IMPOSTORS; FICTITIOUS PAYEES.

(a)    If an impostor, by use of the mails or otherwise, induces the issuer of an instrument to  issue the instrument to the impostor, or to a person acting in concert with the impostor, by  impersonating the  payee of the  instrument or a  person authorized to act for the payee, an  indorsement of the instrument by any person in the name of the payee is effective as the indorsement of the payee in favor of a person who, in good faith, pays the instrument or takes it for value or for collection.

(b)    If (i) a person whose intent determines to whom an instrument is payable (Section  3-110(a) or (b)) does not intend the person identified as payee to have any interest in the instrument, or (ii) the person identified as payee of an instrument is a fictitious person, the following rules apply until the instrument is  negotiated by special  indorsement:

(1) Any person in possession of the  instrument is its holder.

(2)    An indorsement by any person in the name of the payee stated in the instrument is effective as the indorsement of the payee in favor of a person who, in good faith, pays the instrument or takes it for value or for collection.

(c)  Under subsection (a) or (b), an  indorsement is made in the name of a payee if (i) it is made in a  name substantially similar to that of the payee or (ii) the instrument, whether or not indorsed, is deposited in a depositary bank to an account in a name substantially similar to that of the payee.
 
(d)  With respect to an  instrument to which subsection (a) or (b) applies, if a person paying the instrument or taking it for value or for collection fails to exercise  ordinary care in paying or taking the instrument and that failure substantially contributes to loss resulting from payment of the instrument, the person bearing  the loss may recover from the person failing to exercise ordinary care to the extent the failure to exercise ordinary care contributed to the loss.

§    3-405.    EMPLOYER'S    RESPONSIBILITY    FOR    FRAUDULENT INDORSEMENT BY EMPLOYEE.

(a) In this section:

(1)    "Employee"    includes    an    independent    contractor    and    employee    of    an independent contractor retained by the employer.

(2)  "Fraudulent indorsement" means (i) in the case of an  instrument payable to the employer, a forged  indorsement purporting to be that of the employer, or (ii) in the case of an instrument with respect to which the employer is the  issuer, a forged indorsement purporting to be that of the person identified as payee.

(3)  "Responsibility" with respect to  instruments means authority (i) to sign or indorse instruments on behalf of the employer, (ii) to process instruments received by the employer for bookkeeping purposes, for deposit to an account, or for other disposition, (iii) to prepare or process instruments for issue in the  name of the employer,  (iv)  to  supply  information  determining  the  names  or  addresses  of payees of instruments to be issued in the name of the employer, (v) to control the disposition of instruments to be issued in the name of the employer, or (vi) to act otherwise with respect to instruments in a responsible  capacity. "Responsibility" does not include authority that merely allows an employee to have access  to instruments or blank or incomplete instrument forms that are being stored or transported or are part of incoming or outgoing mail, or similar access.

(b) For the purpose of determining the rights and liabilities of a person who, in  good faith, pays an  instrument or takes it for value or for collection, if an employer entrusted an employee with  responsibility with respect to the instrument and the employee or a person acting in concert with the  employee makes a fraudulent indorsement of the instrument, the  indorsement is effective as the indorsement of the person to whom the instrument is payable if it is made in the name of that person.  If the person paying the instrument or taking it for value or for collection fails to exercise ordinary care in  paying or taking the instrument and that failure substantially contributes to loss resulting from the fraud, the person bearing the loss may recover from the person failing to exercise ordinary care to the extent  the failure to exercise ordinary care contributed to the loss.
 
(c) Under subsection (b), an indorsement is made in the name of the person to whom an  instrument is payable if (i) it is made in a name substantially similar to the name of that person or (ii) the instrument, whether or not indorsed, is deposited in a depositary bank to an account in a name substantially similar to the name of that person.

§ 3-406.    NEGLIGENCE  CONTRIBUTING  TO  FORGED  SIGNATURE  OR ALTERATION OF INSTRUMENT.

(a)  A person whose failure to exercise  ordinary care substantially contributes to an alteration of an instrument or to the making of a forged signature on an instrument is precluded from asserting the alteration or the forgery against a person who, in good faith, pays the instrument or takes it for value or for collection.

(b)    Under subsection (a), if the person asserting the preclusion fails to exercise ordinary care  in  paying  or  taking  the  instrument  and  that  failure  substantially contributes to loss, the loss is allocated  between  the person precluded and the person asserting the preclusion according to the extent to which the failure of each to exercise ordinary care contributed to the loss.

(c)  Under subsection (a), the burden of proving failure to exercise  ordinary care is on the person asserting the preclusion.  Under subsection (b), the burden of proving failure to exercise ordinary care is on the person precluded.

§ 3-407.  ALTERATION.

(a)  "Alteration" means (i) an unauthorized change in an  instrument that purports to modify in any respect the obligation of a  party, or (ii) an unauthorized addition of words or numbers or other change to  an incomplete instrument relating to the obligation of a party.

(b)  Except as provided in subsection (c), an alteration fraudulently made discharges a  party whose obligation is affected by the alteration unless that party assents or is precluded from asserting the alteration.  No other alteration discharges a party, and the  instrument may be enforced according to its original terms.

(c)  A payor bank or  drawee paying a fraudulently altered  instrument or a person taking it for value, in good faith  and without notice of the alteration, may enforce rights with respect to the instrument (i) according to its original terms, or (ii) in the case of an  incomplete instrument altered by unauthorized completion, according to its terms as completed.

§ 3-408.  DRAWEE NOT LIABLE ON UNACCEPTED DRAFT.
 
A  check or other  draft does not of itself operate as an assignment of funds in the hands of the  drawee available for its payment, and the drawee is not liable on the instrument until the drawee accepts it.

§ 3-409.  ACCEPTANCE OF DRAFT; CERTIFIED CHECK.

(a)    "Acceptance"  means  the  drawee's  signed  agreement  to  pay  a  draft  as presented.    It  must  be  written  on  the  draft  and  may  consist  of  the  drawee's signature alone.  Acceptance may be made at any time and becomes effective when notification pursuant to instructions is given or the accepted draft is delivered for the purpose of giving rights on the acceptance to any person.

(b)    A draft may be accepted although it has not been signed by the drawer, is otherwise incomplete, is overdue, or has been dishonored.

(c)  If a  draft is payable at a fixed period after sight and the  acceptor fails to date the acceptance, the  holder may complete the acceptance by supplying a date in good faith.

(d)  "Certified check" means a  check accepted by the bank on which it is drawn. Acceptance may be made as stated in subsection (a) or by a writing on the check which indicates that the check is certified.  The  drawee of a check has no obligation to certify the check, and refusal to certify is not dishonor of the check.

§ 3-410.  ACCEPTANCE VARYING DRAFT.

(a)    If the terms of a drawee's acceptance vary from the terms of the draft as presented, the holder may refuse the acceptance and treat the draft as dishonored. In that case, the drawee may cancel the acceptance.

(b)  The terms of a  draft are not varied by an  acceptance to pay at a particular bank or place in the United States, unless the acceptance states that the draft is to be paid only at that bank or place.

(c)    If the holder assents to  an acceptance  varying  the terms of a  draft,  the obligation  of  each  drawer  and  indorser  that  does  not  expressly  assent  to  the acceptance is discharged.

§ 3-411.  REFUSAL TO PAY CASHIER'S CHECKS, TELLER'S CHECKS, AND CERTIFIED CHECKS.

(a)  In this section, "obligated bank" means the  acceptor of a certified check or the  issuer of a  cashier's check or teller's check bought from the issuer.
 
(b)  If the obligated bank wrongfully (i) refuses to pay a  cashier's check or  certified check, (ii) stops  payment of a teller's check, or (iii) refuses to pay a dishonored teller's check, the person asserting the  right to enforce the check is entitled to compensation for expenses and loss of interest resulting from the nonpayment and may recover consequential damages if the obligated bank refuses to pay after receiving notice of particular circumstances giving rise to the damages.

(c)  Expenses or consequential damages under subsection (b) are not recoverable if the refusal of the  obligated bank to pay occurs because (i) the bank suspends payments, (ii) the obligated bank asserts a claim or defense of the bank that it has reasonable grounds to believe is available against the  person entitled to enforce the instrument, (iii) the obligated bank has a reasonable doubt whether the person demanding  payment  is  the  person  entitled  to  enforce  the  instrument,  or  (iv) payment is prohibited by law.

§ 3-412.  OBLIGATION OF ISSUER OF NOTE OR CASHIER'S CHECK.

The  issuer of a  note or  cashier's check or other  draft drawn on the  drawer is obliged to pay the  instrument (i) according to its terms at the time it was  issued or, if not issued, at the time it first came into possession of a holder, or (ii) if the issuer signed an  incomplete instrument, according to its terms when completed, to  the extent stated in Sections  3-115 and  3-407.  The obligation is owed to a  person entitled to enforce the instrument or to an  indorser who paid the instrument under Section  3-
415.

§ 3-413.  OBLIGATION OF ACCEPTOR.

(a)  The  acceptor of a  draft is obliged to pay the draft (i) according to its terms at the time it was  accepted, even though the acceptance states that the draft is payable "as originally drawn" or equivalent terms, (ii) if the acceptance varies the terms of the draft, according to the terms of the draft  as varied, or (iii) if the acceptance is of a draft that is an incomplete instrument, according to its terms when completed, to the extent stated in Sections  3-115 and  3-407.  The obligation is owed to a  person entitled to enforce the draft or to the  drawer or an indorser who paid the draft under Section 3-414 or 3-415.

(b)  If the certification of a  check or other  acceptance of a  draft states the amount certified or accepted,  the obligation of the acceptor is that amount.    If (i) the certification  or  acceptance  does  not  state  an  amount,  (ii)  the  amount  of  the instrument is  subsequently raised, and (iii) the instrument is then negotiated to a holder in due course, the obligation of the  acceptor is the amount of the instrument at the time it was taken by the holder in due course.

§ 3-414.  OBLIGATION OF DRAWER.
 
(a)    This section does not apply to cashier's checks or other drafts drawn on the drawer.

(b)  If an unaccepted  draft is dishonored, the  drawer is obliged to pay the draft (i) according to its terms at the time it was  issued or, if not issued, at the time it first came  into  possession  of  a  holder,  or  (ii)  if  the  drawer  signed  an  incomplete instrument, according to its terms when completed, to the extent stated in Sections
3-115 and  3-407.  The obligation is owed to a  person entitled to enforce the draft or to an indorser who paid the draft under Section  3-415.

(c)  If a  draft is accepted by a bank, the  drawer is discharged, regardless of when or by whom  acceptance was obtained.

(d)    If a draft is accepted and the acceptor is not a bank, the obligation of the drawer to pay the draft if the draft is dishonored by the acceptor is the same as the obligation of an indorser under Section 3-415(a) and (c).

(e)    If a draft states that it is drawn "without recourse" or otherwise disclaims liability of the  drawer to pay the draft, the drawer is not liable under subsection (b) to pay the draft if the draft is not a check.    A  disclaimer of the liability stated in subsection (b) is not effective if the draft is a check.

(f)    If (i) a check is not presented for payment or given to a depositary bank for collection within 30  days after its date, (ii) the drawee suspends payments after expiration of the 30-day period without paying the check, and (iii) because of the suspension  of  payments,  the  drawer  is  deprived  of  funds  maintained  with  the drawee to cover payment of the check, the drawer to the extent deprived of funds may discharge its obligation to pay the check by assigning to the  person entitled to enforce the check the rights of the drawer against the drawee with respect to the funds.

§ 3-415.  OBLIGATION OF INDORSER.

(a)  Subject to subsections (b), (c), and (d) and to Section  3-419(d), if an  instrument is dishonored, an indorser is obliged to pay the amount due on the instrument (i) according to the terms of the instrument at the time it was indorsed, or (ii) if the indorser indorsed an  incomplete instrument, according to its terms when completed, to the extent stated in Sections  3-115 and  3-407.  The obligation of the indorser is owed to a  person entitled to enforce the instrument or to a subsequent indorser who paid the instrument under this section.

(b)    If  an  indorsement  states  that  it  is  made  "without  recourse"  or  otherwise disclaims liability of the indorser, the indorser is not liable under subsection (a) to pay the instrument.
 
(c)  If notice of dishonor of an  instrument is required by Section  3-503 and notice of dishonor complying with that section is not given to an  indorser, the liability of the indorser under subsection (a) is discharged.

(d)  If a  draft is accepted by a bank after an  indorsement is made, the liability of the indorser under subsection (a) is discharged.

(e)    If an indorser of a check is liable under subsection (a) and the check is not presented for payment, or given to a depositary bank for collection, within 30 days after  the  day  the  indorsement  was  made,  the  liability  of  the  indorser  under subsection (a) is discharged.

§ 3-416.  TRANSFER WARRANTIES.

(a)    A  person  who  transfers  an  instrument  for  consideration  warrants  to  the transferee and, if the transfer is by  indorsement, to any subsequent transferee that:

(1) the warrantor is a  person entitled to enforce the  instrument; (2) all signatures on the  instrument are authentic and authorized; (3) the instrument has not been altered;
(4) the  instrument is not subject to a defense or claim in recoupment of any  party which can be asserted against the warrantor; and

(5) the warrantor has no knowledge of any insolvency proceeding commenced with respect to the maker or  acceptor or, in the case of an unaccepted  draft, the drawer; and

(6) with respect to a remotely-created consumer item, that the person on whose account the item is drawn authorized the issuance of the item in the amount for which the item is drawn.

(b)  A person to whom the warranties under subsection (a) are made and who took the  instrument in  good faith  may recover from the warrantor as damages for breach of warranty an amount equal to the loss suffered as a result of the breach, but not more than the amount of the instrument plus expenses and loss of interest incurred as a result of the breach.

(c)    The warranties stated in subsection (a) cannot be disclaimed with respect to checks.    Unless notice of a claim for breach of warranty is given to the warrantor within 30 days after the claimant has reason to know of the breach and the identity of the warrantor, the liability of the warrantor under subsection (b) is discharged to the extent of any loss caused by the delay in giving notice of the claim.
 
(d)  A [cause of action] for breach of warranty under this section accrues when the claimant has reason to know of the breach.

§ 3-417.  PRESENTMENT WARRANTIES.

(a)  If an unaccepted  draft is presented to the  drawee for payment or  acceptance and the drawee pays  or accepts the draft, (i) the person obtaining payment or acceptance, at the time of  presentment, and (ii) a previous transferor of the draft, at the time of transfer, warrant to the drawee making payment or accepting the draft in good faith that:

(1) the warrantor is, or was, at the time the warrantor transferred the draft, a person entitled to enforce the draft or authorized to obtain payment or acceptance of the draft on behalf of a person entitled to enforce the draft;

(2) the draft has not been altered;

(3) the warrantor has no knowledge that the signature of the  drawer of the  draft is unauthorized;

(4) with respect to any remotely-created consumer item, that the person on whose account the item is drawn authorized the issuance of the item in the amount for which the item is drawn.

(b)  A  drawee making payment may recover from any warrantor damages for breach of warranty equal to the amount paid by the drawee less the amount the drawee received or is entitled to receive from the  drawer because of the payment.    In addition, the drawee is entitled to compensation for expenses and loss of interest resulting from the breach.  The right of the drawee to recover damages under this subsection is not affected by any failure of the drawee to exercise  ordinary care in making payment.  If the drawee accepts the  draft, breach of warranty is a defense to the obligation of the  acceptor.  If the acceptor makes payment with respect to the draft, the acceptor is entitled to recover from any warrantor for breach of warranty the amounts stated in this subsection.

(c)  If a  drawee asserts a claim for breach of warranty under subsection (a) based on an unauthorized  indorsement of the draft or an alteration of the draft, the warrantor may defend by proving that the indorsement is effective under Section  3-
404 or 3-405 or the  drawer is precluded under Section  3-406 or  4-406 from asserting against the drawee the unauthorized indorsement or alteration.

(d)  If (i) a dishonored  draft is presented for payment to the  drawer or an  indorser or (ii) any other instrument is presented for payment to a  party obliged to pay the instrument, and (iii) payment is received, the following rules apply:
 
(1)    The  person  obtaining  payment  and  a  prior  transferor  of  the  instrument warrant to the person making payment in  good faith  that the warrantor is, or was, at the time the warrantor transferred the instrument, a  person entitled to enforce the  instrument or authorized to obtain payment on behalf of a person entitled to enforce the  instrument.

(2)  The person making payment may recover from any warrantor for breach of warranty an amount equal to the amount paid plus expenses and loss of interest resulting from the breach.

(e)    The warranties stated in subsections (a) and (d) cannot be disclaimed with respect to  checks.  Unless notice of a claim for breach of warranty is given to the warrantor within 30 days after the claimant has reason to know of the breach and the identity of the warrantor, the liability of the warrantor under subsection (b) or (d) is discharged to the extent of any loss caused by the delay in giving notice of the claim.

(f)  A [cause of action] for breach of warranty under this section accrues when the claimant has reason to know of the breach.

§ 3-418.  PAYMENT OR ACCEPTANCE BY MISTAKE.

(a) Except as provided in subsection (c), if the drawee of a  draft pays or accepts the draft and the drawee acted on the mistaken belief that (i) payment of the draft had not been stopped pursuant to Section  4-403 or (ii) the signature of the  drawer of the draft was authorized, the drawee may recover the amount of the  draft from the person  to  whom  or  for  whose  benefit  payment  was  made  or,  in  the  case  of acceptance, may revoke the acceptance.  Rights of the drawee under this subsection are not affected by  failure of the drawee to exercise ordinary care in paying or accepting the draft.

(b)  Except as provided in subsection (c), if an  instrument has been paid or accepted by mistake and the  case  is not covered by subsection (a), the person paying or accepting may, to the extent permitted by the law governing mistake and restitution, (i) recover the payment from the person to whom or for whose benefit payment was made or (ii) in the case of acceptance, may revoke the acceptance.

(c)  The remedies provided by subsection (a) or (b) may not be asserted against a person who took the instrument in  good faith  and for value or who in good faith changed position in reliance on the payment or  acceptance.    This subsection does not limit remedies provided by Section 3-417 or 4-407.

(d)  Notwithstanding Section  4-215, if an  instrument is paid or accepted by mistake and the payor or acceptor recovers payment or revokes  acceptance under subsection
 
(a) or (b), the instrument is deemed not to have been paid or accepted and is treated as dishonored, and the person from whom payment is recovered has rights as a  person entitled to enforce the dishonored instrument.

§ 3-419.  INSTRUMENTS SIGNED FOR ACCOMMODATION.

(a)    If an instrument is issued for value given for the benefit of a party to the instrument    ("accommodated    party")    and        another    party    to    the     instrument ("accommodation  party")  signs  the  instrument  for  the  purpose  of  incurring liability on the instrument without being a direct beneficiary of the value given for the     instrument,    the    instrument    is    signed    by    the    accommodation    party    "for accommodation."

(b)  An accommodation party may sign the  instrument as  maker,  drawer,  acceptor, or  indorser and, subject to subsection (d), is obliged to pay the instrument in the capacity    in    which        the        accommodation        party      signs.    The    obligation        of        an accommodation party may be enforced notwithstanding any statute of frauds and whether     or        not    the    accommodation    party    receives     consideration    for    the accommodation.

(c)  A person signing an  instrument is presumed to be an accommodation party and there is notice that the instrument is signed for accommodation if the signature is an anomalous indorsement or is accompanied by  words indicating that the signer is acting as surety or guarantor with respect to the obligation of another party to the instrument.    Except    as    provided    in    Section    3-605,    the    obligation    of    an accommodation party to pay the instrument is not affected by the  fact that the person enforcing the obligation had notice when the instrument was taken by that person that the accommodation party signed the instrument for accommodation.

(d)  If the signature of a  party to an  instrument is accompanied by words indicating unambiguously that the party is guaranteeing collection rather than payment of the obligation of another party to the instrument,  the signer is obliged to pay the amount due on the instrument to a  person entitled to enforce the instrument only if (i) execution of judgment against the other party has been returned unsatisfied, (ii) the  other party is insolvent or in an insolvency proceeding, (iii) the other party cannot be served with process, or (iv) it is otherwise apparent that payment cannot be obtained from the other party.

(e) If the signature of a  party to an  instrument is accompanied by words indicating that  the  party  guarantees  payment  or  the  signer  signs  the  instrument  as  an accommodation party in some other manner that does not unambiguously indicate an intention to guarantee collection rather than payment, the signer is obliged to pay the amount due on the instrument to a person entitled to enforce the instrument in the same circumstances as the accommodated party would be obliged, without prior resort to the accommodated party by the person entitled to enforce the instrument.

(f)  An accommodation party who pays the  instrument is entitled to reimbursement from the accommodated party and is entitled to enforce the instrument against the accommodated party.  In proper circumstances, an accommodation party may obtain relief  that  requires  the  accommodated  party  to  perform  its  obligations  on  the instrument.  An  accommodated  party  that  pays  the  instrument  has  no  right  of recourse against, and is not entitled to contribution from, an accommodation party.

§ 3-420.  CONVERSION OF INSTRUMENT.

(a)  The law applicable to conversion of personal property applies to  instruments. An instrument is also converted if it is taken by transfer, other than a  negotiation, from a person not entitled to enforce the  instrument or a bank makes or obtains payment with respect to the instrument for a person not entitled  to enforce the instrument or receive payment.  An action for conversion of an instrument may not be brought by (i) the  issuer or  acceptor of the instrument or (ii) a payee or indorsee who did not receive delivery of the instrument either directly or through delivery to an agent or a co-payee.

(b)  In an action under subsection (a), the measure of liability is presumed to be the amount payable on the instrument, but recovery may not exceed the amount of the plaintiff's interest in the instrument.

(c)  A representative, other than a depositary bank, who has in  good faith  dealt with an  instrument or its proceeds on behalf of one who was not the  person entitled to enforce the instrument is not liable in conversion to that person beyond the amount of any proceeds that it has not paid out.

PART 5.  DISHONOR  [Table of Contents]

§ 3-501.  PRESENTMENT.

(a)  "Presentment" means a demand made by or on behalf of a  person entitled to enforce an instrument  (i)  to pay the instrument made to the drawee or a party obliged to pay the instrument or, in the case of a note or accepted  draft payable at a bank, to the bank, or (ii) to accept a draft made to the drawee.

(b)    The following rules are subject to Article 4, agreement of the parties, and clearing-house rules and the like:

(1)    Presentment may be made at the place of payment of the instrument and must be made at the place of payment if the instrument is payable at a bank in the United States; may be made by any commercially reasonable means, including an oral, written, or  electronic communication; is effective when the demand for payment or  acceptance is received by the person to whom  presentment is made; and is effective if made to any one of two or more  makers, acceptors,  drawees, or other payors.

(2)    Upon demand of the person to whom presentment is made, the person making    presentment    must    (i)    exhibit    the    instrument,    (ii)    give    reasonable identification and, if presentment is made on behalf of another person, reasonable evidence of authority to do so, and (iii) sign a receipt on the instrument for any payment made or surrender the instrument if full payment is made.

(3)  Without dishonoring the  instrument, the  party to whom  presentment is made may (i) return the instrument for lack of a necessary  indorsement, or (ii) refuse payment or  acceptance for failure of the presentment to comply with the terms of the instrument, an agreement of the parties, or other applicable law or rule.

(4)  The  party to whom  presentment is made may treat presentment as occurring on the next business  day after the day of presentment if the party to whom presentment is made has established a cut-off hour not earlier than 2 p.m. for the receipt and processing of  instruments presented for payment or acceptance and presentment is made after the cut-off hour.

§ 3-502.  DISHONOR.

(a) Dishonor of a note is governed by the following rules:

(1)  If the  note is payable on demand, the note is dishonored if  presentment is duly made to the maker and the note is not paid on the day of presentment.

(2)  If the  note is not payable on demand and is payable at or through a bank or the terms of the note require  presentment, the note is dishonored if presentment is duly made and the note is not paid on the day it becomes payable or the day of presentment, whichever is later.

(3)  If the  note is not payable on demand and paragraph (2) does not apply, the note is dishonored if it is not paid on the day it becomes payable.

(b)  Dishonor of an unaccepted  draft other than a documentary draft is governed by the following rules:

(1)  If a  check is duly presented for payment to the payor bank otherwise than for immediate payment over the counter, the check is dishonored if the payor bank makes timely return of the check or sends timely  notice    of    dishonor    or  nonpayment  under  Section  4-301  or  4-302,  or  becomes  accountable  for  the amount of the check under Section  4-302.

(2)  If a  draft is payable on demand and paragraph (1) does not apply, the draft is dishonored if presentment for payment is duly made to the drawee and the draft is not paid on the day of presentment.

(3)  If a  draft is payable on a date stated in the draft, the draft is dishonored if (i) presentment for payment is duly made to the  drawee and payment is not made on the day the draft becomes payable or the day of presentment, whichever is later, or (ii) presentment for  acceptance is duly made before the day the draft becomes payable and the draft is not accepted on the day of presentment.

(4)  If a  draft is payable on elapse of a period of time after sight or  acceptance, the draft is dishonored if  presentment for acceptance is duly made and the draft is not accepted on the day of presentment.

(c)    Dishonor of an unaccepted documentary draft occurs according to the rules stated in subsection (b)(2), (3), and (4), except that payment or  acceptance may be delayed without dishonor until no later than the close of the third business day of the  drawee following the day on which payment or acceptance is required by those paragraphs.

(d) Dishonor of an accepted draft is governed by the following rules:

(1)  If the  draft is payable on demand, the draft is dishonored if  presentment for payment is duly made  to the acceptor and the draft is not paid on the day of presentment.

(2)  If the  draft is not payable on demand, the draft is dishonored if  presentment for payment is duly made to the  acceptor and payment is not made on the day it becomes payable or the day of presentment, whichever is later.

(e)  In any case in which  presentment is otherwise required for dishonor under this section and  presentment is excused under Section 3-504, dishonor occurs without presentment if the  instrument is not duly accepted or paid.

(f)  If a  draft is dishonored because timely  acceptance of the draft was not made and the person entitled to demand acceptance consents to a late acceptance, from the time of acceptance the draft is treated as never having been dishonored.

§ 3-503.  NOTICE OF DISHONOR.
 
(a)  The obligation of an  indorser stated in Section  3-415(a) and the obligation of a drawer stated in  Section 3-414(d) may not be enforced unless (i) the indorser or drawer is given notice of dishonor of the instrument complying with this section or (ii) notice of dishonor is excused under Section 3-504(b).

(b)    Notice  of  dishonor  may  be  given  by  any  person;  may  be  given  by  any commercially    reasonable    means,    including    an    oral,    written,    or    electronic communication;  and  is  sufficient  if  it  reasonably  identifies  the  instrument  and indicates  that  the  instrument  has  been  dishonored  or  has  not  been  paid  or accepted.  Return of an instrument given to a bank for collection is sufficient notice of dishonor.

(c) Subject to Section 3-504(c), with respect to an  instrument taken for collection by a collecting bank, notice of dishonor must be given (i) by the bank before midnight of the next banking day following the banking day on which the bank receives notice of dishonor of the instrument, or (ii) by any other person within 30 days following the day on which the person receives notice of dishonor.  With respect to any other instrument, notice of dishonor must be given within 30 days following the day on which dishonor occurs.

§ 3-504.  EXCUSED PRESENTMENT AND NOTICE OF DISHONOR.

(a)  Presentment for payment or  acceptance of an  instrument is excused if (i) the person entitled to  present the instrument cannot with reasonable diligence make presentment, (ii) the maker or acceptor  has  repudiated an obligation to pay the instrument  or  is  dead  or  in  insolvency  proceedings,  (iii)  by  the  terms  of  the instrument presentment is not necessary to enforce the obligation of  indorsers or the drawer, (iv) the drawer or indorser whose obligation is being enforced has waived presentment or  otherwise has no reason to expect or right to require that the instrument be paid or accepted, or (v) the drawer instructed the  drawee not to pay or accept the  draft or the drawee was not obligated to the drawer to pay the draft.

(b)    Notice of dishonor is excused if (i) by the terms of the instrument notice of dishonor is not necessary to enforce the obligation of a  party to pay the instrument, or (ii) the party whose obligation is  being enforced waived notice of dishonor.    A waiver of presentment is also a waiver of notice of dishonor.

(c)    Delay in giving notice of dishonor is excused if the delay was caused by circumstances beyond  the control of the person giving the notice and the person giving the notice exercised reasonable diligence after the cause of the delay ceased to operate.

§ 3-505.  EVIDENCE OF DISHONOR.
 
(a)  The following are admissible as evidence and create a presumption of dishonor and of any notice of dishonor stated:

(1) a document regular in form as provided in subsection (b) which purports to be a protest;

(2) a purported stamp or writing of the  drawee, payor bank, or presenting bank on or accompanying the  instrument stating that acceptance or payment has been refused  unless  reasons  for  the  refusal  are  stated  and  the  reasons  are  not consistent with dishonor;

(3) a book or record of the  drawee, payor bank, or collecting bank, kept in the usual course of business which shows dishonor, even if there is no evidence of who made the entry.

(b)    A protest is a certificate of dishonor made by a United States consul or vice consul, or a notary public or other person authorized to administer oaths by the law of the place where dishonor occurs.  It may be made upon information satisfactory to that person.    The  protest must identify the instrument and certify either that presentment has been made or, if not made, the reason why it was not made, and that the instrument has been dishonored by nonacceptance or  nonpayment.    The protest may also certify that notice of dishonor has been given to some or all parties.

PART 6.  DISCHARGE AND PAYMENT  [Table of Contents]

§ 3-601.  DISCHARGE AND EFFECT OF DISCHARGE.

(a)  The obligation of a  party to pay the  instrument is discharged as stated in this Article or by an act or agreement with the  party which would discharge an obligation to pay money under a simple contract.

(b)  Discharge of the obligation of a  party is not effective against a person acquiring rights of a  holder in due course of the  instrument without notice of the discharge.

§ 3-602.  PAYMENT.

(a)  Subject to subsection (b), an  instrument is paid to the extent payment is made (i) by or on behalf of a party obliged to pay the instrument, and (ii) to a  person entitled to enforce the instrument.  To the extent of the payment, the obligation of the party obliged to pay the instrument is discharged even though payment is made with knowledge of a claim to the instrument under Section  3-306 by another person.

(b) Subject to subsection (e) a note is paid to the extent payment is made by or on behalf of a  party obliged to pay the note to a person that formerly was entitled to enforce the note only if at the time of the payment the party obliged to pay has not received adequate notification that the note has been transferred and that payment is to be made to the transferee. A notification is adequate only if it is signed by the transferor or the transferee; reasonably identifies the transferred note; and provides an  address  at  which  payments  subsequently  can  be  made.  Upon  request,  a transferee  shall  seasonably  furnish  reasonable  proof  that  the  note  has  been transferred.  Unless the transferee complies with the request, a payment to the person that formerly was entitled to  enforce the note is effective for purposes of subsection (c) even if the party obliged to pay the note has received a notification under this paragraph.

(c) Subject to subsection (e), to the extent of a payment under subsections (a) and (b), the obligation of  the party obliged to pay the instrument is discharged even though payment is made with knowledge of a claim to the instrument under Section
3-306 by another person.

(d) Subject to subsection (e), a transferee, or any  party that has acquired rights in the instrument directly or indirectly from a transferee, including any such party that has rights as a holder in due course, is deemed to have notice of any payment that is made under subsection (b) after the date that the note is  transferred to the transferee    but    before    the    party    obliged    to    pay    the    note    receives    adequate notification of the transfer.

(e)    The  obligation  of  a  party  to  pay  the  instrument  is  not  discharged  under subsections (a) through (d) if:

(1) a claim to the  instrument under Section  3-306 is enforceable against the  party receiving payment and  (i) payment is made with knowledge by the payor that payment is prohibited by injunction or similar  process of a court of competent jurisdiction, or (ii) in the case of an instrument other than a  cashier's check,  teller's check, or certified check, the party making payment accepted, from the person having a claim to the instrument, indemnity against loss resulting from refusal to pay the person entitled to enforce the instrument; or

(2) the person making payment knows that the  instrument is a stolen instrument and pays a person it knows is in wrongful possession of the instrument.

(f) As used in this section, "signed," with respect to a record that is not a writing, includes the  attachment  to or logical association with the record of an electronic symbol, sound, or process to or with the record with the present intent to adopt or accept the record.

§ 3-603.  TENDER OF PAYMENT.
 
(a)  If tender of payment of an obligation to pay an  instrument is made to a  person entitled to enforce the instrument, the effect of tender is governed by principles of law applicable to tender of payment under a simple contract.

(b)  If tender of payment of an obligation to pay an  instrument is made to a  person entitled to enforce the instrument and the tender is refused, there is discharge, to the  extent  of  the  amount  of  the  tender,  of  the  obligation  of  an  indorser  or accommodation  party having a right of recourse with respect to the  obligation to which the tender relates.

(c)  If tender of payment of an amount due on an  instrument is made to a  person entitled to enforce the instrument, the obligation of the obligor to pay interest after the due date on the amount tendered is discharged.  If  presentment is required with respect to an instrument and the obligor is able and ready to pay on the due date at every place of payment stated in the instrument, the obligor is deemed to have made  tender of payment on the due date to the person entitled to enforce the instrument.

§ 3-604.  DISCHARGE BY CANCELLATION OR RENUNCIATION.

(a)  A  person entitled to enforce an  instrument, with or without  consideration, may discharge the obligation  of a party to pay the instrument (i) by an intentional voluntary  act,  such  as  surrender  of  the  instrument  to  the  party,  destruction, mutilation, or cancellation of the instrument, cancellation or  striking out of the party's signature, or the addition of words to the instrument indicating discharge, or (ii)  by agreeing not to sue or otherwise renouncing rights against the party by a signed record.

(b)  Cancellation or striking out of an  indorsement pursuant to subsection (a) does not affect the status and rights of a  party derived from the indorsement.

(c) As used in this section, "signed," with respect to a record that is not a writing, includes the  attachment  to or logical association with the record of an electronic symbol, sound, or process to or with the record with the present intent to adopt or accept the record.

§ 3-605.  DISCHARGE OF SECONDARY OBLIGORS.

(a) If a  person entitled to enforce an  instrument releases the obligation of a principal obligor in whole or in  part, and another party to the instrument is a secondary obligor with respect to the obligation of that  principal obligor, the following rules apply:
 
(1) Any obligations of the principal obligor to the secondary obligor with respect to any previous payment by the secondary obligor are not affected. Unless the terms of the release preserve the secondary obligor's recourse, the principal obligor is discharged, to the extent of the release, from any other duties to the secondary obligor under this article.

(2) Unless the terms of the release provide that the person entitled to enforce the instrument retains the  right to enforce the instrument against the secondary obligor, the secondary obligor is discharged to the same extent as the principal obligor from any unperformed portion of its obligation on the instrument. If the instrument is a check and the obligation of the secondary obligor is based on an indorsement of the check, the secondary obligor is discharged without regard to the language or circumstances of the discharge or other release.

(3) If the secondary obligor is not discharged under paragraph (2), the secondary obligor is discharged  to  the extent of the value of the consideration for the release, and to the extent that the release would otherwise cause the secondary obligor a loss.

(b) If a person entitled to enforce an instrument grants a principal obligor an extension of the time at which one or more payments are due on the instrument and another party to the instrument is a secondary obligor with respect to the obligation of that principal obligor, the following rules apply:

(1) Any obligations of the principal obligor to the secondary obligor with respect to any previous payment by the secondary obligor are not affected. Unless the terms of    the    extension    preserve    the    secondary    obligor's    recourse,    the    extension correspondingly extends the time for performance of any other duties owed to the secondary obligor by the principal obligor under this article.

(2) The secondary obligor is discharged to the extent that the extension would otherwise cause the secondary obligor a loss.

(3) To the extent that the secondary obligor is not discharged under paragraph (2), the secondary  obligor may perform its obligations to a person entitled to enforce the instrument as if the time for  payment had not been extended or, unless the terms of the extension provide that the person entitled to enforce the instrument retains the right to enforce the instrument against the secondary obligor  as  if the time for payment had not been extended, treat the time for performance of its obligations as having been extended correspondingly.

(c)    If    a    person entitled to enforce     an    instrument    agrees,    with    or    without consideration, to a modification of the obligation of a principal obligor other than a complete or partial release or an extension of the due date and another party to the instrument is a secondary obligor with respect to the obligation of that principal obligor, the following rules apply:

(1) Any obligations of the principal obligor to the secondary obligor with respect to any previous payment by the secondary obligor are not affected. The modification correspondingly modifies any other duties owed to the secondary obligor by the principal obligor under this article.

(2) The secondary obligor is discharged from any unperformed portion of its obligation to the extent that the modification would otherwise cause the secondary obligor a loss.

(3) To the extent that the secondary obligor is not discharged under paragraph (2), the secondary  obligor may satisfy its obligation on the instrument as if the modification had not occurred, or treat its obligation on the instrument as having been modified correspondingly.

(d) If the obligation of a principal obligor is secured by an interest in collateral, another   party  to  the  instrument  is  a  secondary  obligor  with  respect  to  that obligation, and a person entitled to enforce the instrument impairs the value of the interest in collateral, the obligation of the secondary obligor is  discharged to the extent of the impairment. The value of an interest in collateral is impaired to the extent the value of the interest is reduced to an amount less than the amount of the recourse of the secondary obligor, or the reduction in value of the interest causes an increase in the amount by which the amount of the recourse exceeds the value of the interest. For purposes of this subsection, impairing the value of an interest in collateral includes failure to obtain or maintain perfection or recordation of the interest in collateral, release of collateral without substitution of collateral of equal value or equivalent reduction of the underlying obligation, failure to perform a duty to preserve the value of collateral owed, under Article 9 or other law, to a debtor or other person secondarily liable, and failure to comply with applicable law in disposing of or otherwise enforcing the interest in collateral.

(e) A secondary obligor is not discharged under subsection (a)(3), (b), (c), or (d) unless the person entitled to enforce the instrument knows that the person is a secondary obligor or has notice under  Section 3-419(c) that the instrument was signed for accommodation.

(f) A secondary obligor is not discharged under this section if the secondary obligor consents to the event or conduct that is the basis of the discharge, or the instrument or a separate agreement of the party provides  for waiver of discharge under this section specifically or by general language indicating that parties waive  defenses based on suretyship or impairment of collateral. Unless the circumstances indicate otherwise, consent by the principal obligor to an act that would lead to a discharge under this section constitutes consent to that act by the secondary obligor if the secondary obligor controls the principal obligor or deals with the person entitled to enforce the instrument on behalf of the principal obligor.

(g) A release or extension preserves a secondary obligor's recourse if the terms of the release or extension provide that the person entitled to enforce the instrument retains the right to enforce the instrument against the secondary obligor; and the recourse of the secondary obligor continues as though the release or extension had not been granted.

(h) Except as otherwise provided in subsection (i), a secondary obligor asserting discharge under this section has the burden of persuasion both with respect to the occurrence of the acts alleged to harm the secondary obligor and loss or prejudice caused by those acts.

(i) If the secondary obligor demonstrates prejudice caused by an impairment of its recourse, and the circumstances of the case indicate that the amount of loss is not reasonably  susceptible  of  calculation  or  requires  proof  of  facts  that  are  not ascertainable, it is presumed  that the act impairing  recourse  caused  a loss or impairment equal to the liability of the secondary obligor on the instrument. In that event, the burden of persuasion as to any lesser amount of the loss is on the person entitled to enforce the instrument.

skip navigation
Search Law School
Search Cornell
LII / Legal Information Institute     
home search
find a lawyer
donate

UCC: uniform commercial code
 
main page about
search


U.C.C. - ARTICLE 4 - BANK DEPOSITS AND COLLECTIONS

PART 1. GENERAL PROVISIONS AND DEFINITIONS  [Table of Contents]

§ 4-101.  SHORT TITLE.

This Article    may  be  cited  as  Uniform  Commercial  Code  --  Bank  Deposits  and
Collections.

§ 4-102.  APPLICABILITY.

(a)  To the extent that  items within this Article are also within  Articles 3 and 8, they are subject to  those Articles.    If there is conflict,  this Article  governs Article 3, but Article 8  governs this Article.

(b)  The liability of a  bank for action or non-action with respect to an  item handled by it for purposes of presentment, payment, or collection is governed by the law of the place where the bank is located.  In the case of action or non-action by or at a branch or separate office of a bank, its liability is governed by the law of the place where the branch or separate office is located.

§ 4-103.  VARIATION BY AGREEMENT; MEASURE OF DAMAGES;  ACTION CONSTITUTING ORDINARY CARE.
 
(a)  The effect of the provisions of this Article may be varied by agreement , but the parties to the agreement cannot disclaim a  bank's responsibility for its  lack of good faith or failure to exercise ordinary care or  limit the measure of damages for the lack or failure.  However, the parties may determine by agreement the standards by which  the  bank's  responsibility  is  to  be  measured  if    those  standards  are  not manifestly unreasonable.

(b)  Federal Reserve regulations and operating  circulars,  clearing-house rules, and the  like  have  the  effect  of  agreements  under  subsection    (a),  whether or  not specifically assented to by all parties interested in items handled.

(c)    Action or non-action approved by this Article or pursuant to Federal Reserve regulations  or  operating    circulars  is  the  exercise  of  ordinary  care  and,  in  the absence of special instructions, action or non-action consistent with  clearing-house rules and the like or with a general banking usage not disapproved by this Article, is prima facie the exercise of ordinary care.

(d)    The  specification  or  approval  of  certain  procedures  by  this  Article    is  not disapproval of other procedures that may be reasonable under the circumstances.

(e)    The measure of damages for failure to exercise ordinary care in handling an item is the amount of the item reduced by an amount    that could not have been realized by the  exercise of ordinary care.  If there is also bad faith it includes any other damages the party suffered as a proximate consequence.

§ 4-104.  DEFINITIONS AND INDEX OF DEFINITIONS.

(a) In this Article, unless the context otherwise requires:

(1)  "Account" means any deposit or credit account with a  bank , including a demand, time,  savings,  passbook, share draft, or like account, other than an account evidenced by a certificate of deposit;

(2) "Afternoon" means the period of a day between noon and midnight;

(3)  "Banking day" means the part of a day on which a  bank is open to the public for carrying on substantially all of its banking functions;

(4)  "Clearing house" means an association of  banks or other payors regularly clearing  items;

(5)  "Customer" means a person having an  account with a  bank or for whom a bank has agreed to collect items, including a bank  that maintains an account  at another bank;
 
(6)    "Documentary draft" means a draft to be presented for acceptance or payment  if  specified    documents,  certificated  securities  (Section  8-102)  or instructions for uncertificated securities  (Section 8-102), or other certificates, statements, or the like are to be received by the  drawee or other payor before acceptance or payment of the draft;

(7)  "Draft" means a  draft as defined in Section  3-104 or an  item, other than an instrument, that is an order.

(8) "Drawee" means a person ordered in a draft to make payment.

(9)  "Item" means an instrument or a promise or order to pay money handled by a bank for  collection or payment.    The term does not include a payment order governed by Article 4A or a credit or debit card slip;

(10)    "Midnight deadline" with respect to a bank is midnight on its next banking day following the banking day on which it receives the relevant  item or notice or from which the time for taking action commences to run, whichever is later;

(11)  "Settle" means to pay in cash, by  clearing-house settlement, in a charge or credit or by remittance, or otherwise as  agreed.  A settlement may be either provisional or final.

(12)    "Suspends payments" with respect to a bank means that it has been closed by order of  the  supervisory authorities, that a public officer has been appointed to take it over, or that it ceases or refuses to make payments in the ordinary course of business.

(b)  Other definitions applying to this Article and the sections in which they appear are:

"Agreement for electronic presentment"    Section 4-110

"Collecting bank"    Section 4-105

"Depositary bank"    Section 4-105

"Intermediary bank"    Section 4-105

"Payor bank"    Section 4-105

"Presenting bank"    Section 4-105

"Presentment notice"    Section 4-110
 


(c)    "Control" as provided in Section 7-106 and the following definitions in other
Articles apply to this Article:

"Acceptance"    Section 3-409

"Alteration"    Section 3-407

"Cashier's check"    Section 3-104

"Certificate of deposit"    Section 3-104

"Certified check"    Section 3-409

"Check"    Section 3-104

"Holder in due course"    Section 3-302

"Instrument"    Section 3-104

"Notice of dishonor"    Section 3-503

"Order"    Section 3-103

"Ordinary care"    Section 3-103

"Person entitled to enforce"    Section 3-301

"Presentment"    Section 3-501

"Promise"    Section 3-103

"Prove"    Section 3-103

"Record"    Section 3-103.
"Remotely-Created consumer item"    Section 3-103. "Teller's check"    Section 3-104

"Unauthorized signature"    Section 3-403

(d)  In addition, Article 1 contains general definitions and principles of construction and interpretation applicable throughout this Article.
 
§    4-105.    "BANK";    "DEPOSITARY    BANK";    "PAYOR    BANK"; "INTERMEDIARY BANK"; "COLLECTING BANK"; "PRESENTING BANK".

In this Article :

(1)    "Bank" means a person engaged in the business of banking, including a savings bank, savings and loan association, credit union, or trust company.

(2)  "Depositary bank" means the first  bank to take an  item even though it is also the  payor bank, unless the item is presented for immediate payment over the counter;

(3) "Payor bank" means a  bank that is the  drawee of a  draft;

(4)    "Intermediary bank" means a bank to which an item is transferred in course of collection except the depositary or  payor bank;

(5)  "Collecting bank" means a  bank handling an  item for collection except the payor bank;

(6) "Presenting bank" means a  bank presenting an  item except a  payor bank.

§ 4-106.    PAYABLE  THROUGH  OR  PAYABLE  AT  BANK;  COLLECTING BANK.

(a)  If an  item states that it is "payable through" a  bank identified in the item, (i) the item designates the bank as a  collecting bank and does not by itself authorize the bank to pay the item, and (ii) the item may be presented for payment only by or through the bank.

Alternative A

(b)  If an  item states that it is "payable at" a  bank identified in the item, the item is equivalent to a  draft drawn on the bank.

Alternative B

(b)  If an  item states that it is "payable at" a  bank identified in the item, (i) the item designates the bank as a collecting bank and does not by itself authorize the bank to pay the item, and (ii) the item may be presented for payment only by or through the bank.

(c)  If a  draft names a nonbank  drawee and it is unclear whether a  bank named in the draft is a co-drawee or a  collecting bank, the bank is a collecting bank.
 
§ 4-107.  SEPARATE OFFICE OF BANK.

A branch or separate office of a bank    is a separate bank for the purpose of computing the time within which and determining the place at or to which action may be taken or notice or orders  must be given under this Article and under Article
3.

§ 4-108.  TIME OF RECEIPT OF ITEMS.

(a)  For the purpose of allowing time to process  items, prove balances, and make the necessary entries on its books to determine its position for the day, a  bank may fix an  afternoon hour of 2 P.M. or later as a  cutoff hour for the handling of money and items and the making of entries on its books.

(b)    An item or deposit of money received on any day after a  cutoff hour so fixed or after the close of the banking day may be treated as being received at the opening of the next banking day.

§ 4-109.  DELAYS.

(a)  Unless otherwise instructed, a  collecting bank in a good faith effort to secure payment    of a specific    item drawn on a payor other than a bank, and with or without the approval of any person involved,  may  waive, modify, or extend time limits imposed or permitted by this [Act] for a period not  exceeding two additional banking  days without discharge of  drawers or indorsers or liability to its transferor or a prior party.

(b)    Delay by a collecting bank or payor bank beyond time limits prescribed or permitted by this [Act]  or by instructions is excused if (i) the delay is caused by interruption of communication or computer  facilities, suspension of payments by another    bank,    war,    emergency    conditions,    failure    of    equipment,    or    other circumstances beyond the control of the bank , and  (ii)  the bank exercises such diligence as the circumstances require.

§ 4-110.  ELECTRONIC PRESENTMENT.

(a)    "Agreement for electronic presentment" means an agreement, clearing- house  rule,  or  Federal  Reserve  regulation  or  operating  circular,  providing  that presentment of an  item may be made by transmission of an image of an item or information describing the item ("presentment notice") rather  than delivery of the item  itself.    The  agreement  may  provide  for  procedures  governing  retention, presentment, payment, dishonor, and other matters concerning items subject to the agreement.
 
(b)    Presentment of an item pursuant to an agreement for presentment is made when the presentment notice is received.

(c)  If presentment is made by presentment notice, a reference to "item" or "check" in this Article means the presentment notice unless the context otherwise indicates.

§ 4-111.  STATUTE OF LIMITATIONS.

An action to enforce an obligation, duty, or right arising under this Article must be commenced within three years after the [cause of action] accrues.

PART 2. COLLECTION OF ITEMS: DEPOSITARY AND COLLECTING BANKS  [Table of Contents]

§ 4-201.    STATUS OF COLLECTING  BANK AS AGENT AND PROVISIONAL STATUS  OF  CREDITS;  APPLICABILITY  OF  ARTICLE;  ITEM  INDORSED "PAY ANY BANK".

(a)  Unless a contrary intent clearly appears and  before the time that a  settlement given by a  collecting bank for an  item is or becomes final, the  bank, with respect to the item, is an agent or sub-agent of the  owner of the item and any settlement given for the item is provisional.    This provision applies regardless  of the form of indorsement or lack of indorsement and even though credit given for the item is subject  to  immediate  withdrawal  as  of  right  or  is  in  fact  withdrawn;  but  the continuance of ownership of an item by its owner and any rights of the owner to proceeds of the item are subject to rights of a  collecting bank, such as those resulting from outstanding advances on the item and    rights of  recoupment or setoff.    If an item is handled by banks for purposes of presentment,  payment , collection, or return, the relevant provisions of this Article apply even though action of the parties clearly establishes that a particular bank has purchased the item and is the owner of it.

(b)  After an  item has been indorsed with the words "pay any bank" or the like, only a  bank may acquire the rights of a holder until the item has been:

(1) returned to the customer initiating collection; or

(2) specially indorsed by a bank to a person who is not a bank.

§    4-202.    RESPONSIBILITY    FOR    COLLECTION    OR    RETURN;    WHEN ACTION  TIMELY.

(a) A  collecting bank must exercise ordinary care in: (1) presenting an item or sending it for presentment;
 
(2) sending notice of dishonor or nonpayment or returning an  item other than a documentary draft to the  bank's transferor    after learning that the item has not been paid or accepted, as the case may be;

(3) settling for an item when the bank receives final  settlement; and

(4) notifying its transferor of any loss or delay in transit within a reasonable time after discovery thereof.

(b)  A  collecting bank exercises ordinary care under subsection (a) by taking proper action    before    its    midnight deadline     following    receipt    of    an    item,    notice,    or settlement. Taking proper action within a reasonably longer time may constitute the exercise of ordinary care, but the bank has the burden of establishing timeliness.

(c)    Subject to subsection    (a)(1), a bank is not liable for the insolvency, neglect, misconduct, mistake, or default of another bank or person or for loss or destruction of an item in the possession of others or in transit .

§ 4-203.  EFFECT OF INSTRUCTIONS.

Subject to    Article 3 concerning conversion of instruments (Section    3-420) and restrictive indorsements (Section  3-206), only a  collecting bank's transferor can give instructions  that affect the  bank or constitute notice to it, and a collecting bank is not liable to prior parties for any action taken  pursuant to the instructions or in accordance with any agreement with its transferor.

§    4-204.    METHODS    OF    SENDING    AND    PRESENTING;    SENDING DIRECTLY TO PAYOR BANK.

(a)  A  collecting bank  shall send  items by a reasonably prompt method, taking into consideration    relevant  instructions, the nature of the item, the number of    those items on hand, the cost of collection involved, and the method generally used by it or others to present  those items.

(b) A  collecting bank may send:

(1) an item  directly to the payor bank;

(2) an item to a nonbank payor if authorized by its transferor; and

(3)  an  item other than  documentary drafts to a nonbank payor, if authorized by
Federal Reserve regulation or operating  circular,  clearing-house rule, or the like.

(c)    Presentment may be made by a presenting bank at a place where the payor bank or other payor has requested that presentment be made.
 
§ 4-205.    DEPOSITARY BANK HOLDER OF UNINDORSED ITEM.

If a  customer delivers an item to a  depositary bank for collection:

(1) the  depositary bank becomes a holder of the  item at the time it receives the item for collection if the customer at the time of delivery was a holder of the item, whether or not the customer indorses the item, and, if the  bank satisfies the other requirements of Section  3-302, it is a holder in due course; and

(2) the depositary bank warrants to collecting banks, the payor bank or other payor, and the drawer that the amount of the  item was paid to the  customer or deposited to the customer's account.

§ 4-206.  TRANSFER BETWEEN BANKS.

Any agreed method    that identifies the transferor bank is sufficient for the item's further transfer to another bank.

§ 4-207.  TRANSFER WARRANTIES.

(a)  A  customer or  collecting bank that transfers an  item and receives a  settlement or other consideration warrants to the transferee and to any subsequent collecting bank that:

(1) the warrantor is a person entitled to enforce the  item; (2) all signatures on the  item are authentic and authorized; (3) the item has not been altered;
(4) the  item is not subject to a defense or claim in recoupment (Section  3-305(a))
of any party that can be asserted against the warrantor; and

(5) the warrantor has no knowledge of any insolvency proceeding commenced with respect to the maker or acceptor or, in the case of an unaccepted  draft, the drawer; and

(6) with respect to any remotely-created consumer item, that the person on whose account the item is drawn authorized the issuance of the item in the amount for which the item is drawn.

(b)  If an  item is dishonored, a  customer or  collecting bank transferring the item and receiving  settlement or other consideration is obliged to pay the amount due on the item (i) according to the terms of the item at the time it was transferred, or (ii) if the transfer was of an incomplete item, according to its terms when completed as stated
 
in Sections 3-115 and  3-407.  The obligation of a transferor is owed to the transferee and  to  any  subsequent  collecting  bank  that  takes  the  item  in  good  faith.    A transferor cannot disclaim its obligation under this subsection by an indorsement stating that it is made "without recourse" or otherwise disclaiming liability.

(c)  A person to whom the warranties under subsection (a) are made and who took the  item in good faith may recover from the warrantor as damages for breach of warranty an amount equal to the loss suffered  as a result of the breach, but not more than the amount of the item plus expenses and loss of interest incurred as a result of the breach.

(d)    The warranties stated in subsection (a) cannot be disclaimed with respect to checks.    Unless notice of a claim for breach of warranty is given to the warrantor within 30 days after the claimant has reason to know of the breach and the identity of the warrantor, the warrantor is discharged to the extent of any loss caused by the delay in giving notice of the claim.

(e)  A cause of action for breach of warranty under this section accrues when the claimant has reason to know of the breach.

§ 4-208.  PRESENTMENT WARRANTIES.

(a)  If an unaccepted  draft is presented to the  drawee for payment or acceptance and the drawee pays  or accepts the draft, (i) the person obtaining payment or acceptance, at the time of presentment, and (ii) a previous transferor of the draft, at the time of transfer, warrant to the drawee that pays or accepts the draft in good faith that:

(1) the warrantor is, or was, at the time the warrantor transferred the draft, a person entitled to enforce the draft or authorized to obtain payment or acceptance of the draft on behalf of a person entitled to enforce the draft;

(2) the draft has not been altered; and

(3) the warrantor has no knowledge that the signature of the purported drawer of the  draft is unauthorized; and

(4) with respect to any remotely-created consumer item, that the person on whose account the item is drawn authorized the issuance of the item in the amount for which the item is drawn.

(b) A  drawee making payment may recover from a warrantor damages for breach of warranty equal to the  amount paid by the drawee less the amount the drawee received or is entitled to receive from the  drawer because of the payment.In addition, the drawee is entitled to compensation for expenses and loss of interest resulting from the breach.  The right of the drawee to recover damages under this subsection is not affected by any failure of the drawee to exercise ordinary care in making payment.  If the drawee accepts the  draft (i) breach of warranty is a defense to the obligation of the acceptor, and (ii) if the acceptor makes payment with respect to  the draft, the acceptor is entitled to recover from a warrantor for breach of warranty the amounts stated in this subsection.

(c)  If a  drawee asserts a claim for breach of warranty under subsection (a) based on an unauthorized  indorsement of the draft or an alteration of the draft, the warrantor may defend by proving that the indorsement is effective under Section  3-
404 or 3-405 or the drawer is precluded under Section  3-406 or  4-406 from asserting against the drawee the unauthorized indorsement or alteration.

(d)  If (i) a dishonored  draft is presented for payment to the drawer or an indorser or (ii) any other  item is presented for payment to a party obliged to pay the item, and the item is paid, the person obtaining payment and a prior transferor of the item warrant to the person making payment in good faith that the warrantor is, or was, at the time the warrantor transferred the item, a person entitled to enforce the item or authorized to obtain payment on behalf of a person entitled to enforce the item. The person making payment may recover from any warrantor for breach of warranty an amount equal to the amount paid plus  expenses and loss of interest resulting from the breach.

(e)    The warranties stated in subsections (a) and (d) cannot be disclaimed with respect to checks.  Unless notice of a claim for breach of warranty is given to the warrantor within 30 days after the claimant has reason to know of the breach and the identity of the warrantor, the warrantor is discharged to the extent of any loss caused by the delay in giving notice of the claim.

(f)  A cause of action for breach of warranty under this section accrues when the claimant has reason to know of the breach.

§ 4-209.  ENCODING AND RETENTION WARRANTIES.

(a)    A person who encodes information on or with respect to an item after issue warrants to any subsequent  collecting bank and to the  payor bank or other payor that the information is correctly  encoded.    If the customer of a depositary bank encodes, that bank also makes the warranty.

(b)A person who undertakes to retain an item pursuant to an agreement for electronic presentment warrants to any subsequent  collecting bank and to the  payor bank or other payor that retention and  presentment of the item comply with the  agreement.  If a  customer of a  depositary bank undertakes to retain an item, that bank also makes this warranty.

(c)    A person to whom warranties are made under this section and who took the item in good faith  may  recover from the warrantor as damages for breach of warranty an amount equal to the loss  suffered as a result of the breach, plus expenses and loss of interest incurred as a result of the breach.

§    4-210.    SECURITY    INTEREST    OF    COLLECTING    BANK    IN    ITEMS, ACCOMPANYING DOCUMENTS AND PROCEEDS.

(a)    A collecting bank has a security interest in an item and any accompanying documents or the proceeds of either:

(1) in case of an  item deposited in an  account, to the extent to which credit given for the item has been withdrawn or applied;

(2) in case of an  item for which it has given credit available for withdrawal as of right, to the extent of the credit given, whether or not the credit is drawn upon or  there is a right of charge-back; or

(3) if it makes an advance on or against the item.

(b)    If credit  given for several  items received at one time or pursuant to a single agreement is withdrawn or applied in part, the security interest remains upon all the items, any accompanying documents or the proceeds of either.  For the purpose of this section, credits first given are first withdrawn.

(c)  Receipt by a  collecting bank of a final  settlement for an  item is a realization on its security interest in the item, accompanying documents, and proceeds.    So long as the bank does not receive final settlement for the item or give up possession of the item or possession or control of the accompanying documents for purposes other than collection, the security interest continues to that extent and is subject to  Article
9, but:

(1) no security agreement is necessary to make the security interest enforceable ( Section  9-203(b)(3)(A));

(2) no filing is required to perfect the security interest; and

(3) the security interest has priority over conflicting perfected security interests in the  item, accompanying documents, or proceeds.

§ 4-211.  WHEN BANK GIVES VALUE FOR PURPOSES OF HOLDER IN DUE COURSE.
 
For purposes of determining its status as a holder in due course, a  bank has given value to the extent    it  has a security interest in an item,    if the bank otherwise complies with the requirements of Section  3-302 on what constitutes a holder in due course.

§    4-212.    PRESENTMENT    BY    NOTICE    OF    ITEM    NOT    PAYABLE    BY, THROUGH, OR AT BANK; LIABILITY OF DRAWER OR INDORSER.

(a)  Unless otherwise instructed, a  collecting bank may present an  item not payable by, through, or at a bank by sending to the party to accept or pay a record providing notice that the bank holds the item for acceptance or payment.  The notice must be sent in time to be received on or before the day when presentment is due and the bank must meet any requirement of the party to accept or pay under Section 3-501 by the close of the bank's next  banking day after it knows of the requirement.

(b)    If presentment is made by notice and    payment, acceptance, or request for compliance with a requirement under Section  3-501 is not received by the close of business on the day after maturity or, in the case of demand  items, by the close of business on the third  banking day after notice was sent, the  presenting bank may treat the item as dishonored and charge any    drawer  or indorser by sending    it notice of the facts.

§ 4-213.    MEDIUM AND TIME OF SETTLEMENT BY BANK.

(a)  With respect to  settlement by a  bank, the medium and time of settlement may be prescribed by Federal Reserve regulations or circulars, clearing-house rules, and the like, or agreement.  In the absence of such prescription:

(1) the medium of  settlement is cash or credit to an  account in a Federal Reserve bank of or specified by the person to receive settlement; and

(2) the time of  settlement, is:

(i) with respect to tender of settlement by cash, a cashier's check, or teller's check, when the cash or check is sent or delivered;

(ii) with respect to tender of settlement by credit in an account in a Federal
Reserve Bank, when the credit is made;

(iii) with respect to tender of  settlement by a credit or debit to an  account in a bank, when the credit or debit is made or, in the case of tender of settlement by authority to charge an account, when the authority is sent or delivered; or 

(iv) with respect to tender of  settlement by a funds transfer, when payment is made pursuant to Section 4A-406(a) to the person receiving settlement.

(b)  If the tender of  settlement is not by a medium authorized by subsection (a) or the time of settlement is not fixed by subsection (a), no settlement occurs until the tender of settlement is accepted by the person receiving settlement.

(c)  If  settlement for an  item is made by cashier's check or teller's check and the person receiving settlement, before its midnight deadline:

(1) presents or forwards the check for collection, settlement is final when the check is finally paid; or

(2) fails to present or forward the check for collection, settlement is final at the midnight deadline of the person receiving settlement.

(d)  If  settlement for an  item is made by giving authority to charge the  account of the  bank giving settlement in the bank receiving settlement, settlement is final when the charge is made by the bank receiving settlement if there are funds available in the account for the amount of the item.

§    4-214.    RIGHT    OF    CHARGE-BACK    OR    REFUND;    LIABILITY    OF COLLECTING BANK; RETURN OF ITEM.

(a)    If a collecting bank has made provisional settlement with its  customer for an item  and    fails by  reason  of dishonor,  suspension of  payments by  a  bank,  or otherwise to receive    settlement for the item  which is or becomes final, the bank may revoke the settlement given by it, charge back the amount of any credit given for the item to its customer's  account, or obtain refund from its customer, whether or not it is able to return the  item, if by its  midnight deadline or within a longer reasonable time after it learns the facts it returns the item or sends notification of the facts.  If the return or notice is delayed beyond the bank's midnight deadline or a  longer  reasonable  time  after  it  learns  the  facts,  the  bank  may  revoke  the settlement, charge back the credit, or obtain refund from its customer, but it is liable for any loss  resulting  from the delay.    These rights to revoke, charge back, and obtain refund terminate if and when a settlement for the item received by the bank is or becomes final .

(b)    A collecting bank returns an item when it is sent or delivered to the bank's customer or transferor or pursuant to its instructions.

(c)  A  depositary bank    that is also the payor may charge back the amount of an item to its  customer's account or obtain refund in accordance with the section
 
governing return of an item received by a  payor bank for credit on its books (Section
4-301).

(d) The right to charge back is not affected by:

(1) previous use of a credit given for the item; or

(2) failure by any  bank to exercise ordinary care with respect to the  item, but a bank so failing remains liable.

(e)  A failure to charge back or claim refund does not affect other rights of the  bank against the customer or any other party.

(f)  If credit is given in dollars as the equivalent of the value of an  item payable in foreign  money, the dollar amount of any charge-back or refund  must be calculated on the basis of the  bank-offered spot rate for the foreign  money prevailing on the day when the person entitled to the charge-back or refund learns  that it will not receive payment in ordinary course.

§    4-215.    FINAL    PAYMENT    OF    ITEM    BY    PAYOR    BANK;    WHEN PROVISIONAL DEBITS AND CREDITS BECOME FINAL; WHEN CERTAIN CREDITS BECOME AVAILABLE FOR WITHDRAWAL.

(a)  An  item is finally paid by a  payor bank when the  bank has first done any of the following:

(1) paid the item in cash;

(2)  settled for the item without    having a right to revoke the settlement    under statute, clearing-house rule, or agreement; or

(3) made a provisional  settlement for the  item and failed to revoke the settlement in the time and manner permitted by statute,  clearing-house rule, or agreement.

(b)If provisional settlement for an item does not become final, the item is not finally paid.

(c)If provisional  settlement for an  item between the presenting and  payor banks is made through a  clearing house or by debits or credits in an  account between them, then to the extent that provisional debits or  credits for the item are entered in accounts between the presenting and payor banks or between the presenting and successive prior  collecting banks seriatim, they become final upon final payment of the items by the payor bank.
 
(d)  If a  collecting bank receives a  settlement for an  item which is or becomes final, the   bank  is  accountable  to  its  customer  for  the  amount of the  item  and  any provisional credit given for the item in an account with its customer becomes final.

(e)  Subject to (i) applicable law stating a time for availability of funds and (ii) any right of the  bank to apply the credit to an obligation of the  customer, credit given by a bank for an  item in a  customer's account becomes available for withdrawal as of right:

(1)    if the bank has received a provisional settlement for the item, when the settlement becomes  final and the bank has had a reasonable time to    receive return of the item and the item has not been received within that time;

(2)  if the  bank is both the  depositary bank and the  payor bank, and the  item is finally paid, at the opening of the bank's second  banking day following receipt of the item.

(f)    Subject to applicable law stating a time for availability of funds and any right of a bank to apply a  deposit to an obligation of the    depositor, a deposit of money becomes  available for withdrawal as of right at the opening of the bank's next banking day after receipt of the deposit.

§ 4-216.  INSOLVENCY AND PREFERENCE.

(a)    If an  item is in or  comes into the possession of a payor or  collecting bank  that suspends payment and  the item    has not been finally paid, the item must    be returned by the receiver, trustee, or agent in charge of the closed bank to the presenting bank or the closed bank's customer.

(b)  If a  payor bank finally pays an  item and  suspends payments without making a settlement for the item with its  customer or the  presenting bank which settlement is or becomes final, the owner of the item has a  preferred claim against the payor bank.

(c)    If a payor bank gives or a collecting bank gives or receives a provisional settlement for an  item and thereafter  suspends payments, the suspension does not prevent  or  interfere  with the    settlement's  becoming  final  if  the  finality  occurs automatically upon the lapse of certain time or the happening of certain events .

(d)    If a collecting bank receives from subsequent parties settlement for an item, which settlement is or  becomes final and the bank suspends payments without making a settlement for the item with its customer which settlement is or becomes final, the owner of the  item has a preferred claim against the collecting bank.
 
PART 3. COLLECTION OF ITEMS: PAYOR BANKS.  [Table of Contents]

§ 4-301.  DEFERRED POSTING; RECOVERY OF PAYMENT BY RETURN OF ITEMS; TIME OF DISHONOR; RETURN OF ITEMS BY PAYOR BANK.

(a)    If a payor bank settles for a demand item other than a documentary draft presented otherwise than for immediate payment over the counter  before midnight of the banking day of receipt, the payor  bank may revoke the settlement and recover the settlement if, before it has made final payment  and before its  midnight deadline, it

(1) returns the  item;

(2) returns an image of the item, if the party to which the return is made has entered into an agreement to accept an image as a return of the item; and the image is returned in accordance with that agreement;

(3) sends a record providing notice of dishonor or nonpayment if the item is unavailable for return.

(b)  If a demand  item is received by a  payor bank for credit on its books, it may return the item or  send notice of dishonor and may revoke any credit given or recover the amount thereof withdrawn by its customer, if it acts within the time limit and in the manner specified in  subsection (a).

(c)  Unless previous notice of dishonor has been sent, an  item is dishonored at the time when for purposes of dishonor it is returned or notice sent in accordance with this section.

(d) An item is returned:

(1) as to an  item  presented through a  clearing house, when it is delivered to the presenting or last collecting bank or to the clearing house or is sent or delivered in accordance with clearing-house rules; or

(2) in all other cases, when it is sent or delivered to the bank's customer or transferor or pursuant to  instructions.

§ 4-302.  PAYOR BANK'S RESPONSIBILITY FOR LATE RETURN OF ITEM.

(a)    If  an  item  is  presented  to    and  received  by  a  payor bank,  the  bank  is accountable for the amount of:

(1) a demand  item, other than a  documentary draft, whether  properly payable or not, if the bank, in any case  in which it is not also the  depositary bank, retains the item beyond midnight of the banking day of receipt without settling for it or, whether or not it is also the depositary bank, does not pay or return the item or send notice of dishonor until after its midnight deadline; or

(2) any other  properly payable item unless, within the time allowed for acceptance or payment of that item, the  bank either accepts or pays the item or returns it and accompanying documents.

(b)  The liability of a  payor bank to pay an  item pursuant to subsection (a) is subject to defenses based on  breach of a presentment warranty (Section 4-208) or proof that the person seeking enforcement of the liability presented or transferred the item for the purpose of defrauding the payor bank.

§ 4-303.    WHEN ITEMS SUBJECT TO NOTICE,        STOP-PAYMENT ORDER, LEGAL    PROCESS,     OR    SETOFF;    ORDER    IN    WHICH    ITEMS    MAY    BE CHARGED OR CERTIFIED.

(a) Any knowledge, notice, or stop-payment order received by, legal process served upon, or setoff exercised by a  payor bank comes too late to terminate, suspend, or modify the  bank's right or duty to pay an  item or to charge its  customer's account for the item if the knowledge, notice,    stop-payment order,  or  legal process is received or served and a reasonable time for the  bank to act thereon expires or the setoff is exercised after the  earliest of the following:

(1) the bank accepts or certifies the  item; (2) the bank pays the  item in cash;
(3) the  bank settles for the  item without  having a right to revoke the settlement under statute,  clearing-house rule, or agreement;

(4) the  bank becomes accountable for the amount of the  item under  Section  4-
302 dealing with the payor bank's responsibility for late return of items; or

(5) with respect to checks, a cutoff hour no earlier than one hour after the opening of the next banking day after the banking day on which the  bank received the check and no later than the close of that next banking day or, if no cutoff hour is fixed, the close of the next banking day after the banking day on which the bank received the check.

(b) Subject to  subsection  (a),  items may be accepted, paid, certified, or charged to the indicated  account of its customer in any order.

PART 4. RELATIONSHIP BETWEEN PAYOR BANK AND ITS CUSTOMER  [Table of Contents]
 
§ 4-401.  WHEN BANK MAY CHARGE CUSTOMER'S ACCOUNT.

(a)    A  bank may charge against the  account of a customer an  item  that is  properly payable from that account even though the charge creates an overdraft.  An item is properly payable if it is authorized by the customer and is in accordance with any agreement between the customer and bank.

(b)  A  customer is not liable for the amount of an overdraft if the customer neither signed the item nor benefited from the proceeds of the item.

(c)  A  bank may charge against the  account of a  customer a check that is otherwise properly payable from the account, even though payment was made before the date of the check, unless the customer has given notice to the bank of the postdating describing the check with reasonable certainty.  The notice is effective for the period stated in Section  4-403(b) for stop-payment orders, and must be received at such time and in such manner as to afford the bank a reasonable opportunity to act on it before the bank takes any action with respect to the check described in Section  4-
303.  If a bank charges against the account of a customer a check before the date stated in the notice of  postdating, the bank is liable for damages for the loss resulting from its act.    The loss may include  damages for dishonor of subsequent items under Section 4-402.

(d)  A  bank  that in good faith makes payment to a holder may charge the indicated account of its customer according to:

(1) the original  terms of the altered item; or

(2) the  terms of the completed item, even though the bank knows the item has been completed unless the bank has notice that the completion was improper.

§ 4-402.  BANK'S LIABILITY TO CUSTOMER FOR WRONGFUL DISHONOR; TIME OF DETERMINING INSUFFICIENCY OF ACCOUNT.

(a)  Except as otherwise provided in this Article, a  payor bank wrongfully dishonors an  item if it dishonors an item that is  properly payable, but a  bank may dishonor an item that would create an overdraft unless it has agreed to pay the overdraft.

(b)  A  payor bank is liable to its  customer for damages proximately caused by the wrongful dishonor of an item.  Liability is limited to actual damages proved and may include damages for an arrest or prosecution of the customer or other consequential damages.    Whether any  consequential  damages  are proximately  caused  by  the wrongful dishonor is a question of fact to be determined in each case.
 
(c)A payor bank's determination of the customer's account balance on which a decision to dishonor for insufficiency of available funds is based may be made at any time between the time the  item is received by the payor bank and the time that the payor bank returns the item or gives notice in lieu of return, and no more than one determination need be made.    If, at the election of the payor bank, a subsequent balance determination is made for the purpose of reevaluating the  bank's decision to dishonor the item, the account balance at that time is determinative of whether a dishonor for insufficiency of available funds is wrongful.

§ 4-403.    CUSTOMER'S RIGHT TO STOP PAYMENT; BURDEN OF PROOF OF LOSS.

(a)  A  customer  or any person authorized to draw on the account if there is more than one person may stop payment of any item drawn on the customer's account or close the account by an order to the bank  describing the item or account with reasonable certainty received at a time and in a manner    that affords  the bank a reasonable opportunity to act on it  before any action by the bank with respect to the item described in Section  4-303.    If the signature of more than one person is required to draw on an account, any of these persons may stop payment or close the account.

(b)  A stop-payment order is effective for six months, but it lapses after 14 calendar days if the original  order was oral and was not confirmed in a record within that period. A stop-payment order may be renewed for additional six-month periods by a record given to the bank within a period during which the  stop-payment order is effective.

(c)    The burden of establishing the fact and amount of loss resulting from the payment of an  item contrary to a stop-payment order or order to close an  account is on the customer.    The loss from payment of  an item contrary to a stop-payment order may include damages for dishonor of subsequent items under Section  4-402.

§ 4-404.  BANK NOT OBLIGED TO PAY CHECK MORE THAN SIX MONTHS OLD.

A bank is under no obligation to a customer having a checking account to pay a check, other than a certified check, which is presented more than six months after its date, but it may charge its customer's account for a payment made thereafter in good faith.

§ 4-405.  DEATH OR INCOMPETENCE OF CUSTOMER.

(a)  A payor or  collecting bank's authority to accept, pay,  or collect an  item or to account  for  proceeds  of  its  collection,  if  otherwise  effective,  is  not  rendered  ineffective by incompetence of a  customer of either bank existing at the time the item is issued or its  collection is undertaken if the bank does not know of an adjudication  of  incompetence.    Neither  death  nor  incompetence  of  a  customer revokes the authority to accept, pay, collect, or account until the bank knows of the fact of death or of an adjudication of incompetence and has reasonable opportunity to act on it.

(b)  Even with knowledge, a  bank may for 10 days after the date of death pay or certify checks drawn on or  before that date unless ordered to stop payment by a person claiming an interest in the account.

§    4-406.    CUSTOMER'S    DUTY    TO    DISCOVER    AND    REPORT UNAUTHORIZED SIGNATURE OR ALTERATION.

(a)    A bank that sends or makes available to a customer a statement of account showing payment of items for the account shall either return or make available to the customer the items paid or provide  information in the statement of account sufficient to allow the customer reasonably to identify the items paid.  The statement of account provides sufficient information if the item is described by item number, amount, and date of payment.

(b)  If the  items are not returned to the  customer, the person retaining the items shall either retain the items or, if the items are destroyed, maintain the capacity to furnish legible copies of the items until the expiration of seven years after receipt of the items.  A customer may request an item from the  bank that paid the item, and that bank must provide in a reasonable time either the item or, if the item has been destroyed or is not otherwise obtainable, a legible copy of the item.

(c)  If a  bank sends or makes available a statement of  account or  items pursuant to subsection (a), the customer must exercise reasonable promptness in examining the statement or the items to determine  whether any payment was not authorized because of an alteration of an item or because a purported signature by or on behalf of the customer was not authorized. If, based on the statement or items provided, the customer should reasonably have discovered the unauthorized payment, the customer must promptly notify the bank of the relevant facts.

(d)  If the  bank proves that the  customer failed, with respect to an  item, to comply with  the  duties  imposed  on  the  customer  by  subsection    (c),  the  customer  is precluded from asserting against the bank:

(1) the customer's unauthorized signature or any alteration on the item, if the bank also  proves that it suffered a loss by reason of the failure; and  (2) the  customer's unauthorized signature or alteration by the same wrongdoer on any other  item paid in good faith by the  bank  if the payment was made before the bank received notice from the customer  of the unauthorized signature or alteration and after the customer had been afforded a reasonable period of time, not exceeding 30 days, in which to examine the item or statement of  account and notify the bank.

(e)    If subsection (d) applies and the customer proves that the bank failed to exercise    ordinary    care    in    paying    the    item    and    that    the    failure    substantially contributed to loss, the loss is allocated between the customer precluded and the bank asserting the preclusion according to the extent  to which the failure of the customer to comply with subsection (c) and the failure of the bank to  exercise ordinary care contributed to the loss.  If the customer proves that the bank did not pay the item in good faith, the preclusion under subsection (d) does not apply.

(f)    Without regard to care or lack of care of either the customer or the bank, a customer who does not  within one year    after the statement    or items are made available  to  the  customer  (subsection  (a))  discover  and  report  the  customer's unauthorized signature on or any alteration  on the item is precluded from asserting against the bank the unauthorized signature  or  alteration.  If there is a preclusion under this subsection, the  payor bank may not recover for breach of warranty under Section  4-208 with respect to the unauthorized signature or alteration to which the preclusion applies.

§ 4-407.    PAYOR  BANK'S  RIGHT  TO  SUBROGATION  ON  IMPROPER PAYMENT.

If a payor bank has paid an  item over the order of the drawer or maker to stop payment, or after an  account has been closed, or otherwise under circumstances giving a basis for objection by the drawer or maker, to prevent unjust enrichment and only to the extent necessary to prevent loss to the bank by  reason of its payment of the item, the payor bank  is subrogated to the rights

(1) of any holder in due course on the item against the drawer or maker;

(2) of the payee or any other holder of the item against the drawer or maker either on the item or under the transaction out of which the item arose; and

(3) of the drawer or maker against the payee or any other holder of the item with respect to the transaction out of which the item arose.

PART 5. COLLECTION OF DOCUMENTATARY DRAFTS  [Table of Contents]
 
§ 4-501.    HANDLING OF DOCUMENTARY DRAFTS; DUTY TO SEND FOR PRESENTMENT AND TO NOTIFY CUSTOMER OF DISHONOR.

A  bank  that takes a  documentary draft for collection  shall present or send the  draft and accompanying documents for presentment and, upon learning that the draft has not been paid or accepted in due course,  shall seasonably notify its  customer of the fact even though it may have discounted or bought the draft or  extended credit available for withdrawal as of right.

§ 4-502.  PRESENTMENT OF "ON ARRIVAL" DRAFTS.

If a  draft or the relevant instructions require presentment "on arrival", "when goods arrive" or the like, the  collecting bank need not present until in its judgment a reasonable time for arrival of the goods has  expired.    Refusal to pay or accept because  the goods have not arrived is not dishonor; the bank must notify its transferor of the refusal but need not present the draft again until it is instructed to do so or learns of the arrival of the goods.

§ 4-503.    RESPONSIBILITY  OF  PRESENTING  BANK  FOR  DOCUMENTS AND GOODS; REPORT OF REASONS FOR DISHONOR; REFEREE IN CASE OF NEED.

Unless otherwise instructed and except as provided in Article 5, a  bank presenting a documentary draft:

(1) must deliver the documents to the  drawee on acceptance of the  draft if it is payable more than three days after presentment; otherwise, only on payment; and

(2)    upon    dishonor,    either    in    the    case    of    presentment    for    acceptance    or presentment for payment, may seek and follow instructions from any referee in case of need designated in the  draft or, if the  presenting bank does not choose to utilize the referee's services, it must use diligence and good faith to ascertain the reason for dishonor, must notify its transferor of the dishonor and of the results of its effort to ascertain the reasons therefor, and must request instructions.

However  the  presenting    bank  is  under  no      obligation  with  respect  to    goods represented    by    the    documents    except    to    follow    any    reasonable    instructions seasonably received; it has a right to reimbursement for any expense incurred in following instructions and to prepayment of or indemnity for  those expenses.

§ 4-504.    PRIVILEGE OF PRESENTING BANK TO DEAL  WITH  GOODS; SECURITY INTEREST FOR EXPENSES.
 (a)    A presenting bank    that, following the dishonor of a documentary draft, has seasonably  requested instructions but does not receive them within a reasonable time may store, sell, or otherwise deal with the goods in any reasonable manner.

(b)    For its  reasonable expenses  incurred  by  action under  subsection    (a),  the presenting bank  has  a  lien  upon  the  goods  or  their  proceeds,  which  may  be foreclosed in the same manner as an unpaid seller's lien.

© Copyright 2005 by The American Law Institute and the National Conference of Commissioners on  Uniform State Laws; reproduced, published and distributed with the permission of the Permanent Editorial Board for the Uniform Commercial Code for the limited purposes of study, teaching, and academic research.

about us sitemap help
terms of use
skip navigation
Search Law School
Search Cornell
LII / Legal Information Institute     
home search
find a lawyer
donate

UCC: uniform commercial code

main page about
search

U.C.C. - ARTICLE 4A - FUNDS TRANSFER

PART 1. SUBJECT MATTER AND DEFINITIONS  [Table of Contents]

§ 4A-101.  SHORT TITLE.

This Article may be cited as Uniform Commercial Code--Funds Transfers.

§ 4A-102.  SUBJECT MATTER.

Except  as  otherwise  provided  in  Section  4A-108,  this  Article  applies  to  funds transfers defined in Section 4A-104.

§ 4A-103.  PAYMENT ORDER - DEFINITIONS.

(a) In this Article:
 
(1)    "Payment order" means an instruction of a sender to a receiving bank, transmitted orally, electronically, or in writing, to pay, or to cause another  bank to pay, a fixed or determinable amount of money to a beneficiary if:

(i) the instruction does not state a condition to payment to the beneficiary other than time of payment,

(ii)  the  receiving  bank  is  to  be  reimbursed  by  debiting  an  account  of,  or otherwise receiving payment from, the sender, and

(iii) the instruction is transmitted by the sender directly to the receiving bank or to an agent, funds-transfer system, or communication system for transmittal to the receiving bank.

(2) "Beneficiary" means the person to be paid by the beneficiary's bank.

(3)  "Beneficiary's bank" means the  bank identified in a  payment order in which an account of the  beneficiary is to be credited pursuant to the order or which otherwise is to make payment to the beneficiary if the order does not provide for payment to an account.

(4)    "Receiving  bank" means the bank  to which the sender's  instruction is addressed.

(5) "Sender" means the person giving the instruction to the receiving bank.

(b)    If an instruction complying with subsection (a)(1) is to make more than one payment to a beneficiary, the instruction is a separate  payment order with respect to each payment.

(c) A  payment order is issued when it is sent to the receiving bank.

§ 4A-104.  FUNDS TRANSFER - DEFINITIONS.

In this Article:

(a)    "Funds  transfer"  means  the  series  of  transactions,  beginning  with  the originator's  payment  order,  made  for  the  purpose  of  making  payment  to  the beneficiary of the order.    The term includes  any payment order issued by the originator's bank or an intermediary bank intended to carry out the  originator's payment order.    A funds transfer is completed by acceptance by the beneficiary's bank  of  a  payment order for  the benefit of the beneficiary  of the originator's payment order.
 


(b)  "Intermediary bank" means a  receiving bank other than the  originator's bank or the  beneficiary's bank.

(c) "Originator" means the sender of the first payment order in a  funds transfer.

(d)  "Originator's bank" means (i) the  receiving bank to which the  payment order of the  originator is issued if the originator is not a  bank, or (ii) the originator if the originator is a bank.

§ 4A-105.  OTHER DEFINITIONS.

(a) In this Article:

(1)    "Authorized account" means a deposit account of a customer in a bank designated by the customer as a source of payment of  payment orders issued by the customer to the bank.  If a customer does not so designate an account, any account of the customer is an  authorized account if payment of a payment order from that account is not inconsistent with a restriction on the use of that account.

(2)  "Bank" means a person engaged in the business of banking and includes a savings  bank, savings and loan association, credit union, and trust company.    A branch or separate office of a bank is a separate bank for purposes of this Article.

(3)    "Customer" means a person, including a bank, having an account with a bank or from whom a bank has agreed to receive payment orders.

(4)  "Funds-transfer business day" of a  receiving bank means the part of a day during which the receiving bank is open for the receipt, processing, and transmittal of payment orders and cancellations and amendments of payment orders.

(5)    "Funds-transfer  system"  means  a  wire  transfer  network,    automated clearing house, or other communication system of a clearing house or other association  of  banks  through  which  a  payment order  by  a  bank  may  be transmitted to the bank to which the order is addressed.

(6) [reserved]

(7)  "Prove" with respect to a fact means to meet the burden of establishing the fact (Section 1-201(b)(8)).

(b)  Other definitions applying to this Article and the sections in which they appear are:

"Acceptance"    Section 4A-209
 

برچسب ها : damage , , law , تجاری , sale , , , ,

 
 
خدمات حقوقی مشاوره و وکالت موسسه حقوقی رضا خوشیاران 
آدرس دفتر وکالت 
صفحه اصلي 
بخش دانلود از سایت 
برنامه هفتگي 
امور موکلین 
مشاوره تلفنی 
قبول کلیه دعاوی حقوقی 
سوالات حقوقي كاربران 
سايت هاي مرتبط 
گالري تصاویر 
اخبار حقوقی و حوادث 
مطالب و مقالات حقوقی 
اخبار گوناگون و اقتصادی 
اخبار و مطالب دانشگاهی 
قوانین و مقررات داخلی 
قوانین و مقررات خارجی 
درگاه نظرات مشورتی اداره حقوقی قوه قضائیه 
نظرات مشورتی 
هشدارهای انتظامی 
نشست های قضایی 
آرای وحدت رویه هیات عمومی دیوان عالی کشور 
آرای اصراری هیئت عمومی دیوان عالی کشور 
منتخب آرای دیوان عالی کشور 
آرای هیات عمومی دیوان عدالت اداری 
آدرس محاکم و دادسراها و کلانتری ها 
نشانی نهادها، سازمان ها، سفارتخانه ها، دانشگاه ها 
نظرسنجی سایت 
سایت های مفید 


 
وكالت آن لاين ( آنلاين ) | وکیل | سایت وکیل | وکالت | سایت وکالت | وب سایت وکیل | وکیل دادگستری | وکیل با سابقه |دفتر وکالت | مشاوره حقوقی | مشاوره آنلاین حقوقی | مشاوره تلفنی با وکیل | مشاوره تلفنی حقوقی | مشاوره با وکیل | قبول کلیه دعاوی حقوی | بانک قوانین ایران | فروشگاه کتاب نرم افزار حقوقی