§12A-3-310. Effect of Instrument on Obligation for Which Taken.
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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)of this section, 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;
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)of this
subsection, 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; and
(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)of this section is taken for an obligation, the effect is
(i)that stated in subsection
(a)of this section if the instrument is one on which a bank is liable as maker or acceptor, or
(ii)that stated in subsection
(b)of this section in any other case. Added by Laws 1991, c. 117, § 61, eff. Jan. 1, 1992.