§ 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) 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.
(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) 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.
(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 1993, No. 158 (Adj. Sess.), § 12, eff. Jan. 1, 1995.)