UCC 3 Full Text

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UNIFORM COMMERCIAL CODE - ARTICLE 3 NEGOTIABLE INSTRUMENTS

Copyright 1978, 1987, 1988, 1990, 1991, 1992 by The American Law Institute and the ationa! Con"erence o" Commissioners on #ni"orm $tate Laws% reproduced, pub!ished and distributed with the permission o" the &ermanent 'ditoria! (oard "or the #ni"orm Commercia! Code "or the !imited purposes o" study, teaching, and academic research) [For Article 3 as enacted ! a "artic#lar state and an! "ro"osed re$isions clic% &ere'( *+u!! Te,t $earchADDENDUM TO RE)ISED ARTICLE 3 *ART +' GENERAL *RO)ISIONS AND DEFINITIONS *ART ,' NEGOTIATION- TRANSFER- AND INDORSEMENT *ART 3' ENFORCEMENT OF INSTRUMENTS *ART .' LIABILIT/ OF *ARTIES *ART 0' DIS1ONOR *ART 2' DISC1ARGE AND *A/MENT *ART +' GENERAL *RO)ISIONS AND DEFINITIONS 3 101. !"#RT T$T%&. ' 3 102. !()*&+T ,ATT&R. ' 3 103. -&.$/$T$#/!. ' 3 100. /&1#T$A)%& $/!TR(,&/T. ' 3 102. $!!(& #. $/!TR(,&/T. ' 3 103. (/+#/-$T$#/A% PR#,$!& #R #R-&R. ' 3 104. $/!TR(,&/T PA5A)%& $/ .#R&$1/ ,#/&5. ' 3 106. PA5A)%& #/ -&,A/- #R AT -&.$/$T& T$,&. ' 3 107. PA5A)%& T# )&AR&R #R T# #R-&R. ' 3 110. $-&/T$.$+AT$#/ #. P&R!#/ T# 8"#, $/!TR(,&/T $! PA5A)%&. ' 3 111. P%A+& #. PA5,&/T. ' 3 112. $/T&R&!T. ' 3 113. -AT& #. $/!TR(,&/T. ' 3 110. +#/TRA-$+T#R5 T&R,! #. $/!TR(,&/T. ' 3 112. $/+#,P%&T& $/!TR(,&/T.
' 3 113. *#$/T A/- !&9&RA% %$A)$%$T5: +#/TR$)(T$#/. ' 3 114. #T"&R A1R&&,&/T! A..&+T$/1 $/!TR(,&/T. ' 3 116. !TAT(T& #. %$,$TAT$#/!. ' 3 117. /#T$+& #. R$1"T T# -&.&/- A+T$#/. *ART ,' NEGOTIATION- TRANSFER- AND INDORSEMENT 3 201. /&1#T$AT$#/. ' 3 202. /&1#T$AT$#/ !()*&+T T# R&!+$!!$#/. ' 3 203. TRA/!.&R #. $/!TR(,&/T: R$1"T! A+;($R&- )5 TRA/!.&R. ' 3 200. $/-#R!&,&/T. ' 3 202. !P&+$A% $/-#R!&,&/T: )%A/< $/-#R!&,&/T: A/#,A%#(! $/-#R!&,&/T. ' 3 203. R&!TR$+T$9& $/-#R!&,&/T. ' 3 204. R&A+;($!$T$#/. *ART 3' ENFORCEMENT OF INSTRUMENTS 3 301. P&R!#/ &/T$T%&- T# &/.#R+& $/!TR(,&/T. ' 3 302. "#%-&R $/ -(& +#(R!&. ' 3 303. 9A%(& A/- +#/!$-&RAT$#/. ' 3 300. #9&R-(& $/!TR(,&/T. ' 3 302. -&.&/!&! A/- +%A$,! $/ R&+#(P,&/T. ' 3 303. +%A$,! T# A/ $/!TR(,&/T. ' 3 304. /#T$+& #. )R&A+" #. .$-(+$AR5 -(T5. ' 3 306. PR##. #. !$1/AT(R&! A/- !TAT(! A! "#%-&R $/ -(& +#(R!&. ' 3 307. &/.#R+&,&/T #. %#!T= -&!TR#5&-= #R !T#%&/ $/!TR(,&/T. ' 3 310. &..&+T #. $/!TR(,&/T #/ #)%$1AT$#/ .#R 8"$+" TA<&/. ' 3 311. A++#R- A/- !AT$!.A+T$#/ )5 (!& #. $/!TR(,&/T. ' 3 312. %#!T= -&!TR#5&-= #R !T#%&/ +A!"$&R>! +"&+<= T&%%&R>! +"&+<= #R +&RT$.$&- +"&+<. *ART .' LIABILIT/ OF *ARTIES 3 001. !$1/AT(R&. ' 3 002. !$1/AT(R& )5 R&PR&!&/TAT$9&. ' 3 003. (/A(T"#R$?&- !$1/AT(R&. ' 3 000. $,P#!T#R!: .$+T$T$#(! PA5&&!. ' 3 002. &,P%#5&R>! R&!P#/!$)$%$T5 .#R .RA(-(%&/T $/-#R!&,&/T )5 &,P%#5&&.
' 3 003. /&1%$1&/+& +#/TR$)(T$/1 T# .#R1&- !$1/AT(R& #R A%T&RAT$#/ #. $/!TR(,&/T. ' 3 004. A%T&RAT$#/. ' 3 006. -RA8&& /#T %$A)%& #/ (/A++&PT&- -RA.T. ' 3 007. A++&PTA/+& #. -RA.T: +&RT$.$&- +"&+<. ' 3 010. A++&PTA/+& 9AR5$/1 -RA.T. ' 3 011. R&.(!A% T# PA5 +A!"$&R>! +"&+<!= T&%%&R>! +"&+<!= A/+&RT$.$&- +"&+<!. ' 3 012. #)%$1AT$#/ #. $!!(&R #. /#T& #R +A!"$&R>! +"&+<. ' 3 013. #)%$1AT$#/ #. A++&PT#R. ' 3 010. #)%$1AT$#/ #. -RA8&R. ' 3 012. #)%$1AT$#/ #. $/-#R!&R. ' 3 013. TRA/!.&R 8ARRA/T$&!. ' 3 014. PR&!&/T,&/T 8ARRA/T$&!. ' 3 016. PA5,&/T #R A++&PTA/+& )5 ,$!TA<&. ' 3 017. $/!TR(,&/T! !$1/&- .#R A++#,,#-AT$#/. ' 3 020. +#/9&R!$#/ #. $/!TR(,&/T. *ART 0' DIS1ONOR 3 201. PR&!&/T,&/T. ' 3 202. -$!"#/#R. ' 3 203. /#T$+& #. -$!"#/#R. ' 3 200. &@+(!&- PR&!&/T,&/T A/- /#T$+& #. -$!"#/#R. ' 3 202. &9$-&/+& #. -$!"#/#R. *ART 2' DISC1ARGE AND *A/MENT 3 301. -$!+"AR1& A/- &..&+T #. -$!+"AR1&. ' 3 302. PA5,&/T. ' 3 303. T&/-&R #. PA5,&/T. ' 3 300. -$!+"AR1& )5 +A/+&%%AT$#/ #R R&/(/+$AT$#/. ' 3 302. -$!+"AR1& #. $/-#R!&R! A/- A++#,,#-AT$#/ PART$&!.
Uni3or4 Co44ercial Code Article 3

U.C.C. - ARTICLE 3 - NEGOTIABLE INSTRUMENTS ..PART 1. GENERAL PROVISIONS AND DEFINITIONS
*ART +' GENERAL *RO)ISIONS AND DEFINITIONS

5 3-+6+' S1ORT TITLE' ThiA Article maB Ce cited aA (niDorm +ommercial +ode
/eEotiaCle $nAtrumentA.
5 3-+6,' SUB7ECT MATTER' FaG ThiA Article applieA to neEotiaCle inAtrumentA. $t doeA not applB to moneB= to paBment orderA Eoverned CB Article 0A= or to AecuritieA Eoverned CB Article 6. ' FCG $D there iA conDlict Cetween thiA Article and Article 0 or 7= ArticleA 0 and 7 Eovern. ' FcG ReEulationA oD the )oard oD 1overnorA oD the .ederal ReAerve !BAtem and operatinE circularA oD the .ederal ReAerve )anHA AuperAede anB inconAiAtent proviAion oD thiA Article to the eItent oD the inconAiAtencB.
5 3-+63' DEFINITIONS'
(a) In this Article:
o o o o o o
(1) "Acceptor" means a drawee who has accepted a draft. (2) "Drawee" means a person ordered in a draft to make payment. (3) "Drawer" means a person who signs or is identified in a draft as a person ordering payment. (4) "Good faith" means honesty in fact and the observance of reasonable commercial standards of fair dealing. (5) "Maker" means a person who signs or is identified in a note as a person ndertaking to pay. (!) "Order" means a written instr ction to pay money signed by the person giving the instr ction. "he instr ction may be addressed to any person# incl ding the person giving the instr ction# or to one or more persons $ointly or in the
alternative b t not in s ccession. %n a thori&ation to pay is not an order nless the person a thori&ed to pay is also instr cted to pay.
(') "Ordinary care" in the case of a person engaged in b siness means observance of reasonable commercial standards# prevailing in the area in which the person is located# with respect to the b siness in which the person is engaged. (n the case of a bank that takes an instr ment for processing for collection or payment by a tomated means# reasonable commercial standards do not re) ire the bank to e*amine the instr ment if the fail re to e*amine does not violate the bank+s prescribed proced res and the bank+s proced res do not vary nreasonably from general banking sage not disapproved by this %rticle or %rticle 4. (,) "Party" means a party to an instr ment. (-) "Promise" means a written ndertaking to pay money signed by the person ndertaking to pay. %n acknowledgment of an obligation by the obligor is not a promise nless the obligor also ndertakes to pay the obligation. (1.) "Prove" with respect to a fact means to meet the b rden of establishing the fact (/ection 102.1(,)). (11) "Remitter" means a person who p rchases an instr ment from its iss er if the instr ment is payable to an identified person other than the p rchaser. (b) 1ther definitions applying to this %rticle and the sections in which they appear are2
o o
o o o
' "%cceptance" 00 /ection 304.' "%ccommodated party" 00 /ection 3041' "%ccommodation party" 00 /ection 3041' "%lteration" 00 /ection 304.' ' "%nomalo s indorsement" 00 /ection 302.5 ' "3lank indorsement" 00 /ection 302.5 ' "4ashier+s check" 00 /ection 301.4 ' "4ertificate of deposit" 00 /ection 301.4 ' "4ertified check" 00 /ection 304.' "4heck" 00 /ection 301.4 ' "4onsideration" 00 /ection 303.3 ' "5raft" 00 /ection 301.4 ' "6older in d e co rse" 00 /ection 303.2 ' "(ncomplete instr ment" 00 /ection 30115 ' "(ndorsement" 00 /ection 302.4 ' "(ndorser" 00 /ection 302.4 ' "(nstr ment" 00 /ection 301.4 ' "(ss e" 00 /ection 301.5
' "(ss er" 00 /ection 301.5 ' "7egotiable instr ment" 00 /ection 301.4 ' "7egotiation" 00 /ection 302.1 ' "7ote" 00 /ection 301.4 ' "8ayable at a definite time" 00 /ection 301., ' "8ayable on demand" 00 /ection 301., ' "8ayable to bearer" 00 /ection 301.' "8ayable to order" 00 /ection 301.' "8ayment" 00 /ection 30!.2 ' "8erson entitled to enforce" 00 /ection 303.1 ' "8resentment" 00 /ection 305.1 ' "9eac) isition" 00 /ection 302.' ' "/pecial indorsement" 00 /ection 302.5 ' ""eller+s check" 00 /ection 301.4 ' ""ransfer of instr ment" 00 /ection 302.3 ' ""raveler+s check" 00 /ection 301.4 ' ":al e" 00 /ection 303.3 ' (c) "he following definitions in other %rticles apply to this %rticle2 ' "3ank" 00 /ection 401.5 ' "3anking day" 00 /ection 401.4 ' "4learing ho se" 00 /ection 401.4 ' "4ollecting bank" 00 /ection 401.5 ' "5epositary bank" 00 /ection 401.5 ' "5oc mentary draft" 00 /ection 401.4 ' "(ntermediary bank" 00 /ection 401.5 ' "(tem" 00 /ection 401.4 ' "8ayor bank" 00 /ection 401.5 ' "/ spends payments" 00 /ection 401.4 ' (d) (n addition# %rticle 1 contains general definitions and principles of constr ction and
interpretation applicable thro gho t this %rticle. U.C.C. - ARTICLE 3 - NEGOTIABLE INSTRUMENTS ..PART 1. GENERAL PROVISIONS AND DEFINITIONS
5 3-+6.' NEGOTIABLE INSTRUMENT'

(a) !cept as provided in s"#sections (c) and (d)$ %ne&otia#le instr"ment% means an "nconditional promise or order to pay a fi!ed amo"nt of money$ with or witho"t interest or other char&es descri#ed in the promise or order$ if it:
o o o
(1) is payable to bearer or to order at the time it is iss ed 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 ndertaking or instr ction by the person promising or ordering payment to do any act in addition to the payment of money# b t the promise or order may contain (i) an ndertaking or power to give# maintain# or protect collateral to sec re payment# (ii) an a thori&ation or power to the holder to confess $ dgment or reali&e 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) "Instr"ment" means a negotiable instr ment.
' (c) %n order that meets all of the re) irements of s bsection (a)# e*cept paragraph (1)#
and otherwise falls within the definition of "check" in s bsection (f) is a negotiable instr ment and a check.
' (d) % promise or order other than a check is not an instr ment if# at the time it is iss ed
or first comes into possession of a holder# it contains a conspic o s statement# however e*pressed# to the effect that the promise or order is not negotiable or is not an instr ment governed by this %rticle.
' (e) %n instr ment is a "note" if it is a promise and is a "draft" if it is an order. (f an

instr ment falls within the definition of both "note" and "draft#" a person entitled to enforce the instr ment may treat it as either.
' (f) "'heck" means (i) a draft# other than a doc mentary draft# payable on demand and
drawn on a bank or (ii) a cashier+s check or teller+s check. %n instr ment may be a check even tho gh it is described on its face by another term# s ch as "money order."
' (g) "'ashier(s check" means a draft with respect to which the drawer and drawee are
the same bank or branches of the same bank.
' (h) ")eller(s check" means a draft drawn by a bank (i) on another bank# or (ii) payable at
or thro gh a bank.
' (i) ")raveler(s check" means an instr ment that (i) is payable on demand# (ii) is drawn
on or payable at or thro gh a bank# (iii) is designated by the term "traveler+s check" or by a s bstantially similar term# and (iv) re) ires# as a condition to payment# a co ntersignat re by a person whose specimen signat re appears on the instr ment.
' ($) "'ertificate of deposit" means an instr ment containing an acknowledgment by a

bank that a s m of money has been received by the bank and a promise by the bank to repay the s m of money. % certificate of deposit is a note of the bank. U.C.C. - ARTICLE 3 - NEGOTIABLE INSTRUMENTS ..PART 1. GENERAL PROVISIONS AND DEFINITIONS
5 3-+60' ISSUE OF INSTRUMENT'

(a) %Iss"e% means the first delivery of an instr"ment #y the maker or drawer$ whether to a holder or nonholder$ for the p"rpose of &ivin& ri&hts on the instr"ment to any person*
' (b) %n niss ed instr ment# or an niss ed incomplete instr ment that is completed# is
binding on the maker or drawer# b t noniss ance is a defense. %n instr ment that is conditionally iss ed or is iss ed for a special p rpose is binding on the maker or drawer# b t fail re of the condition or special p rpose to be f lfilled is a defense.
' (c) "Iss"er" applies to iss ed and niss ed instr ments and means a maker or drawer of
an instr ment. U.C.C. - ARTICLE 3 - NEGOTIABLE INSTRUMENTS ..PART 1. GENERAL PROVISIONS AND DEFINITIONS
5 3-+62' UNCONDITIONAL *ROMISE OR ORDER'

(a) !cept as provided in this section$ for the p"rposes of +ection ,-./0(a)$ a promise or order is "nconditional "nless it states (i) an e!press condition to payment$ (ii) that the promise or order is s"#1ect to or &overned #y another writin&$ or (iii) that ri&hts or o#li&ations with respect to the promise or order are stated in another writin&* A reference to another writin& does not of itself make the promise or order conditional*
' (b) % promise or order is not made conditional (i) by a reference to another writing for a
statement of rights with respect to collateral# prepayment# or acceleration# or (ii) beca se payment is limited to resort to a partic lar f nd or so rce.
' (c) (f a promise or order re) ires# as a condition to payment# a co ntersignat re by a

person whose specimen signat re appears on the promise or order# the condition does not make the promise or order conditional for the p rposes of /ection 301.4(a). (f the person whose specimen signat re appears on an instr ment fails to co ntersign the instr ment# the fail re to co ntersign is a defense to the obligation of the iss er# b t the fail re does not prevent a transferee of the instr ment from becoming a holder of the instr ment.
' (d) (f a promise or order at the time it is iss ed or first comes into possession of a holder
contains a statement# re) ired by applicable stat tory or administrative law# to the effect that the rights of a holder or transferee are s b$ect to claims or defenses that the iss er co ld assert against the original payee# the promise or order is not thereby made conditional for the p rposes of /ection 301.4(a); b t if the promise or order is an instr ment# there cannot be a holder in d e co rse of the instr ment. U.C.C. - ARTICLE 3 - NEGOTIABLE INSTRUMENTS ..PART 1. GENERAL PROVISIONS AND DEFINITIONS
5 3-+68' INSTRUMENT *A/ABLE IN FOREIGN MONE/' (nleAA the inAtrument otherwiAe provideA= an inAtrument that AtateA the amount paBaCle in DoreiEn moneB maB Ce paid in the DoreiEn moneB or in an eJuivalent amount in dollarA calculated CB uAinE the current CanH oDDered Apot rate at the place oD paBment Dor the purchaAe oD dollarA on the daB on which the inAtrument iA paid.
5 3-+69' *A/ABLE ON DEMAND OR AT DEFINITE TIME'

(a) A promise or order is %paya#le on demand% if it (i) states that it is paya#le on demand or at si&ht$ or otherwise indicates that it is paya#le at the will of the holder$ or (ii) does not state any time of payment*
' (b) % promise or order is "paya#le at a definite time" if it is payable on elapse of a

definite period of time after sight or acceptance or at a fi*ed date or dates or at a time or times readily ascertainable at the time the promise or order is iss ed# s b$ect to rights of (i) prepayment# (ii) acceleration# (iii) e*tension at the option of the holder# or (iv) e*tension to a f rther definite time at the option of the maker or acceptor or a tomatically pon or after a specified act or event.
' (c) (f an instr ment# payable at a fi*ed date# is also payable pon demand made before
the fi*ed date# the instr ment is payable on demand ntil the fi*ed date and# if demand for payment is not made before that date# becomes payable at a definite time on the fi*ed date. U.C.C. - ARTICLE 3 - NEGOTIABLE INSTRUMENTS ..PART 1. GENERAL PROVISIONS AND DEFINITIONS
5 3-+6:' *A/ABLE TO BEARER OR TO ORDER'

(a) A promise or order is paya#le to #earer 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) % 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. % promise or order that is payable to order is payable to the identified person.
o o o
' (c) %n instr ment payable to bearer may become payable to an identified person if it is
specially indorsed p rs ant to /ection 302.5(a). %n instr ment payable to an identified person may become payable to bearer if it is indorsed in blank p rs ant to /ection 30 2.5(b). U.C.C. - ARTICLE 3 - NEGOTIABLE INSTRUMENTS ..PART 1. GENERAL PROVISIONS AND DEFINITIONS
5 3-++6' IDENTIFICATION OF *ERSON TO ;1OM INSTRUMENT IS *A/ABLE'

(a) )he person to whom an instr"ment is initially paya#le is determined #y the intent of the person$ whether or not a"thori2ed$ si&nin& as$ or in the name or #ehalf of$ the iss"er of the instr"ment* )he instr"ment is paya#le to the person intended #y the si&ner even if that person is identified in the instr"ment #y a name or other identification that is not that of the intended person* If more than one person si&ns in the name or #ehalf of the iss"er of an instr"ment and all the si&ners do not intend the same person as payee$ the instr"ment is paya#le to any person intended #y one or more of the si&ners*
' (b) (f the signat re of the iss er of an instr ment is made by a tomated means# s ch as
a check0writing machine# the payee of the instr ment is determined by the intent of the person who s pplied the name or identification of the payee# whether or not a thori&ed to do so.
' (c) % person to whom an instr ment is payable may be identified in any way# incl ding by
name# identifying n mber# office# or acco nt n mber. <or the p rpose of determining the holder of an instr ment# the following r les apply2
(1) (f an instr ment is payable to an acco nt and the acco nt is identified only by n mber# the instr ment is payable to the person to whom the acco nt is payable. (f an instr ment is payable to an acco nt identified by n mber and by the name of a person# the instr ment is payable to the named person# whether or not that person is the owner of the acco nt identified by n mber. (2) (f an instr ment is payable to2
' (i) a tr st# an estate# or a person described as tr stee or representative of

a tr st or estate# the instr ment is payable to the tr stee# the representative# or a s ccessor 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 instr ment is payable to the represented person# the representative# or a s ccessor of the representative;
' (iii) a f nd or organi&ation that is not a legal entity# the instr ment is
payable to a representative of the members of the f nd or organi&ation; or
' (iv) an office or to a person described as holding an office# the instr ment
is payable to the named person# the inc mbent of the office# or a s ccessor to the inc mbent.
' (d) (f an instr ment 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 instr ment. (f an instr ment 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. (f an instr ment payable to two or more persons is ambig o s as to whether it is payable to the persons alternatively# the instr ment is payable to the persons alternatively. U.C.C. - ARTICLE 3 - NEGOTIABLE INSTRUMENTS ..PART 1. GENERAL PROVISIONS AND DEFINITIONS
5 3-+++' *LACE OF *A/MENT' &Icept aA otherwiAe provided Dor itemA in Article 0= an inAtrument iA paBaCle at the place oD paBment Atated in the inAtrument. $D no place oD paBment iA Atated= an inAtrument iA paBaCle at the addreAA oD the drawee or maHer Atated in the inAtrument. $D no addreAA iA Atated= the place oD paBment iA the place oD CuAineAA oD the drawee or maHer. $D a drawee or maHer haA more than one place oD CuAineAA= the place oD paBment iA anB place oD CuAineAA oD the drawee or maHer choAen CB the perAon entitled to enDorce the inAtrument. $D the drawee or maHer haA no place oD CuAineAA= the place oD paBment iA the reAidence oD the drawee or maHer.
5 3-++,' INTEREST'
(a) 3nless otherwise provided in the instr"ment$ (i) an instr"ment is not paya#le with interest$ and (ii) interest on an interest-#earin& instr"ment is paya#le from the date of the instr"ment*
' (b) (nterest may be stated in an instr ment as a fi*ed or variable amo nt of money or it
may be e*pressed as a fi*ed or variable rate or rates. "he amo nt or rate of interest may be stated or described in the instr ment in any manner and may re) ire reference to information not contained in the instr ment. (f an instr ment provides for interest# b t the amo nt of interest payable cannot be ascertained from the description# interest is payable at the $ dgment rate in effect at the place of payment of the instr ment and at the time interest first accr es. U.C.C. - ARTICLE 3 - NEGOTIABLE INSTRUMENTS ..PART 1. GENERAL PROVISIONS AND DEFINITIONS
5 3-++3' DATE OF INSTRUMENT'

(a) An instr"ment may #e antedated or postdated* )he date stated determines the time of payment if the instr"ment is paya#le at a fi!ed period after date* !cept as provided in +ection 0-0/.(c)$ an instr"ment paya#le on demand is not paya#le #efore the date of the instr"ment*
' (b) (f an instr ment is ndated# its date is the date of its iss e or# in the case of an
niss ed instr ment# the date it first comes into possession of a holder. U.C.C. - ARTICLE 3 - NEGOTIABLE INSTRUMENTS ..PART 1. GENERAL PROVISIONS AND DEFINITIONS
5 3-++.' CONTRADICTOR/ TERMS OF INSTRUMENT' $D an inAtrument containA contradictorB termA= tBpewritten termA prevail over printed termA= handwritten termA prevail over Coth= and wordA prevail over numCerA.
5 3-++0' INCOM*LETE INSTRUMENT'

(a) %Incomplete instr"ment% means a si&ned writin&$ whether or not iss"ed #y the si&ner$ the contents of which show at the time of si&nin& that it is incomplete #"t that the si&ner intended it to #e completed #y the addition of words or n"m#ers*
' (b) / b$ect to s bsection (c)# if an incomplete instr ment is an instr ment nder /ection
301.4# it may be enforced according to its terms if it is not completed# or according to its terms as a gmented by completion. (f an incomplete instr ment is not an instr ment nder /ection 301.4# b t# after completion# the re) irements of /ection 301.4 are met# the instr ment may be enforced according to its terms as a gmented by completion.
' (c) (f words or n mbers are added to an incomplete instr ment witho t a thority of the
signer# there is an alteration of the incomplete instr ment nder /ection 304.'.
' (d) "he b rden of establishing that words or n mbers were added to an incomplete
instr ment witho t a thority of the signer is on the person asserting the lack of a thority. U.C.C. - ARTICLE 3 - NEGOTIABLE INSTRUMENTS ..PART 1. GENERAL PROVISIONS AND DEFINITIONS
5 3-++2' 7OINT AND SE)ERAL LIABILIT/< CONTRIBUTION'

(a) !cept as otherwise provided in the instr"ment$ two or more persons who have the same lia#ility on an instr"ment as makers$ drawers$ acceptors$ indorsers who indorse as 1oint payees$ or anomalo"s indorsers are 1ointly and severally lia#le in the capacity in which they si&n*
' (b) =*cept as provided in /ection 3041-(e) or by agreement of the affected parties# a
party having $oint and several liability who pays the instr ment is entitled to receive from any party having the same $oint and several liability contrib tion in accordance with applicable law.
' (c) 5ischarge of one party having $oint and several liability by a person entitled to
enforce the instr ment does not affect the right nder s bsection (b) of a party having the same $oint and several liability to receive contrib tion from the party discharged.
AmendedKPermanent &ditorial )oard +ommentarBL

5 3-++8' OT1ER AGREEMENTS AFFECTING INSTRUMENT' !uCMect to applicaCle law reEardinE eIcluAion oD prooD oD contemporaneouA or previouA aEreementA= the oCliEation oD a partB to an inAtrument to paB the inAtrument maB Ce modiDied= Aupplemented= or nulliDied CB a Aeparate aEreement oD the oCliEor and a perAon entitled to enDorce the inAtrument= iD the inAtrument iA iAAued or the oCliEation iA incurred in reliance on the aEreement or aA part oD the Aame tranAaction EivinE riAe to the aEreement. To the eItent an oCliEation iA modiDied= Aupplemented= or nulliDied CB an aEreement under thiA Aection= the aEreement iA a deDenAe to the oCliEation.
5 3-++9' STATUTE OF LIMITATIONS'

(a) !cept as provided in s"#section (e)$ an action to enforce the o#li&ation of a party to pay a note paya#le at a definite time m"st #e commenced within si! years after the d"e date or dates stated in the note or$ if a d"e date is accelerated$ within si! years after the accelerated d"e date*
' (b) =*cept as provided in s bsection (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 m st be commenced within si* years after the demand. (f 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 contin o s period of 1. years.
' (c) =*cept as provided in s bsection (d)# an action to enforce the obligation of a party to
an naccepted draft to pay the draft m st be commenced within three years after dishonor of the draft or 1. years after the date of the draft# whichever period e*pires first.
' (d) %n action to enforce the obligation of the acceptor of a certified check or the iss er of
a teller+s check# cashier+s check# or traveler+s check m st be commenced within three years after demand for payment is made to the acceptor or iss er# as the case may be.
' (e) %n action to enforce the obligation of a party to a certificate of deposit to pay the
instr ment m st be commenced within si* years after demand for payment is made to the maker# b t if the instr ment states a d e date and the maker is not re) ired to pay before that date# the si*0year period begins when a demand for payment is in effect and the d e date has passed.
' (f) %n action to enforce the obligation of a party to pay an accepted draft# other than a
certified check# m st be commenced (i) within si* years after the d e date or dates stated in the draft or acceptance if the obligation of the acceptor is payable at a definite time# or (ii) within si* years after the date of the acceptance if the obligation of the acceptor is payable on demand.
' (g) >nless governed by other law regarding claims for indemnity or contrib tion# an
action (i) for conversion of an instr ment# for money had and received# or like action based on conversion# (ii) for breach of warranty# or (iii) to enforce an obligation# d ty# or right arising nder this %rticle and not governed by this section m st be commenced within three years after the ?ca se of action@ accr es. U.C.C. - ARTICLE 3 - NEGOTIABLE INSTRUMENTS ..PART 1. GENERAL PROVISIONS AND DEFINITIONS
5 3-++:' NOTICE OF RIG1T TO DEFEND ACTION' $n an action Dor Creach oD an oCliEation Dor which a third perAon iA anAweraCle over purAuant to thiA Article or Article 0= the deDendant maB Eive the third perAon written notice oD the litiEation= and the perAon notiDied maB then Eive Aimilar notice to anB other perAon who iA anAweraCle over. $D the notice AtateA FiG that the perAon notiDied maB come in and deDend and FiiG that Dailure to do Ao will Cind the perAon notiDied in an action later CrouEht CB the perAon EivinE the notice aA to
anB determination oD Dact common to the two litiEationA= the perAon notiDied iA Ao Cound unleAA aDter AeaAonaCle receipt oD the notice the perAon notiDied doeA come in and deDend.
*ART ,' NEGOTIATION- TRANSFER- AND INDORSEMENT

U.C.C. - ARTICLE 3 - NEGOTIABLE INSTRUMENTS ..PART 2. NEGOTIATION, TRANSFER, AND INDORSEMENT
5 3-,6+' NEGOTIATION'
(a) %4e&otiation% means a transfer of possession$ whether vol"ntary or invol"ntary$ of an instr"ment #y a person other than the iss"er to a person who there#y #ecomes its holder*
' (b) =*cept for negotiation by a remitter# if an instr ment is payable to an identified
person# negotiation re) ires transfer of possession of the instr ment and its indorsement by the holder. (f an instr ment is payable to bearer# it may be negotiated by transfer of possession alone. U.C.C. - ARTICLE 3 - NEGOTIABLE INSTRUMENTS ..PART 2. NEGOTIATION, TRANSFER, AND INDORSEMENT
5 3-,6,' NEGOTIATION SUB7ECT TO RESCISSION'

(a) 4e&otiation is effective even if o#tained (i) from an infant$ a corporation e!ceedin& its powers$ or a person witho"t capacity$ (ii) #y fra"d$ d"ress$ or mistake$ or (iii) in #reach of d"ty or as part of an ille&al transaction*
' (b) "o the e*tent permitted by other law# negotiation may be rescinded or may be s b$ect
to other remedies# b t those remedies may not be asserted against a s bse) ent holder in d e co rse or a person paying the instr ment in good faith and witho t knowledge of facts that are a basis for rescission or other remedy. U.C.C. - ARTICLE 3 - NEGOTIABLE INSTRUMENTS ..PART 2. NEGOTIATION, TRANSFER, AND INDORSEMENT
5 3-,63' TRANSFER OF INSTRUMENT< RIG1TS AC=UIRED B/ TRANSFER'

(a) An instr"ment is transferred when it is delivered #y a person other than its iss"er for the p"rpose of &ivin& to the person receivin& delivery the ri&ht to enforce the instr"ment*
' (b) "ransfer of an instr ment# whether or not the transfer is a negotiation# vests in the
transferee any right of the transferor to enforce the instr ment# incl ding any right as a holder in d e co rse# b t the transferee cannot ac) ire rights of a holder in d e co rse by a transfer# directly or indirectly# from a holder in d e co rse if the transferee engaged in fra d or illegality affecting the instr ment.
' (c) >nless otherwise agreed# if an instr ment is transferred for val e and the transferee
does not become a holder beca se of lack of indorsement by the transferor# the transferee has a specifically enforceable right to the n) alified indorsement of the
transferor# b t negotiation of the instr ment does not occ r ntil the indorsement is made.
' (d) (f a transferor p rports to transfer less than the entire instr ment# negotiation of the
instr ment does not occ r. "he transferee obtains no rights nder this %rticle and has only the rights of a partial assignee. U.C.C. - ARTICLE 3 - NEGOTIABLE INSTRUMENTS ..PART 2. NEGOTIATION, TRANSFER, AND INDORSEMENT
5 3-,6.' INDORSEMENT'
(a) %Indorsement% means a si&nat"re$ other than that of a si&ner as maker$ drawer$ or acceptor$ that alone or accompanied #y other words is made on an instr"ment for the p"rpose of (i) ne&otiatin& the instr"ment$ (ii) restrictin& payment of the instr"ment$ or (iii) inc"rrin& indorser(s lia#ility on the instr"ment$ #"t re&ardless of the intent of the si&ner$ a si&nat"re and its accompanyin& words is an indorsement "nless the accompanyin& words$ terms of the instr"ment$ place of the si&nat"re$ or other circ"mstances "nam#i&"o"sly indicate that the si&nat"re was made for a p"rpose other than indorsement* 5or the p"rpose of determinin& whether a si&nat"re is made on an instr"ment$ a paper affi!ed to the instr"ment is a part of the instr"ment*
' (b) "Indorser" means a person who makes an indorsement. ' (c) <or the p rpose of determining whether the transferee of an instr ment is a holder#
an indorsement that transfers a sec rity interest in the instr ment is effective as an n) alified indorsement of the instr ment.
' (d) (f an instr ment is payable to a holder nder a name that is not the name of the
holder# indorsement may be made by the holder in the name stated in the instr ment or in the holder+s name or both# b t signat re in both names may be re) ired by a person paying or taking the instr ment for val e or collection. U.C.C. - ARTICLE 3 - NEGOTIABLE INSTRUMENTS ..PART 2. NEGOTIATION, TRANSFER, AND INDORSEMENT
5 3-,60' S*ECIAL INDORSEMENT< BLAN> INDORSEMENT< ANOMALOUS INDORSEMENT'

(a) If an indorsement is made #y the holder of an instr"ment$ whether paya#le to an identified person or paya#le to #earer$ and the indorsement identifies a person to whom it makes the instr"ment paya#le$ it is a %special indorsement*% 6hen specially indorsed$ an instr"ment #ecomes paya#le to the identified person and may #e ne&otiated only #y the indorsement of that person* )he principles stated in +ection ,-../ apply to special indorsements*
' (b) (f an indorsement is made by the holder of an instr ment and it is not a special
indorsement# it is a "#lank indorsement." Ahen indorsed in blank# an instr ment becomes payable to bearer and may be negotiated by transfer of possession alone ntil specially indorsed.
' (c) "he holder may convert a blank indorsement that consists only of a signat re into a
special indorsement by writing# above the signat re of the indorser# words identifying the person to whom the instr ment is made payable.
' (d) "Anomalo"s indorsement" means an indorsement made by a person who is not the
holder of the instr ment. %n anomalo s indorsement does not affect the manner in which the instr ment may be negotiated. U.C.C. - ARTICLE 3 - NEGOTIABLE INSTRUMENTS ..PART 2. NEGOTIATION, TRANSFER, AND INDORSEMENT
5 3-,62' RESTRICTI)E INDORSEMENT'

(a) An indorsement limitin& payment to a partic"lar person or otherwise prohi#itin& f"rther transfer or ne&otiation of the instr"ment is not effective to prevent f"rther transfer or ne&otiation of the instr"ment*
' (b) %n indorsement stating a condition to the right of the indorsee to receive payment
does not affect the right of the indorsee to enforce the instr ment. % person paying the instr ment or taking it for val e or collection may disregard the condition# and the rights and liabilities of that person are not affected by whether the condition has been f lfilled.
' (c) (f an instr ment bears an indorsement (i) described in /ection 402.1(b)# or (ii) in
blank or to a partic lar bank sing the words "for deposit#" "for collection#" or other words indicating a p rpose of having the instr ment collected by a bank for the indorser or for a partic lar acco nt# the following r les apply2
(1) % person# other than a bank# who p rchases the instr ment when so indorsed converts the instr ment nless the amo nt paid for the instr ment is received by the indorser or applied consistently with the indorsement. (2) % depositary bank that p rchases the instr ment or takes it for collection when so indorsed converts the instr ment nless the amo nt paid by the bank with respect to the instr ment is received by the indorser or applied consistently with the indorsement. (3) % payor bank that is also the depositary bank or that takes the instr ment for immediate payment over the co nter from a person other than a collecting bank converts the instr ment nless the proceeds of the instr ment are received by the indorser or applied consistently with the indorsement. (4) =*cept 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 instr ment are not received by the indorser or applied consistently with the indorsement. (d) =*cept for an indorsement covered by s bsection (c)# if an instr ment bears an indorsement sing words to the effect that payment is to be made to the indorsee as agent# tr stee# or other fid ciary for the benefit of the indorser or another person# the following r les apply2 (1) >nless there is notice of breach of fid ciary d ty as provided in /ection 30 3.'# a person who p rchases the instr ment from the indorsee or takes the instr ment from the indorsee for collection or payment may pay the proceeds of
payment or the val e given for the instr ment to the indorsee witho t regard to whether the indorsee violates a fid ciary d ty to the indorser.
(2) % s bse) ent transferee of the instr ment or person who pays the instr ment is neither given notice nor otherwise affected by the restriction in the indorsement nless the transferee or payor knows that the fid ciary dealt with the instr ment or its proceeds in breach of fid ciary d ty. (e) "he presence on an instr ment of an indorsement to which this section applies does not prevent a p rchaser of the instr ment from becoming a holder in d e co rse of the instr ment nless the p rchaser is a converter nder s bsection (c) or has notice or knowledge of breach of fid ciary d ty as stated in s bsection (d).
' (f) (n an action to enforce the obligation of a party to pay the instr ment# the obligor has
a defense if payment wo ld violate an indorsement to which this section applies and the payment is not permitted by this section. U.C.C. - ARTICLE 3 - NEGOTIABLE INSTRUMENTS ..PART 2. NEGOTIATION, TRANSFER, AND INDORSEMENT
5 3-,68' REAC=UISITION' ReacJuiAition oD an inAtrument occurA iD it iA tranADerred to a Dormer holder= CB neEotiation or otherwiAe. A Dormer holder who reacJuireA the inAtrument maB cancel indorAementA made aDter the reacJuirer DirAt Cecame a holder oD the inAtrument. $D the cancellation cauAeA the inAtrument to Ce paBaCle to the reacJuirer or to Cearer= the reacJuirer maB neEotiate the inAtrument. An indorAer whoAe indorAement iA canceled iA diAcharEed= and the diAcharEe iA eDDective aEainAt anB AuCAeJuent holder.
*ART 3' ENFORCEMENT OF INSTRUMENTS

U.C.C. - ARTICLE 3 - NEGOTIABLE INSTRUMENTS ..PART 3. ENFORCEMENT OF INSTRUMENTS
5 3-36+' *ERSON ENTITLED TO ENFORCE INSTRUMENT' N*erson entitled to en3orceN an inAtrument meanA FiG the holder oD the inAtrument= FiiG a nonholder in poAAeAAion oD the inAtrument who haA the riEhtA oD a holder= or FiiiG a perAon not in poAAeAAion oD the inAtrument who iA entitled to enDorce the inAtrument purAuant to !ection 3 307 or 3 016FdG. A perAon maB Ce a perAon entitled to enDorce the inAtrument even thouEh the perAon iA not the owner oD the inAtrument or iA in wronEDul poAAeAAion oD the inAtrument.
5 3-36,' 1OLDER IN DUE COURSE'

(a) +"#1ect to s"#section (c) and +ection ,-./7(d)$ %holder in d"e co"rse% means the holder of an instr"ment if:
(1) the instr ment when iss ed or negotiated to the holder does not bear s ch apparent evidence of forgery or alteration or is not otherwise so irreg lar or incomplete as to call into ) estion its a thenticity; and (2) the holder took the instr ment (i) for val e# (ii) in good faith# (iii) witho t notice that the instr ment is overd e or has been dishonored or that there is an nc red defa lt with respect to payment of another instr ment iss ed as part of the same series# (iv) witho t notice that the instr ment contains an na thori&ed signat re or has been altered# (v) witho t notice of any claim to the instr ment described in /ection 303.!# and (vi) witho t notice that any party has a defense or claim in reco pment described in /ection 303.5(a). (b) 7otice of discharge of a party# other than discharge in an insolvency proceeding# is not notice of a defense nder s bsection (a)# b t discharge is effective against a person who became a holder in d e co rse with notice of the discharge. 8 blic filing or recording of a doc ment does not of itself constit te notice of a defense# claim in reco pment# or claim to the instr ment.
' (c) =*cept to the e*tent a transferor or predecessor in interest has rights as a holder in
d e co rse# a person does not ac) ire rights of a holder in d e co rse of an instr ment taken (i) by legal process or by p rchase in an e*ec tion# bankr ptcy# or creditor+s sale or similar proceeding# (ii) by p rchase as part of a b lk transaction not in ordinary co rse of b siness of the transferor# or (iii) as the s ccessor in interest to an estate or other organi&ation.
' (d) (f# nder /ection 303.3(a)(1)# the promise of performance that is the consideration for
an instr ment has been partially performed# the holder may assert rights as a holder in d e co rse of the instr ment only to the fraction of the amo nt payable nder the instr ment e) al to the val e of the partial performance divided by the val e of the promised performance.
' (e) (f (i) the person entitled to enforce an instr ment has only a sec rity interest in the
instr ment and (ii) the person obliged to pay the instr ment has a defense# claim in reco pment# or claim to the instr ment that may be asserted against the person who granted the sec rity interest# the person entitled to enforce the instr ment may assert rights as a holder in d e co rse only to an amo nt payable nder the instr ment which# at the time of enforcement of the instr ment# does not e*ceed the amo nt of the npaid obligation sec red.
' (f) "o be effective# notice m st be received at a time and in a manner that gives a
reasonable opport nity to act on it.
' (g) "his section is s b$ect to any law limiting stat s as a holder in d e co rse in
partic lar classes of transactions. U.C.C. - ARTICLE 3 - NEGOTIABLE INSTRUMENTS ..PART 3. ENFORCEMENT OF INSTRUMENTS
5 3-363' )ALUE AND CONSIDERATION'

(a) An instr"ment is iss"ed or transferred for val"e if:
o o o o o o
(1) the instr ment is iss ed or transferred for a promise of performance# to the e*tent the promise has been performed; (2) the transferee ac) ires a sec rity interest or other lien in the instr ment other than a lien obtained by $ dicial proceeding; (3) the instr ment is iss ed or transferred as payment of# or as sec rity for# an antecedent claim against any person# whether or not the claim is d e; (4) the instr ment is iss ed or transferred in e*change for a negotiable instr ment; or (5) the instr ment is iss ed or transferred in e*change for the inc rring of an irrevocable obligation to a third party by the person taking the instr ment. (b) "'onsideration" means any consideration s fficient to s pport a simple contract. "he drawer or maker of an instr ment has a defense if the instr ment is iss ed witho t consideration. (f an instr ment is iss ed for a promise of performance# the iss er has a defense to the e*tent performance of the promise is d e and the promise has not been performed. (f an instr ment is iss ed for val e as stated in s bsection (a)# the instr ment is also iss ed for consideration.
5 3-36.' O)ERDUE INSTRUMENT'

(a) An instr"ment paya#le on demand #ecomes overd"e at the earliest of the followin& times:
o o o
(1) on the day after the day demand for payment is d ly made; (2) if the instr ment is a check# -. days after its date; or (3) if the instr ment is not a check# when the instr ment has been o tstanding for a period of time after its date which is nreasonably long nder the circ mstances of the partic lar case in light of the nat re of the instr ment and sage of the trade. (b) Aith respect to an instr ment payable at a definite time the following r les apply2 (1) (f the principal is payable in installments and a d e date has not been accelerated# the instr ment becomes overd e pon defa lt nder the instr ment for nonpayment of an installment# and the instr ment remains overd e ntil the defa lt is c red. (2) (f the principal is not payable in installments and the d e date has not been accelerated# the instr ment becomes overd e on the day after the d e date. (3) (f a d e date with respect to principal has been accelerated# the instr ment becomes overd e on the day after the accelerated d e date.
o o
o o
(c) >nless the d e date of principal has been accelerated# an instr ment does not become overd e if there is defa lt in payment of interest b t no defa lt in payment of principal.
5 3-360' DEFENSES AND CLAIMS IN RECOU*MENT'

(a) !cept as stated in s"#section (#)$ the ri&ht to enforce the o#li&ation of a party to pay an instr"ment is s"#1ect to the followin&:
(1) a defense of the obligor based on (i) infancy of the obligor to the e*tent it is a defense to a simple contract# (ii) d ress# lack of legal capacity# or illegality of the transaction which# nder other law# n llifies the obligation of the obligor# (iii) fra d that ind ced the obligor to sign the instr ment with neither knowledge nor reasonable opport nity 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 %rticle or a defense of the obligor that wo ld be available if the person entitled to enforce the instr ment were enforcing a right to payment nder a simple contract; and (3) a claim in reco pment of the obligor against the original payee of the instr ment if the claim arose from the transaction that gave rise to the instr ment; b t the claim of the obligor may be asserted against a transferee of the instr ment only to red ce the amo nt owing on the instr ment at the time the action is bro ght. (b) "he right of a holder in d e co rse to enforce the obligation of a party to pay the instr ment is s b$ect to defenses of the obligor stated in s bsection (a)(1)# b t is not s b$ect to defenses of the obligor stated in s bsection (a)(2) or claims in reco pment stated in s bsection (a)(3) against a person other than the holder.
' (c) =*cept as stated in s bsection (d)# in an action to enforce the obligation of a party to
pay the instr ment# the obligor may not assert against the person entitled to enforce the instr ment a defense# claim in reco pment# or claim to the instr ment (/ection 303.!) of another person# b t the other person+s claim to the instr ment may be asserted by the obligor if the other person is $oined in the action and personally asserts the claim against the person entitled to enforce the instr ment. %n obligor is not obliged to pay the instr ment if the person seeking enforcement of the instr ment does not have rights of a holder in d e co rse and the obligor proves that the instr ment is a lost or stolen instr ment.
' (d) (n an action to enforce the obligation of an accommodation party to pay an

instr ment# the accommodation party may assert against the person entitled to enforce the instr ment any defense or claim in reco pment nder s bsection (a) that the accommodated party co ld assert against the person entitled to enforce the instr ment# e*cept the defenses of discharge in insolvency proceedings# infancy# and lack of legal capacity.
5 3-362' CLAIMS TO AN INSTRUMENT' A perAon taHinE an inAtrument= other than a perAon havinE riEhtA oD a holder in due courAe= iA AuCMect to a claim oD a propertB or poAAeAAorB riEht in the inAtrument or itA proceedA= includinE a claim to reAcind a neEotiation and to recover the inAtrument or itA proceedA. A perAon havinE riEhtA oD a holder in due courAe taHeA Dree oD the claim to the inAtrument.
5 3-368' NOTICE OF BREAC1 OF FIDUCIAR/ DUT/'

(a) In this section:
o o o
(1) "5id"ciary" means an agent# tr stee# partner# corporate officer or director# or other representative owing a fid ciary d ty with respect to an instr ment. (2) "Represented person" means the principal# beneficiary# partnership# corporation# or other person to whom the d ty stated in paragraph (1) is owed. (b) (f (i) an instr ment is taken from a fid ciary for payment or collection or for val e# (ii) the taker has knowledge of the fid ciary stat s of the fid ciary# and (iii) the represented person makes a claim to the instr ment or its proceeds on the basis that the transaction of the fid ciary is a breach of fid ciary d ty# the following r les apply2 (1) 7otice of breach of fid ciary d ty by the fid ciary is notice of the claim of the represented person. (2) (n the case of an instr ment payable to the represented person or the fid ciary as s ch# the taker has notice of the breach of fid ciary d ty if the instr ment is (i) taken in payment of or as sec rity for a debt known by the taker to be the personal debt of the fid ciary# (ii) taken in a transaction known by the taker to be for the personal benefit of the fid ciary# or (iii) deposited to an acco nt other than an acco nt of the fid ciary# as s ch# or an acco nt of the represented person. (3) (f an instr ment is iss ed by the represented person or the fid ciary as s ch# and made payable to the fid ciary personally# the taker does not have notice of the breach of fid ciary d ty nless the taker knows of the breach of fid ciary d ty. (4) (f an instr ment is iss ed by the represented person or the fid ciary as s ch# to the taker as payee# the taker has notice of the breach of fid ciary d ty if the instr ment is (i) taken in payment of or as sec rity for a debt known by the taker to be the personal debt of the fid ciary# (ii) taken in a transaction known by the taker to be for the personal benefit of the fid ciary# or (iii) deposited to an acco nt other than an acco nt of the fid ciary# as s ch# or an acco nt of the represented person.
o o
5 3-369' *ROOF OF SIGNATURES AND STATUS AS 1OLDER IN DUE COURSE'

(a) In an action with respect to an instr"ment$ the a"thenticity of$ and a"thority to make$ each si&nat"re on the instr"ment is admitted "nless specifically denied in the pleadin&s* If the validity of a si&nat"re is denied in the pleadin&s$ the #"rden of esta#lishin& validity is on the person claimin& validity$ #"t the si&nat"re is pres"med to #e a"thentic and a"thori2ed "nless the action is to enforce the lia#ility of the p"rported si&ner and the si&ner is dead or incompetent at the time of trial of the iss"e of validity of the si&nat"re* If an action to enforce the instr"ment is #ro"&ht a&ainst a person as the "ndisclosed principal of a person who si&ned the instr"ment as a party to the instr"ment$ the plaintiff has the #"rden of esta#lishin& that the defendant is lia#le on the instr"ment as a represented person "nder +ection ,-0/8(a)*
' (b) (f the validity of signat res is admitted or proved and there is compliance with
s bsection (a)# a plaintiff prod cing the instr ment is entitled to payment if the plaintiff proves entitlement to enforce the instr ment nder /ection 303.1# nless the defendant proves a defense or claim in reco pment. (f a defense or claim in reco pment is proved# the right to payment of the plaintiff is s b$ect to the defense or claim# e*cept to the e*tent the plaintiff proves that the plaintiff has rights of a holder in d e co rse which are not s b$ect to the defense or claim. U.C.C. - ARTICLE 3 - NEGOTIABLE INSTRUMENTS ..PART 3. ENFORCEMENT OF INSTRUMENTS
5 3-36:' ENFORCEMENT OF LOST- DESTRO/ED- OR STOLEN INSTRUMENT'

(a) A person not in possession of an instr"ment is entitled to enforce the instr"ment if (i) the person was in possession of the instr"ment and entitled to enforce it when loss of possession occ"rred$ (ii) the loss of possession was not the res"lt of a transfer #y the person or a lawf"l sei2"re$ and (iii) the person cannot reasona#ly o#tain possession of the instr"ment #eca"se the instr"ment was destroyed$ its wherea#o"ts cannot #e determined$ or it is in the wron&f"l possession of an "nknown person or a person that cannot #e fo"nd or is not amena#le to service of process*
' (b) % person seeking enforcement of an instr ment nder s bsection (a) m st prove the
terms of the instr ment and the person+s right to enforce the instr ment. (f that proof is made# /ection 303., applies to the case as if the person seeking enforcement had prod ced the instr ment. "he co rt may not enter $ dgment in favor of the person seeking enforcement nless it finds that the person re) ired to pay the instr ment is ade) ately protected against loss that might occ r by reason of a claim by another person to enforce the instr ment. %de) ate protection may be provided by any reasonable means. U.C.C. - ARTICLE 3 - NEGOTIABLE INSTRUMENTS ..PART 3. ENFORCEMENT OF INSTRUMENTS
5 3-3+6' EFFECT OF INSTRUMENT ON OBLIGATION FOR ;1IC1 TA>EN'

(a) 3nless otherwise a&reed$ if a certified check$ cashier(s check$ or teller(s check is taken for an o#li&ation$ the o#li&ation is dischar&ed to the same e!tent dischar&e wo"ld res"lt if an amo"nt of money e9"al to the amo"nt of the instr"ment were taken in payment of the o#li&ation* Dischar&e of the o#li&ation does not affect any lia#ility that the o#li&or may have as an indorser of the instr"ment*
' (b) >nless otherwise agreed and e*cept as provided in s bsection (a)# if a note or an
ncertified check is taken for an obligation# the obligation is s spended to the same e*tent the obligation wo ld be discharged if an amo nt of money e) al to the amo nt of the instr ment were taken# and the following r les apply2
(1) (n the case of an ncertified check# s spension of the obligation contin es ntil dishonor of the check or ntil it is paid or certified. 8ayment or certification of the check res lts in discharge of the obligation to the e*tent of the amo nt of the check. (2) (n the case of a note# s spension of the obligation contin es ntil dishonor of the note or ntil it is paid. 8ayment of the note res lts in discharge of the obligation to the e*tent of the payment. (3) =*cept as provided in paragraph (4)# if the check or note is dishonored and the obligee of the obligation for which the instr ment was taken is the person entitled to enforce the instr ment# the obligee may enforce either the instr ment or the obligation. (n the case of an instr ment of a third person which is negotiated to the obligee by the obligor# discharge of the obligor on the instr ment also discharges the obligation. (4) (f the person entitled to enforce the instr ment taken for an obligation is a person other than the obligee# the obligee may not enforce the obligation to the e*tent the obligation is s spended. (f the obligee is the person entitled to enforce the instr ment b t no longer has possession of it beca se it was lost# stolen# or destroyed# the obligation may not be enforced to the e*tent of the amo nt payable on the instr ment# and to that e*tent the obligee+s rights against the obligor are limited to enforcement of the instr ment. (c) (f an instr ment other than one described in s bsection (a) or (b) is taken for an obligation# the effect is (i) that stated in s bsection (a) if the instr ment is one on which a bank is liable as maker or acceptor# or (ii) that stated in s bsection (b) in any other case.
5 3-3++' ACCORD AND SATISFACTION B/ USE OF INSTRUMENT'

(a) If a person a&ainst whom a claim is asserted proves that (i) that person in &ood faith tendered an instr"ment to the claimant as f"ll satisfaction of the claim$ (ii) the amo"nt of the claim was "nli9"idated or s"#1ect to a #ona fide disp"te$ and (iii) the claimant o#tained payment of the instr"ment$ the followin& s"#sections apply*
' (b) >nless s bsection (c) applies# the claim is discharged if the person against whom the
claim is asserted proves that the instr ment or an accompanying written comm nication
contained a conspic o s statement to the effect that the instr ment was tendered as f ll satisfaction of the claim.
' (c) / b$ect to s bsection (d)# a claim is not discharged nder s bsection (b) if either of
the following applies2
(1) "he claimant# if an organi&ation# proves that (i) within a reasonable time before the tender# the claimant sent a conspic o s statement to the person against whom the claim is asserted that comm nications concerning disp ted debts# incl ding an instr ment tendered as f ll satisfaction of a debt# are to be sent to a designated person# office# or place# and (ii) the instr ment or accompanying comm nication was not received by that designated person# office# or place. (2) "he claimant# whether or not an organi&ation# proves that within -. days after payment of the instr ment# the claimant tendered repayment of the amo nt of the instr ment to the person against whom the claim is asserted. "his paragraph does not apply if the claimant is an organi&ation that sent a statement complying with paragraph (1)(i).
' (d) % claim is discharged if the person against whom the claim is asserted proves that
within a reasonable time before collection of the instr ment was initiated# the claimant# or an agent of the claimant having direct responsibility with respect to the disp ted obligation# knew that the instr ment was tendered in f ll satisfaction of the claim. U.C.C. - ARTICLE 3 - NEGOTIABLE INSTRUMENTS ..PART 3. ENFORCEMENT OF INSTRUMENTS
5 3-3+,' LOST- DESTRO/ED- OR STOLEN CAS1IER?S C1EC>- TELLER?S C1EC>OR CERTIFIED C1EC>'
o o
(1) "4heck" means a cashier+s check# teller+s check# or certified check. (2) "4laimant" means a person who claims the right to receive the amo nt of a cashier+s check# teller+s check# or certified check that was lost# destroyed# or stolen. (3) "5eclaration of loss" means a written statement# made nder penalty of per$ ry# 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 res lt of a transfer by the declarer or a lawf l sei& re# and (iv) the declarer cannot reasonably obtain possession of the check beca se the check was destroyed# its whereabo ts cannot be determined# or it is in the wrongf l possession of an nknown person or a person that cannot be fo nd or is not amenable to service of process. (4) "1bligated bank" means the iss er of a cashier+s check or teller+s check or the acceptor of a certified check. (b) % claimant may assert a claim to the amo nt of a check by a comm nication to the obligated bank describing the check with reasonable certainty and re) esting payment of the amo nt of the check# if (i) the claimant is the drawer or
o o
payee of a certified check or the remitter or payee of a cashier+s check or teller+s check# (ii) the comm nication contains or is accompanied by a declaration of loss of the claimant with respect to the check# (iii) the comm nication 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 re) ested by the obligated bank. 5elivery of a declaration of loss is a warranty of the tr th of the statements made in the declaration. (f a claim is asserted in compliance with this s bsection# the following r les apply2
(1) "he claim becomes enforceable at the later of (i) the time the claim is asserted# or (ii) the -.th day following the date of the check# in the case of a ccashier+s check or teller+s check# or the -.th day following the date of the acceptance# in the case of a certified check. (2) >ntil 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. 8ayment to a person entitled to enforce the check discharges all liability of the obligated bank with respect to the check. (3) (f the claim becomes enforceable before the check is presented for payment# the obligated bank is not obliged to pay the check. (4) Ahen the claim becomes enforceable# the obligated bank becomes obliged to pay the amo nt of the check to the claimant if payment of the check has not been made to a person entitled to enforce the check. / b$ect to /ection 403.2(a)(1)# payment to the claimant discharges all liability of the obligated bank with respect to the check. (c) (f the obligated bank pays the amo nt of a check to a claimant nder s bsection (b)(4) and the check is presented for payment by a person having rights of a holder in d e co rse# the claimant is obliged to (i) ref nd the payment to the obligated bank if the check is paid# or (ii) pay the amo nt of the check to the person having rights of a holder in d e co rse if the check is dishonored.
o o
' (d) (f a claimant has the right to assert a claim nder s bsection (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 nder this section or /ection 303.-.
*ART .' LIABILIT/ OF *ARTIES

U.C.C. - ARTICLE 3 - NEGOTIABLE INSTRUMENTS ..PART 4. LIABILITY OF PARTIES
5 3-.6+' SIGNATURE'
(a) A person is not lia#le on an instr"ment "nless (i) the person si&ned the instr"ment$ or (ii) the person is represented #y an a&ent or representative who si&ned the instr"ment and the si&nat"re is #indin& on the represented person "nder +ection ,-0/8*
' (b) % signat re may be made (i) man ally or by means of a device or machine# and (ii)
by the se of any name# incl ding a trade or ass med name# or by a word# mark# or symbol e*ec ted or adopted by a person with present intention to a thenticate a writing.
5 3-.6,' SIGNATURE B/ RE*RESENTATI)E'

(a) If a person actin&$ or p"rportin& to act$ as a representative si&ns an instr"ment #y si&nin& either the name of the represented person or the name of the si&ner$ the represented person is #o"nd #y the si&nat"re to the same e!tent the represented person wo"ld #e #o"nd if the si&nat"re were on a simple contract* If the represented person is #o"nd$ the si&nat"re of the representative is the %a"thori2ed si&nat"re of the represented person% and the represented person is lia#le on the instr"ment$ whether or not identified in the instr"ment*
' (b) (f a representative signs the name of the representative to an instr ment and the
signat re is an a thori&ed signat re of the represented person# the following r les apply2
(1) (f the form of the signat re shows nambig o sly that the signat re is made on behalf of the represented person who is identified in the instr ment# the representative is not liable on the instr ment. (2) / b$ect to s bsection (c)# if (i) the form of the signat re does not show nambig o sly that the signat re is made in a representative capacity or (ii) the represented person is not identified in the instr ment# the representative is liable on the instr ment to a holder in d e co rse that took the instr ment witho t notice that the representative was not intended to be liable on the instr ment. Aith respect to any other person# the representative is liable on the instr ment nless the representative proves that the original parties did not intend the representative to be liable on the instr ment. (c) (f a representative signs the name of the representative as drawer of a check witho t indication of the representative stat s and the check is payable from an acco nt of the represented person who is identified on the check# the signer is not liable on the check if the signat re is an a thori&ed signat re of the represented person.
5 3-.63' UNAUT1ORI@ED SIGNATURE'

(a) 3nless otherwise provided in this Article or Article 0$ an "na"thori2ed si&nat"re is ineffective e!cept as the si&nat"re of the "na"thori2ed si&ner in favor of a person who in &ood faith pays the instr"ment or takes it for val"e* An "na"thori2ed si&nat"re may #e ratified for all p"rposes of this Article*
' (b) (f the signat re of more than one person is re) ired to constit te the a thori&ed
signat re of an organi&ation# the signat re of the organi&ation is na thori&ed if one of the re) ired signat res is lacking.
' (c) "he civil or criminal liability of a person who makes an na thori&ed signat re is not
affected by any provision of this %rticle which makes the na thori&ed signat re effective for the p rposes of this %rticle.
5 3-.6.' IM*OSTORS< FICTITIOUS *A/EES'

(a) If an impostor$ #y "se of the mails or otherwise$ ind"ces the iss"er of an instr"ment to iss"e the instr"ment to the impostor$ or to a person actin& in concert with the impostor$ #y impersonatin& the payee of the instr"ment or a person a"thori2ed to act for the payee$ an indorsement of the instr"ment #y any person in the name of the payee is effective as the indorsement of the payee in favor of a person who$ in &ood faith$ pays the instr"ment or takes it for val"e or for collection*
' (b) (f (i) a person whose intent determines to whom an instr ment is payable (/ection 30
11.(a) or (b)) does not intend the person identified as payee to have any interest in the instr ment# or (ii) the person identified as payee of an instr ment is a fictitio s person# the following r les apply ntil the instr ment is negotiated by special indorsement2
o o
(1) %ny person in possession of the instr ment is its holder. (2) %n indorsement by any person in the name of the payee stated in the instr ment is effective as the indorsement of the payee in favor of a person who# in good faith# pays the instr ment or takes it for val e or for collection. (c) >nder s bsection (a) or (b)# an indorsement is made in the name of a payee if (i) it is made in a name s bstantially similar to that of the payee or (ii) the instr ment# whether or not indorsed# is deposited in a depositary bank to an acco nt in a name s bstantially similar to that of the payee.
' (d) Aith respect to an instr ment to which s bsection (a) or (b) applies# if a person
paying the instr ment or taking it for val e or for collection fails to e*ercise ordinary care in paying or taking the instr ment and that fail re s bstantially contrib tes to loss res lting from payment of the instr ment# the person bearing the loss may recover from the person failing to e*ercise ordinary care to the e*tent the fail re to e*ercise ordinary care contrib ted to the loss. U.C.C. - ARTICLE 3 - NEGOTIABLE INSTRUMENTS ..PART 4. LIABILITY OF PARTIES
5 3-.60' EM*LO/ER?S RES*ONSIBILIT/ FOR FRAUDULENT INDORSEMENT B/ EM*LO/EE'

o o
(1) " mployee" incl des an independent contractor and employee of an independent contractor retained by the employer. (2) "5ra"d"lent indorsement" means (i) in the case of an instr ment payable to the employer# a forged indorsement p rporting to be that of the employer# or (ii) in the case of an instr ment with respect to which the employer is the iss er# a forged indorsement p rporting to be that of the person identified as payee. (3) "Responsi#ility" with respect to instr ments means a thority (i) to sign or indorse instr ments on behalf of the employer# (ii) to process instr ments received by the employer for bookkeeping p rposes# for deposit to an acco nt# or
for other disposition# (iii) to prepare or process instr ments for iss e in the name of the employer# (iv) to s pply information determining the names or addresses of payees of instr ments to be iss ed in the name of the employer# (v) to control the disposition of instr ments to be iss ed in the name of the employer# or (vi) to act otherwise with respect to instr ments in a responsible capacity. "9esponsibility" does not incl de a thority that merely allows an employee to have access to instr ments or blank or incomplete instr ment forms that are being stored or transported or are part of incoming or o tgoing mail# or similar access.
(b) <or the p rpose of determining the rights and liabilities of a person who# in good faith# pays an instr ment or takes it for val e or for collection# if an employer entr sted an employee with responsibility with respect to the instr ment and the employee or a person acting in concert with the employee makes a fra d lent indorsement of the instr ment# the indorsement is effective as the indorsement of the person to whom the instr ment is payable if it is made in the name of that person. (f the person paying the instr ment or taking it for val e or for collection fails to e*ercise ordinary care in paying or taking the instr ment and that fail re s bstantially contrib tes to loss res lting from the fra d# the person bearing the loss may recover from the person failing to e*ercise ordinary care to the e*tent the fail re to e*ercise ordinary care contrib ted to the loss.
' (c) >nder s bsection (b)# an indorsement is made in the name of the person to whom an
instr ment is payable if (i) it is made in a name s bstantially similar to the name of that person or (ii) the instr ment# whether or not indorsed# is deposited in a depositary bank to an acco nt in a name s bstantially similar to the name of that person. U.C.C. - ARTICLE 3 - NEGOTIABLE INSTRUMENTS ..PART 4. LIABILITY OF PARTIES
5 3-.62' NEGLIGENCE CONTRIBUTING TO FORGED SIGNATURE OR ALTERATION OF INSTRUMENT'

(a) A person whose fail"re to e!ercise ordinary care s"#stantially contri#"tes to an alteration of an instr"ment or to the makin& of a for&ed si&nat"re on an instr"ment is precl"ded from assertin& the alteration or the for&ery a&ainst a person who$ in &ood faith$ pays the instr"ment or takes it for val"e or for collection*
' (b) >nder s bsection (a)# if the person asserting the precl sion fails to e*ercise ordinary
care in paying or taking the instr ment and that fail re s bstantially contrib tes to loss# the loss is allocated between the person precl ded and the person asserting the precl sion according to the e*tent to which the fail re of each to e*ercise ordinary care contrib ted to the loss.
' (c) >nder s bsection (a)# the b rden of proving fail re to e*ercise ordinary care is on the
person asserting the precl sion. >nder s bsection (b)# the b rden of proving fail re to e*ercise ordinary care is on the person precl ded. U.C.C. - ARTICLE 3 - NEGOTIABLE INSTRUMENTS ..PART 4. LIABILITY OF PARTIES
5 3-.68' ALTERATION'
(a) %Alteration% means (i) an "na"thori2ed chan&e in an instr"ment that p"rports to modify in any respect the o#li&ation of a party$ or (ii) an "na"thori2ed addition of words or n"m#ers or other chan&e to an incomplete instr"ment relatin& to the o#li&ation of a party*
' (b) =*cept as provided in s bsection (c)# an alteration fra d lently made discharges a
party whose obligation is affected by the alteration nless that party assents or is precl ded from asserting the alteration. 7o other alteration discharges a party# and the instr ment may be enforced according to its original terms.
' (c) % payor bank or drawee paying a fra d lently altered instr ment or a person taking it
for val e# in good faith and witho t notice of the alteration# may enforce rights with respect to the instr ment (i) according to its original terms# or (ii) in the case of an incomplete instr ment altered by na thori&ed completion# according to its terms as completed. U.C.C. - ARTICLE 3 - NEGOTIABLE INSTRUMENTS ..PART 4. LIABILITY OF PARTIES
5 3-.69' DRA;EE NOT LIABLE ON UNACCE*TED DRAFT' A checH or other draDt doeA not oD itAelD operate aA an aAAiEnment oD DundA in the handA oD the drawee availaCle Dor itA paBment= and the drawee iA not liaCle on the inAtrument until the drawee acceptA it.
5 3-.6:' ACCE*TANCE OF DRAFT< CERTIFIED C1EC>'

(a) %Acceptance% means the drawee(s si&ned a&reement to pay a draft as presented* It m"st #e written on the draft and may consist of the drawee(s si&nat"re alone* Acceptance may #e made at any time and #ecomes effective when notification p"rs"ant to instr"ctions is &iven or the accepted draft is delivered for the p"rpose of &ivin& ri&hts on the acceptance to any person*
' (b) % draft may be accepted altho gh it has not been signed by the drawer# is otherwise
incomplete# is overd e# or has been dishonored.
' (c) (f a draft is payable at a fi*ed period after sight and the acceptor fails to date the
acceptance# the holder may complete the acceptance by s pplying a date in good faith.
' (d) "'ertified check" means a check accepted by the bank on which it is drawn.
%cceptance may be made as stated in s bsection (a) or by a writing on the check which indicates that the check is certified. "he drawee of a check has no obligation to certify the check# and ref sal to certify is not dishonor of the check. U.C.C. - ARTICLE 3 - NEGOTIABLE INSTRUMENTS ..PART 4. LIABILITY OF PARTIES
5 3-.+6' ACCE*TANCE )AR/ING DRAFT'

(a) If the terms of a drawee(s acceptance vary from the terms of the draft as presented$ the holder may ref"se the acceptance and treat the draft as dishonored* In that case$ the drawee may cancel the acceptance*
' (b) "he terms of a draft are not varied by an acceptance to pay at a partic lar bank or
place in the >nited /tates# nless the acceptance states that the draft is to be paid only at that bank or place.
' (c) (f the holder assents to an acceptance varying the terms of a draft# the obligation of
each drawer and indorser that does not e*pressly assent to the acceptance is discharged. U.C.C. - ARTICLE 3 - NEGOTIABLE INSTRUMENTS ..PART 4. LIABILITY OF PARTIES
5 3-.++' REFUSAL TO *A/ CAS1IER?S C1EC>S- TELLER?S C1EC>S- AND CERTIFIED C1EC>S'
(a) In this section$ %o#li&ated #ank% means the acceptor of a certified check or the iss"er of a cashier(s check or teller(s check #o"&ht from the iss"er*
' (b) (f the obligated bank wrongf lly (i) ref ses to pay a cashier+s check or certified check#
(ii) stops payment of a teller+s check# or (iii) ref ses to pay a dishonored teller+s check# the person asserting the right to enforce the check is entitled to compensation for e*penses and loss of interest res lting from the nonpayment and may recover conse) ential damages if the obligated bank ref ses to pay after receiving notice of partic lar circ mstances giving rise to the damages.
' (c) =*penses or conse) ential damages nder s bsection (b) are not recoverable if the
ref sal of the obligated bank to pay occ rs beca se (i) the bank s spends payments# (ii) the obligated bank asserts a claim or defense of the bank that it has reasonable gro nds to believe is available against the person entitled to enforce the instr ment# (iii) the obligated bank has a reasonable do bt whether the person demanding payment is the person entitled to enforce the instr ment# or (iv) payment is prohibited by law. ..PART 4. LIABILITY OF PARTIES
5 3-.+,' OBLIGATION OF ISSUER OF NOTE OR CAS1IER?S C1EC>' The iAAuer oD a note or caAhier>A checH or other draDt drawn on the drawer iA oCliEed to paB the inAtrument FiG accordinE to itA termA at the time it waA iAAued or= iD not iAAued= at the time it DirAt came into poAAeAAion oD a holder= or FiiG iD the iAAuer AiEned an incomplete inAtrument= accordinE to itA termA when completed= to the eItent Atated in !ectionA 3 112 and 3 004. The oCliEation iA owed to a perAon entitled to enDorce the inAtrument or to an indorAer who paid the inAtrument under !ection 3 012.
5 3-.+3' OBLIGATION OF ACCE*TOR'

(a) )he acceptor of a draft is o#li&ed to pay the draft (i) accordin& to its terms at the time it was accepted$ even tho"&h the acceptance states that the draft is paya#le %as ori&inally drawn% or e9"ivalent terms$ (ii) if the acceptance varies the terms of the draft$ accordin& to the terms of the draft as varied$ or (iii) if the acceptance is of a draft that is an incomplete instr"ment$ accordin& to its terms when completed$ to the e!tent stated in +ections ,-..: and ,-0/;* )he o#li&ation is owed to a person entitled to enforce the draft or to the drawer or an indorser who paid the draft "nder +ection ,-0.0 or ,-0.:*
' (b) (f the certification of a check or other acceptance of a draft states the amo nt certified
or accepted# the obligation of the acceptor is that amo nt. (f (i) the certification or acceptance does not state an amo nt# (ii) the amo nt of the instr ment is s bse) ently raised# and (iii) the instr ment is then negotiated to a holder in d e co rse# the obligation of the acceptor is the amo nt of the instr ment at the time it was taken by the holder in d e co rse. U.C.C. - ARTICLE 3 - NEGOTIABLE INSTRUMENTS ..PART 4. LIABILITY OF PARTIES
5 3-.+.' OBLIGATION OF DRA;ER'

(a) )his section does not apply to cashier(s checks or other drafts drawn on the drawer*
' (b) (f an naccepted draft is dishonored# the drawer is obliged to pay the draft (i)
according to its terms at the time it was iss ed or# if not iss ed# at the time it first came into possession of a holder# or (ii) if the drawer signed an incomplete instr ment# according to its terms when completed# to the e*tent stated in /ections 30115 and 304.'. "he obligation is owed to a person entitled to enforce the draft or to an indorser who paid the draft nder /ection 30415.
' (c) (f a draft is accepted by a bank# the drawer is discharged# regardless of when or by
whom acceptance was obtained.
' (d) (f 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 nder /ection 30415(a) and (c).
' (e) (f a draft states that it is drawn "witho t reco rse" or otherwise disclaims liability of
the drawer to pay the draft# the drawer is not liable nder s bsection (b) to pay the draft if the draft is not a check. % disclaimer of the liability stated in s bsection (b) is not effective if the draft is a check.
' (f) (f (i) a check is not presented for payment or given to a depositary bank for collection
within 3. days after its date# (ii) the drawee s spends payments after e*piration of the 3.0day period witho t paying the check# and (iii) beca se of the s spension of payments# the drawer is deprived of f nds maintained with the drawee to cover payment of the check# the drawer to the e*tent deprived of f nds 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 f nds. U.C.C. - ARTICLE 3 - NEGOTIABLE INSTRUMENTS ..PART 4. LIABILITY OF PARTIES
5 3-.+0' OBLIGATION OF INDORSER'

(a) +"#1ect to s"#sections (#)$ (c)$ and (d) and to +ection ,-0.<(d)$ if an instr"ment is dishonored$ an indorser is o#li&ed to pay the amo"nt d"e on the instr"ment (i) accordin& to the terms of the instr"ment at the time it was indorsed$ or (ii) if the indorser indorsed an incomplete instr"ment$ accordin& to its terms when completed$ to the e!tent stated in +ections ,-..: and ,-0/;* )he o#li&ation of the indorser is owed to a person entitled to enforce the instr"ment or to a s"#se9"ent indorser who paid the instr"ment "nder this section*
' (b) (f an indorsement states that it is made "witho t reco rse" or otherwise disclaims
liability of the indorser# the indorser is not liable nder s bsection (a) to pay the instr ment.
' (c) (f notice of dishonor of an instr ment is re) ired by /ection 305.3 and notice of
dishonor complying with that section is not given to an indorser# the liability of the indorser nder s bsection (a) is discharged.
' (d) (f a draft is accepted by a bank after an indorsement is made# the liability of the
indorser nder s bsection (a) is discharged.
' (e) (f an indorser of a check is liable nder s bsection (a) and the check is not presented
for payment# or given to a depositary bank for collection# within 3. days after the day the indorsement was made# the liability of the indorser nder s bsection (a) is discharged.

5 3-.+2' TRANSFER ;ARRANTIES'

(a) A person who transfers an instr"ment for consideration warrants to the transferee and$ if the transfer is #y indorsement$ to any s"#se9"ent transferee that:
o o o o o
(1) the warrantor is a person entitled to enforce the instr ment; (2) all signat res on the instr ment are a thentic and a thori&ed; (3) the instr ment has not been altered; (4) the instr ment is not s b$ect to a defense or claim in reco pment 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 naccepted draft# the drawer. (b) % person to whom the warranties nder s bsection (a) are made and who took the instr ment in good faith may recover from the warrantor as damages for breach of warranty an amo nt e) al to the loss s ffered as a res lt of the breach# b t not more than the amo nt of the instr ment pl s e*penses and loss of interest inc rred as a res lt of the breach.
' (c) "he warranties stated in s bsection (a) cannot be disclaimed with respect to checks.
>nless notice of a claim for breach of warranty is given to the warrantor within 3. days after the claimant has reason to know of the breach and the identity of the warrantor# the
liability of the warrantor nder s bsection (b) is discharged to the e*tent of any loss ca sed by the delay in giving notice of the claim.
' (d) % ?ca se of action@ for breach of warranty nder this section accr es when the
claimant has reason to know of the breach. U.C.C. - ARTICLE 3 - NEGOTIABLE INSTRUMENTS ..PART 4. LIABILITY OF PARTIES
5 3-.+8' *RESENTMENT ;ARRANTIES'

(a) If an "naccepted draft is presented to the drawee for payment or acceptance and the drawee pays or accepts the draft$ (i) the person o#tainin& payment or acceptance$ at the time of presentment$ and (ii) a previo"s transferor of the draft$ at the time of transfer$ warrant to the drawee makin& payment or acceptin& the draft in &ood faith that:
(1) the warrantor is# or was# at the time the warrantor transferred the draft# a person entitled to enforce the draft or a thori&ed 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 signat re of the drawer of the draft is na thori&ed. (b) % drawee making payment may recover from any warrantor damages for breach of warranty e) al to the amo nt paid by the drawee less the amo nt the drawee received or is entitled to receive from the drawer beca se of the payment. (n addition# the drawee is entitled to compensation for e*penses and loss of interest res lting from the breach. "he right of the drawee to recover damages nder this s bsection is not affected by any fail re of the drawee to e*ercise ordinary care in making payment. (f the drawee accepts the draft# breach of warranty is a defense to the obligation of the acceptor. (f the acceptor makes payment with respect to the draft# the acceptor is entitled to recover from any warrantor for breach of warranty the amo nts stated in this s bsection.
o o o
' (c) (f a drawee asserts a claim for breach of warranty nder s bsection (a) based on an
na thori&ed indorsement of the draft or an alteration of the draft# the warrantor may defend by proving that the indorsement is effective nder /ection 304.4 or 304.5 or the drawer is precl ded nder /ection 304.! or 404.! from asserting against the drawee the na thori&ed indorsement or alteration.
' (d) (f (i) a dishonored draft is presented for payment to the drawer or an indorser or (ii)
any other instr ment is presented for payment to a party obliged to pay the instr ment# and (iii) payment is received# the following r les apply2
(1) "he person obtaining payment and a prior transferor of the instr ment warrant to the person making payment in good faith that the warrantor is# or was# at the time the warrantor transferred the instr ment# a person entitled to enforce the instr ment or a thori&ed to obtain payment on behalf of a person entitled to enforce the instr ment. (2) "he person making payment may recover from any warrantor for breach of warranty an amo nt e) al to the amo nt paid pl s e*penses and loss of interest res lting from the breach.
(e) "he warranties stated in s bsections (a) and (d) cannot be disclaimed with respect to checks. >nless notice of a claim for breach of warranty is given to the warrantor within 3. days after the claimant has reason to know of the breach and the identity of the warrantor# the liability of the warrantor nder s bsection (b) or (d) is discharged to the e*tent of any loss ca sed by the delay in giving notice of the claim.
' (f) % ?ca se of action@ for breach of warranty nder this section accr es when the
claimant has reason to know of the breach. U.C.C. - ARTICLE 3 - NEGOTIABLE INSTRUMENTS ..PART 4. LIABILITY OF PARTIES
5 3-.+9' *A/MENT OR ACCE*TANCE B/ MISTA>E'

(a) !cept as provided in s"#section (c)$ if the drawee of a draft pays or accepts the draft and the drawee acted on the mistaken #elief that (i) payment of the draft had not #een stopped p"rs"ant to +ection 0-0/, or (ii) the si&nat"re of the drawer of the draft was a"thori2ed$ the drawee may recover the amo"nt of the draft from the person to whom or for whose #enefit payment was made or$ in the case of acceptance$ may revoke the acceptance* Ri&hts of the drawee "nder this s"#section are not affected #y fail"re of the drawee to e!ercise ordinary care in payin& or acceptin& the draft*
' (b) =*cept as provided in s bsection (c)# if an instr ment has been paid or accepted by
mistake and the case is not covered by s bsection (a)# the person paying or accepting may# to the e*tent permitted by the law governing mistake and restit tion# (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) "he remedies provided by s bsection (a) or (b) may not be asserted against a person
who took the instr ment in good faith and for val e or who in good faith changed position in reliance on the payment or acceptance. "his s bsection does not limit remedies provided by /ection 3041' or 404.'.
' (d) 7otwithstanding /ection 40215# if an instr ment is paid or accepted by mistake and
the payor or acceptor recovers payment or revokes acceptance nder s bsection (a) or (b)# the instr ment 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 instr ment. U.C.C. - ARTICLE 3 - NEGOTIABLE INSTRUMENTS ..PART 4. LIABILITY OF PARTIES
5 3-.+:' INSTRUMENTS SIGNED FOR ACCOMMODATION'

(a) If an instr"ment is iss"ed for val"e &iven for the #enefit of a party to the instr"ment (%accommodated party%) and another party to the instr"ment (%accommodation party%) si&ns the instr"ment for the p"rpose of inc"rrin& lia#ility on the instr"ment witho"t #ein& a direct #eneficiary of the val"e &iven for the instr"ment$ the instr"ment is si&ned #y the accommodation party %for accommodation*%
' (b) %n accommodation party may sign the instr ment as maker# drawer# acceptor# or
indorser and# s b$ect to s bsection (d)# is obliged to pay the instr ment in the capacity in
which the accommodation party signs. "he obligation of an accommodation party may be enforced notwithstanding any stat te of fra ds and whether or not the accommodation party receives consideration for the accommodation.
' (c) % person signing an instr ment is pres med to be an accommodation party and there
is notice that the instr ment is signed for accommodation if the signat re is an anomalo s indorsement or is accompanied by words indicating that the signer is acting as s rety or g arantor with respect to the obligation of another party to the instr ment. =*cept as provided in /ection 30!.5# the obligation of an accommodation party to pay the instr ment is not affected by the fact that the person enforcing the obligation had notice when the instr ment was taken by that person that the accommodation party signed the instr ment for accommodation.
' (d) (f the signat re of a party to an instr ment is accompanied by words indicating
nambig o sly that the party is g aranteeing collection rather than payment of the obligation of another party to the instr ment# the signer is obliged to pay the amo nt d e on the instr ment to a person entitled to enforce the instr ment only if (i) e*ec tion of $ dgment against the other party has been ret rned nsatisfied# (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) %n accommodation party who pays the instr ment is entitled to reimb rsement from
the accommodated party and is entitled to enforce the instr ment against the accommodated party. %n accommodated party who pays the instr ment has no right of reco rse against# and is not entitled to contrib tion from# an accommodation party.

5 3-.,6' CON)ERSION OF INSTRUMENT'

(a) )he law applica#le to conversion of personal property applies to instr"ments* An instr"ment is also converted if it is taken #y transfer$ other than a ne&otiation$ from a person not entitled to enforce the instr"ment or a #ank makes or o#tains payment with respect to the instr"ment for a person not entitled to enforce the instr"ment or receive payment* An action for conversion of an instr"ment may not #e #ro"&ht #y (i) the iss"er or acceptor of the instr"ment or (ii) a payee or indorsee who did not receive delivery of the instr"ment either directly or thro"&h delivery to an a&ent or a co-payee*
' (b) (n an action nder s bsection (a)# the meas re of liability is pres med to be the
amo nt payable on the instr ment# b t recovery may not e*ceed the amo nt of the plaintiff+s interest in the instr ment.
' (c) % representative# other than a depositary bank# who has in good faith dealt with an
instr ment or its proceeds on behalf of one who was not the person entitled to enforce the instr ment is not liable in conversion to that person beyond the amo nt of any proceeds that it has not paid o t.
*ART 0' DIS1ONOR
U.C.C. - ARTICLE 3 - NEGOTIABLE INSTRUMENTS ..PART 5. DISHONOR
5 3-06+' *RESENTMENT'
(a) %Presentment% means a demand made #y or on #ehalf of a person entitled to enforce an instr"ment (i) to pay the instr"ment made to the drawee or a party o#li&ed to pay the instr"ment or$ in the case of a note or accepted draft paya#le at a #ank$ to the #ank$ or (ii) to accept a draft made to the drawee*
' (b) "he following r les are s b$ect to %rticle 4# agreement of the parties# and clearing0
ho se r les and the like2
(1) 8resentment may be made at the place of payment of the instr ment and m st be made at the place of payment if the instr ment is payable at a bank in the >nited /tates; may be made by any commercially reasonable means# incl ding an oral# written# or electronic comm nication; 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) >pon demand of the person to whom presentment is made# the person making presentment m st (i) e*hibit the instr ment# (ii) give reasonable identification and# if presentment is made on behalf of another person# reasonable evidence of a thority to do so# and (iii) sign a receipt on the instr ment for any payment made or s rrender the instr ment if f ll payment is made. (3) Aitho t dishonoring the instr ment# the party to whom presentment is made may (i) ret rn the instr ment for lack of a necessary indorsement# or (ii) ref se payment or acceptance for fail re of the presentment to comply with the terms of the instr ment# an agreement of the parties# or other applicable law or r le. (4) "he party to whom presentment is made may treat presentment as occ rring on the ne*t b siness day after the day of presentment if the party to whom presentment is made has established a c t0off ho r not earlier than 2 p.m. for the receipt and processing of instr ments presented for payment or acceptance and presentment is made after the c t0off ho r.
..PART 5. DISHONOR
5 3-06,' DIS1ONOR'
(a) Dishonor of a note is &overned #y the followin& r"les:
o o
(1) (f the note is payable on demand# the note is dishonored if presentment is d ly made to the maker and the note is not paid on the day of presentment. (2) (f the note is not payable on demand and is payable at or thro gh a bank or the terms of the note re) ire presentment# the note is dishonored if presentment is d ly made and the note is not paid on the day it becomes payable or the day of presentment# whichever is later.
o o o
(3) (f 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) 5ishonor of an naccepted draft other than a doc mentary draft is governed by the following r les2 (1) (f a check is d ly presented for payment to the payor bank otherwise than for immediate payment over the co nter# the check is dishonored if the payor bank makes timely ret rn of the check or sends timely notice of dishonor or nonpayment nder /ection 403.1 or 403.2# or becomes acco ntable for the amo nt of the check nder /ection 403.2. (2) (f a draft is payable on demand and paragraph (1) does not apply# the draft is dishonored if presentment for payment is d ly made to the drawee and the draft is not paid on the day of presentment. (3) (f a draft is payable on a date stated in the draft# the draft is dishonored if (i) presentment for payment is d ly 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 d ly made before the day the draft becomes payable and the draft is not accepted on the day of presentment. (4) (f a draft is payable on elapse of a period of time after sight or acceptance# the draft is dishonored if presentment for acceptance is d ly made and the draft is not accepted on the day of presentment. (c) 5ishonor of an naccepted doc mentary draft occ rs according to the r les stated in s bsection (b)(2)# (3)# and (4)# e*cept that payment or acceptance may be delayed witho t dishonor ntil no later than the close of the third b siness day of the drawee following the day on which payment or acceptance is re) ired by those paragraphs. (1) (f the draft is payable on demand# the draft is dishonored if presentment for payment is d ly made to the acceptor and the draft is not paid on the day of presentment. (2) (f the draft is not payable on demand# the draft is dishonored if presentment for payment is d ly made to the acceptor and payment is not made on the day it becomes payable or the day of presentment# whichever is later. (e) (n any case in which presentment is otherwise re) ired for dishonor nder this section and presentment is e*c sed nder /ection 305.4# dishonor occ rs witho t presentment if the instr ment is not d ly accepted or paid.
' (d) 5ishonor of an accepted draft is governed by the following r les2 o
' (f) (f a draft is dishonored beca se 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. U.C.C. - ARTICLE 3 - NEGOTIABLE INSTRUMENTS ..PART 5. DISHONOR
5 3-063' NOTICE OF DIS1ONOR'

(a) )he o#li&ation of an indorser stated in +ection ,-0.:(a) and the o#li&ation of a drawer stated in +ection ,-0.0(d) may not #e enforced "nless (i) the indorser or drawer is &iven notice of dishonor of the instr"ment complyin& with this section or (ii) notice of dishonor is e!c"sed "nder +ection ,-:/0(#)*
' (b) 7otice of dishonor may be given by any person; may be given by any commercially
reasonable means# incl ding an oral# written# or electronic comm nication; and is s fficient if it reasonably identifies the instr ment and indicates that the instr ment has been dishonored or has not been paid or accepted. 9et rn of an instr ment given to a bank for collection is s fficient notice of dishonor.
' (c) / b$ect to /ection 305.4(c)# with respect to an instr ment taken for collection by a
collecting bank# notice of dishonor m st be given (i) by the bank before midnight of the ne*t banking day following the banking day on which the bank receives notice of dishonor of the instr ment# or (ii) by any other person within 3. days following the day on which the person receives notice of dishonor. Aith respect to any other instr ment# notice of dishonor m st be given within 3. days following the day on which dishonor occ rs. U.C.C. - ARTICLE 3 - NEGOTIABLE INSTRUMENTS ..PART 5. DISHONOR
5 3-06.' EACUSED *RESENTMENT AND NOTICE OF DIS1ONOR'

(a) Presentment for payment or acceptance of an instr"ment is e!c"sed if (i) the person entitled to present the instr"ment cannot with reasona#le dili&ence make presentment$ (ii) the maker or acceptor has rep"diated an o#li&ation to pay the instr"ment or is dead or in insolvency proceedin&s$ (iii) #y the terms of the instr"ment presentment is not necessary to enforce the o#li&ation of indorsers or the drawer$ (iv) the drawer or indorser whose o#li&ation is #ein& enforced has waived presentment or otherwise has no reason to e!pect or ri&ht to re9"ire that the instr"ment #e paid or accepted$ or (v) the drawer instr"cted the drawee not to pay or accept the draft or the drawee was not o#li&ated to the drawer to pay the draft*
' (b) 7otice of dishonor is e*c sed if (i) by the terms of the instr ment notice of dishonor is
not necessary to enforce the obligation of a party to pay the instr ment# or (ii) the party whose obligation is being enforced waived notice of dishonor. % waiver of presentment is also a waiver of notice of dishonor.
' (c) 5elay in giving notice of dishonor is e*c sed if the delay was ca sed by
circ mstances beyond the control of the person giving the notice and the person giving the notice e*ercised reasonable diligence after the ca se of the delay ceased to operate. U.C.C. - ARTICLE 3 - NEGOTIABLE INSTRUMENTS ..PART 5. DISHONOR
5 3-060' E)IDENCE OF DIS1ONOR'

(a) )he followin& are admissi#le as evidence and create a pres"mption of dishonor and of any notice of dishonor stated:
o o
(1) a doc ment reg lar in form as provided in s bsection (b) which p rports to be a protest; (2) a p rported stamp or writing of the drawee# payor bank# or presenting bank on or accompanying the instr ment stating that acceptance or payment has been ref sed nless reasons for the ref sal 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 s al co rse of b siness which shows dishonor# even if there is no evidence of who made the entry. (b) % protest is a certificate of dishonor made by a >nited /tates cons l or vice cons l# or a notary p blic or other person a thori&ed to administer oaths by the law of the place where dishonor occ rs. (t may be made pon information satisfactory to that person. "he protest m st identify the instr ment and certify either that presentment has been made or# if not made# the reason why it was not made# and that the instr ment has been dishonored by nonacceptance or nonpayment. "he protest may also certify that notice of dishonor has been given to some or all parties.
*ART 2' DISC1ARGE AND *A/MENT

U.C.C. - ARTICLE 3 - NEGOTIABLE INSTRUMENTS ..PART 6. DISCHARGE AND PAYMENT
5 3-26+' DISC1ARGE AND EFFECT OF DISC1ARGE'

(a) )he o#li&ation of a party to pay the instr"ment is dischar&ed as stated in this Article or #y an act or a&reement with the party which wo"ld dischar&e an o#li&ation to pay money "nder a simple contract*
' (b) 5ischarge of the obligation of a party is not effective against a person ac) iring rights
of a holder in d e co rse of the instr ment witho t notice of the discharge. U.C.C. - ARTICLE 3 - NEGOTIABLE INSTRUMENTS ..PART 6. DISCHARGE AND PAYMENT
5 3-26,' *A/MENT'
(a) +"#1ect to s"#section (#)$ an instr"ment is paid to the e!tent payment is made (i) #y or on #ehalf of a party o#li&ed to pay the instr"ment$ and (ii) to a person entitled to enforce the instr"ment* )o the e!tent of the payment$ the o#li&ation of the party o#li&ed to pay the instr"ment is dischar&ed even tho"&h payment is made with knowled&e of a claim to the instr"ment "nder +ection ,-,/7 #y another person*
' (b) "he obligation of a party to pay the instr ment is not discharged nder s bsection (a)
if2
(1) a claim to the instr ment nder /ection 303.! is enforceable against the party receiving payment and (i) payment is made with knowledge by the payor that payment is prohibited by in$ nction or similar process of a co rt of competent $ risdiction# or (ii) in the case of an instr ment 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 instr ment# indemnity against loss res lting from ref sal to pay the person entitled to enforce the instr ment; or (2) the person making payment knows that the instr ment is a stolen instr ment and pays a person it knows is in wrongf l possession of the instr ment.
U.C.C. - ARTICLE 3 - NEGOTIABLE INSTRUMENTS ..PART 6. DISCHARGE AND PAYMENT
5 3-263' TENDER OF *A/MENT'

(a) If tender of payment of an o#li&ation to pay an instr"ment is made to a person entitled to enforce the instr"ment$ the effect of tender is &overned #y principles of law applica#le to tender of payment "nder a simple contract*
' (b) (f tender of payment of an obligation to pay an instr ment is made to a person
entitled to enforce the instr ment and the tender is ref sed# there is discharge# to the e*tent of the amo nt of the tender# of the obligation of an indorser or accommodation party having a right of reco rse with respect to the obligation to which the tender relates.
' (c) (f tender of payment of an amo nt d e on an instr ment is made to a person entitled
to enforce the instr ment# the obligation of the obligor to pay interest after the d e date on the amo nt tendered is discharged. (f presentment is re) ired with respect to an instr ment and the obligor is able and ready to pay on the d e date at every place of payment stated in the instr ment# the obligor is deemed to have made tender of payment on the d e date to the person entitled to enforce the instr ment. U.C.C. - ARTICLE 3 - NEGOTIABLE INSTRUMENTS ..PART 6. DISCHARGE AND PAYMENT
5 3-26.' DISC1ARGE B/ CANCELLATION OR RENUNCIATION'

(a) A person entitled to enforce an instr"ment$ with or witho"t consideration$ may dischar&e the o#li&ation of a party to pay the instr"ment (i) #y an intentional vol"ntary act$ s"ch as s"rrender of the instr"ment to the party$ destr"ction$ m"tilation$ or cancellation of the instr"ment$ cancellation or strikin& o"t of the party(s si&nat"re$ or the addition of words to the instr"ment indicatin& dischar&e$ or (ii) #y a&reein& not to s"e or otherwise reno"ncin& ri&hts a&ainst the party #y a si&ned writin&*
' (b) 4ancellation or striking o t of an indorsement p rs ant to s bsection (a) does not
affect the stat s and rights of a party derived from the indorsement. U.C.C. - ARTICLE 3 - NEGOTIABLE INSTRUMENTS ..PART 6. DISCHARGE AND PAYMENT
5 3-260' DISC1ARGE OF INDORSERS AND ACCOMMODATION *ARTIES'

(a) In this section$ the term %indorser% incl"des a drawer havin& the o#li&ation descri#ed in +ection ,-0.0(d)*
' (b) 5ischarge# nder /ection 30!.4# of the obligation of a party to pay an instr ment
does not discharge the obligation of an indorser or accommodation party having a right of reco rse against the discharged party.
' (c) (f a person entitled to enforce an instr ment agrees# with or witho t consideration# to
an e*tension of the d e date of the obligation of a party to pay the instr ment# the e*tension discharges an indorser or accommodation party having a right of reco rse against the party whose obligation is e*tended to the e*tent the indorser or accommodation party proves that the e*tension ca sed loss to the indorser or accommodation party with respect to the right of reco rse.
' (d) (f a person entitled to enforce an instr ment agrees# with or witho t consideration# to
a material modification of the obligation of a party other than an e*tension of the d e date# the modification discharges the obligation of an indorser or accommodation party having a right of reco rse against the person whose obligation is modified to the e*tent the modification ca ses loss to the indorser or accommodation party with respect to the right of reco rse. "he loss s ffered by the indorser or accommodation party as a res lt of the modification is e) al to the amo nt of the right of reco rse nless the person enforcing the instr ment proves that no loss was ca sed by the modification or that the loss ca sed by the modification was an amo nt less than the amo nt of the right of reco rse.
' (e) (f the obligation of a party to pay an instr ment is sec red by an interest in collateral
and a person entitled to enforce the instr ment impairs the val e of the interest in collateral# the obligation of an indorser or accommodation party having a right of reco rse against the obligor is discharged to the e*tent of the impairment. "he val e of an interest in collateral is impaired to the e*tent (i) the val e of the interest is red ced to an amo nt less than the amo nt of the right of reco rse of the party asserting discharge# or (ii) the red ction in val e of the interest ca ses an increase in the amo nt by which the amo nt of the right of reco rse e*ceeds the val e of the interest. "he b rden of proving impairment is on the party asserting discharge.
' (f) (f the obligation of a party is sec red by an interest in collateral not provided by an
accommodation party and a person entitled to enforce the instr ment impairs the val e of the interest in collateral# the obligation of any party who is $ointly and severally liable with respect to the sec red obligation is discharged to the e*tent the impairment ca ses the party asserting discharge to pay more than that party wo ld have been obliged to pay# taking into acco nt rights of contrib tion# if impairment had not occ rred. (f the party asserting discharge is an accommodation party not entitled to discharge nder s bsection (e)# the party is deemed to have a right to contrib tion based on $oint and several liability rather than a right to reimb rsement. "he b rden of proving impairment is on the party asserting discharge.
' (g) >nder s bsection (e) or (f)# impairing val e of an interest in collateral incl des (i)
fail re to obtain or maintain perfection or recordation of the interest in collateral# (ii) release of collateral witho t s bstit tion of collateral of e) al val e# (iii) fail re to perform a d ty to preserve the val e of collateral owed# nder %rticle - or other law# to a debtor or s rety or other person secondarily liable# or (iv) fail re to comply with applicable law in disposing of collateral.
' (h) %n accommodation party is not discharged nder s bsection (c)# (d)# or (e) nless the
person entitled to enforce the instr ment knows of the accommodation or has notice nder /ection 3041-(c) that the instr ment was signed for accommodation.
' (i) % party is not discharged nder this section if (i) the party asserting discharge
consents to the event or cond ct that is the basis of the discharge# or (ii) the instr ment or a separate agreement of the party provides for waiver of discharge nder this section either specifically or by general lang age indicating that parties waive defenses based on s retyship or impairment of collateral.

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UNIFORM COMMERCIAL CODE - ARTICLE 3 NEGOTIABLE INSTRUMENTS

Uni3or4 Co44ercial Code Article 3

*ART +' GENERAL *RO)ISIONS AND DEFINITIONS

5 3-+6.' NEGOTIABLE INSTRUMENT'

' (e) %n instr ment is a "note" if it is a promise and is a "draft" if it is an order. (f an

' ($) "'ertificate of deposit" means an instr ment containing an acknowledgment by a

5 3-+60' ISSUE OF INSTRUMENT'

5 3-+62' UNCONDITIONAL *ROMISE OR ORDER'

' (c) (f a promise or order re) ires# as a condition to payment# a co ntersignat re by a

U.C.C. - ARTICLE 3 - NEGOTIABLE INSTRUMENTS ..PART 1. GENERAL PROVISIONS AND DEFINITIONS

5 3-+69' *A/ABLE ON DEMAND OR AT DEFINITE TIME'

' (b) % promise or order is "paya#le at a definite time" if it is payable on elapse of a

5 3-+6:' *A/ABLE TO BEARER OR TO ORDER'

5 3-++6' IDENTIFICATION OF *ERSON TO ;1OM INSTRUMENT IS *A/ABLE'

' (i) a tr st# an estate# or a person described as tr stee or representative of

' (ii) a person described as agent or similar representative of a named or

' (d) (f an instr ment is payable to two or more persons alternatively# it is

5 3-++3' DATE OF INSTRUMENT'

5 3-++0' INCOM*LETE INSTRUMENT'

5 3-++2' 7OINT AND SE)ERAL LIABILIT/< CONTRIBUTION'

AmendedKPermanent &ditorial )oard +ommentarBL

U.C.C. - ARTICLE 3 - NEGOTIABLE INSTRUMENTS ..PART 1. GENERAL PROVISIONS AND DEFINITIONS

5 3-++9' STATUTE OF LIMITATIONS'

*ART ,' NEGOTIATION- TRANSFER- AND INDORSEMENT

5 3-,6,' NEGOTIATION SUB7ECT TO RESCISSION'

5 3-,63' TRANSFER OF INSTRUMENT< RIG1TS AC=UIRED B/ TRANSFER'

5 3-,60' S*ECIAL INDORSEMENT< BLAN> INDORSEMENT< ANOMALOUS INDORSEMENT'

5 3-,62' RESTRICTI)E INDORSEMENT'

*ART 3' ENFORCEMENT OF INSTRUMENTS

5 3-36,' 1OLDER IN DUE COURSE'

5 3-363' )ALUE AND CONSIDERATION'

U.C.C. - ARTICLE 3 - NEGOTIABLE INSTRUMENTS ..PART 3. ENFORCEMENT OF INSTRUMENTS

5 3-36.' O)ERDUE INSTRUMENT'

U.C.C. - ARTICLE 3 - NEGOTIABLE INSTRUMENTS ..PART 3. ENFORCEMENT OF INSTRUMENTS

5 3-360' DEFENSES AND CLAIMS IN RECOU*MENT'

' (d) (n an action to enforce the obligation of an accommodation party to pay an

AmendedKPermanent &ditorial )oard +ommentarBL

U.C.C. - ARTICLE 3 - NEGOTIABLE INSTRUMENTS ..PART 3. ENFORCEMENT OF INSTRUMENTS

5 3-368' NOTICE OF BREAC1 OF FIDUCIAR/ DUT/'

U.C.C. - ARTICLE 3 - NEGOTIABLE INSTRUMENTS ..PART 3. ENFORCEMENT OF INSTRUMENTS

5 3-369' *ROOF OF SIGNATURES AND STATUS AS 1OLDER IN DUE COURSE'

5 3-36:' ENFORCEMENT OF LOST- DESTRO/ED- OR STOLEN INSTRUMENT'

5 3-3+6' EFFECT OF INSTRUMENT ON OBLIGATION FOR ;1IC1 TA>EN'

U.C.C. - ARTICLE 3 - NEGOTIABLE INSTRUMENTS ..PART 3. ENFORCEMENT OF INSTRUMENTS

5 3-3++' ACCORD AND SATISFACTION B/ USE OF INSTRUMENT'

*ART .' LIABILIT/ OF *ARTIES

U.C.C. - ARTICLE 3 - NEGOTIABLE INSTRUMENTS ..PART 4. LIABILITY OF PARTIES

5 3-.6,' SIGNATURE B/ RE*RESENTATI)E'

U.C.C. - ARTICLE 3 - NEGOTIABLE INSTRUMENTS ..PART 4. LIABILITY OF PARTIES

5 3-.63' UNAUT1ORI@ED SIGNATURE'

U.C.C. - ARTICLE 3 - NEGOTIABLE INSTRUMENTS ..PART 4. LIABILITY OF PARTIES

5 3-.6.' IM*OSTORS< FICTITIOUS *A/EES'

5 3-.60' EM*LO/ER?S RES*ONSIBILIT/ FOR FRAUDULENT INDORSEMENT B/ EM*LO/EE'

5 3-.62' NEGLIGENCE CONTRIBUTING TO FORGED SIGNATURE OR ALTERATION OF INSTRUMENT'

5 3-.6:' ACCE*TANCE OF DRAFT< CERTIFIED C1EC>'

5 3-.+6' ACCE*TANCE )AR/ING DRAFT'

5 3-.+3' OBLIGATION OF ACCE*TOR'

5 3-.+.' OBLIGATION OF DRA;ER'

5 3-.+0' OBLIGATION OF INDORSER'

AmendedKPermanent &ditorial )oard +ommentarBL

5 3-.+2' TRANSFER ;ARRANTIES'

5 3-.+8' *RESENTMENT ;ARRANTIES'

5 3-.+9' *A/MENT OR ACCE*TANCE B/ MISTA>E'

ART +' GENERAL RO)ISIONS AND DEFINITIONS

5 3-++6' IDENTIFICATION OF ERSON TO ;1OM INSTRUMENT IS A/ABLE'

ART .' LIABILIT/ OF ARTIES

5 3-.6.' IMOSTORS< FICTITIOUS A/EES'

5 3-.60' EMLO/ER?S RESONSIBILIT/ FOR FRAUDULENT INDORSEMENT B/ EM*LO/EE'

5 3-.+9' A/MENT OR ACCETANCE B/ MISTA>E'

ART 2' DISC1ARGE AND A/MENT