(a) If a person entitled to enforce an instrument releases the obligation of a principal obligor in whole or in part, and another party to the instrument is a secondary obligor with respect to the obligation of that principal obligor, the following rules apply: (1) Any obligations of the principal obligor to the secondary obligor with respect to any previous payment by the secondary obligor are not affected. Sec. is a promise and is a "draft" if (5) the drawer instructed the drawee not to pay or accept the draft or the drawee was not obligated to the drawer to pay the draft. OVERDUE INSTRUMENT. If that proof is made, Section 3.308 applies to the case as if the person seeking enforcement had produced the instrument. Upon request, a transferee shall seasonably furnish reasonable proof that the note has been transferred. instrument" means an unconditional promise or order to A. - An instrument is payable on demand: (a) When it is so expressed to be payable on demand, or at sight, or on presentation; or (b) In which no time for payment is expressed. Amended by Acts 1995, 74th Leg., ch. An instrument payable to an identified person may become payable to bearer if it is indorsed in blank pursuant to Section 3.205(b). All crimes as defense lawyer or private prosecutor. A person taking an instrument, other than a person having rights of a holder in due course, is subject to a claim of a property or possessory right in the instrument or its proceeds, including a claim to rescind a negotiation and to recover the instrument or its proceeds. (a) The obligation of an indorser stated in Section 3.415(a) and the obligation of a drawer stated in Section 3.414(d) may not be enforced unless: (1) the indorser or drawer is given notice of dishonor of the instrument complying with this section; or. or order is issued, subject to rights of (i) prepayment, 3.408. 3.504. An action for conversion of an instrument may not be brought by: (1) the issuer or acceptor of the instrument; or. REFUSAL TO PAY CASHIER'S CHECKS, TELLER'S CHECKS, AND CERTIFIED CHECKS. (a) Unless otherwise provided in the instrument: (1) an instrument is not payable with interest; and. 3.410. (b) A person may not charge a delivery notification fee to a drawer or indorser under this section if the fee has been collected under Article 102.007(g), Code of Criminal Procedure. See Page 1. where an instrument payable on demand is negotiated on an unreasonable length of time after its issue, the holder is not deemed a holder in due course. (17) "Secondary obligor," with respect to an instrument, means (A) an indorser or an accommodation party, (B) a drawer having the obligation described in Section 3.414(d), or (C) any other party to the instrument that has recourse against another party to the instrument pursuant to Section 3.116(b). (e) If (i) the person entitled to enforce an instrument has only a security interest in the instrument, and (ii) the person obliged to pay the instrument has a defense, claim in recoupment, or claim to the instrument that may be asserted against the person who granted the security interest, the person entitled to enforce the instrument may assert rights as a holder in due course only to an amount payable under the instrument that, at the time of enforcement of the instrument, does not exceed the amount of the unpaid obligation secured. a check, when the instrument has been outstanding for a (3) as the successor in interest to an estate or other organization. Sec. The payee , which is the person who receives the payment, must be named . The value of an interest in collateral is impaired to the extent the value of the interest is reduced to an amount less than the amount of the recourse of the secondary obligor, or the reduction in value of the interest causes an increase in the amount by which the amount of the recourse exceeds the value of the interest. (c) If an instrument bears an indorsement (i) described in Section 4.201(b), or (ii) in blank or to a particular bank using the words "for deposit" or "for collection," or other words indicating a purpose of having the instrument collected by a bank for the indorser or for a particular account, the following rules apply: (1) a person, other than a bank, who purchases the instrument when so indorsed converts the instrument unless the amount paid for the instrument is received by the indorser or applied consistently with the indorsement; (2) a depositary bank that purchases the instrument or takes it for collection when so indorsed converts the instrument unless the amount paid by the bank with respect to the instrument is received by the indorser or applied consistently with the indorsement; (3) a payor bank that is also the depositary bank or that takes the instrument for immediate payment over the counter from a person other than a collecting bank converts the instrument unless the proceeds of the instrument are received by the indorser or applied consistently with the indorsement; and. (c) Delay in giving notice of dishonor is excused if the delay was caused by circumstances beyond the control of the person giving the notice and the person giving the notice exercised reasonable diligence after the cause of the delay ceased to operate. (3) If the secondary obligor is not discharged under Subdivision (2), the secondary obligor is discharged to the extent of the value of the consideration for the release, and to the extent that the release would otherwise cause the secondary obligor a loss. (8) "Order" means a written instruction to pay money signed by the person giving the instruction. The obligation of the acceptor is the amount of the instrument at the time it was taken by the holder in due course if: (1) the certification or acceptance does not state an amount; (2) the amount of the instrument is subsequently raised; and. (a) In an action with respect to an instrument, the authenticity of, and authority to make, each signature on the instrument are admitted unless specifically denied in the pleadings. Sec. (3) if the instrument is not a check, when the instrument has been outstanding for a period of time after its date that is unreasonably long under the circumstances of the particular case in light of the nature of the instrument and usage of the trade. the time it is issued or first comes into possession of (3) an action to enforce an obligation, duty, or right arising under this chapter and not governed by this section. (c) Dishonor of an unaccepted documentary draft occurs according to the rules stated in Subsections (b)(2), (3), and (4), except that payment or acceptance may be delayed without dishonor until not later than the close of the third business day of the drawee following the day on which payment or acceptance is required by those subdivisions. 3.112. UNAUTHORIZED SIGNATURE. False; True C. Both statements are true. 3.301. September 1, 2005. If an instrument falls within the 3, eff. (a) "Incomplete instrument" means a signed writing, whether or not issued by the signer, the contents of which show at the time of signing that it is incomplete but that the signer intended it to be completed by the addition of words or numbers. (e) An action to enforce the obligation of a party to a certificate of deposit to pay the instrument must be commenced within six years after demand for payment is made to the maker, but if the instrument states a due date and the maker is not required to pay before that date, the six-year period begins when a demand for payment is in effect and the due date has passed. (3) "Declaration of loss" means a statement, made in a record under penalty of perjury, to the effect that: (A) the declarer lost possession of a check; (B) 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; (C) the loss of possession was not the result of a transfer by the declarer or a lawful seizure; and. PAYMENT. 1563), Sec. (e) This section does not affect any right or remedy to which the holder of a payment device may be entitled under any rule, written contract, judicial decision, or other statute. (b) The following rules are subject to Chapter 4, agreement of the parties, and clearing-house rules and the like: (1) Presentment may be made at the place of payment of the instrument and must be made at the place of payment if the instrument is payable at a bank in the United States. Acts 2005, 79th Leg., Ch. IDENTIFICATION OF PERSON TO WHOM INSTRUMENT IS PAYABLE. (c) The remedies provided by Subsection (a) or (b) may not be asserted against a person who took the instrument in good faith and for value or who in good faith changed position in reliance on the payment or acceptance. Sec. Acts 2019, 86th Leg., R.S., Ch. Sept. 1, 1997; Acts 2003, 78th Leg., ch. Reacquisition of an instrument occurs if it is transferred to a former holder, by negotiation or otherwise. (c) Except as provided in Subsection (d), an action to enforce the obligation of a party to an unaccepted draft to pay the draft must be commenced within three years after dishonor of the draft or 10 years after the date of the draft, whichever period expires first. (b) Notice of dishonor may be given by any person; may be given by any commercially reasonable means, including an oral, written, or electronic communication; and is sufficient if it reasonably identifies the instrument and indicates that the instrument has been dishonored or has not been paid or accepted. ACCORD AND SATISFACTION BY USE OF INSTRUMENT. (a) The acceptor of a draft is obliged to pay the draft (i) according to its terms at the time it was accepted, even though the acceptance states that the draft is payable "as originally drawn" or equivalent terms, (ii) if the acceptance varies the terms of the draft, according to the terms of the draft as varied, or (iii) if the acceptance is of a draft that is an incomplete instrument, according to its terms when completed, to the extent stated in Sections 3.115 and 3.407. (f) If a draft is dishonored because timely acceptance of the draft was not made and the person entitled to demand acceptance consents to a late acceptance, from the time of acceptance the draft is treated as never having been dishonored. (b) Notice of dishonor is excused if (i) by the terms of the instrument notice of dishonor is not necessary to enforce the obligation of a party to pay the instrument, or (ii) the party whose obligation is being enforced waived notice of dishonor. Chapter 18 Negotiable instruments Flashcards | Quizlet (b) If an indorsement states that it is made "without recourse" or otherwise disclaims liability of the indorser, the indorser is not liable under Subsection (a) to pay the instrument. 921, Sec. 3.119. . It may be made on information satisfactory to that person. (1959, P.A. (2) If the principal is not payable in installments 7.45, eff. Notes Payable to the Maker - University of Pennsylvania 128 (S.B. at a definite time the following rules apply: (1) If the principal is payable in installments Sec. September 1, 2005. 1420, Sec. (3) Without dishonoring the instrument, the party to whom presentment is made may: (A) return the instrument for lack of a necessary indorsement; or. Except as provided in Section 4.401(c), an instrument payable on demand is not payable before the date of the instrument. EFFECT OF INSTRUMENT ON OBLIGATION FOR WHICH TAKEN. Sample 1. Sec. 3.307. Unless the instrument otherwise provides, an instrument that states the amount payable in foreign money may be paid in the foreign money or in an equivalent amount in dollars calculated by using the current bank-offered spot rate at the place of payment for the purchase of dollars on the day on which the instrument is paid.