Chapter 490 — Chapter 490

§490:3-405 Employer responsibility for fraudulent indorsement by employee. (a) In this section: (b) For the purpose of determining the rights and liabilities of a person who, in good faith, pays an instrument or takes it for value or for collection, if an employer entrusted an em…

§490:3-406 Negligence contributing to forged signature or alteration of instrument. (a) A person whose failure to exercise ordinary care substantially contributes to an alteration of an instrument or to the making of a forged signature on an instrument is precluded from asserting…

§490:3-407 Alteration. (a) "Alteration" means (i) an unauthorized change in an instrument that purports to modify in any respect the obligation of a party, or (ii) an unauthorized addition of words or numbers or other change to an incomplete instrument relating to the obligation …

§490:3-408 Drawee not liable on unaccepted draft. A check or other draft does not of itself operate as an assignment of funds in the hands of the drawee available for its payment, and the drawee is not liable on the instrument until the drawee accepts it. [L 1991, c 118, pt of §1…

§490:3-409 Acceptance of draft; certified check. (a) "Acceptance" means the drawee's signed agreement to pay a draft as presented. It must be written on the draft and may consist of the drawee's signature alone. Acceptance may be made at any time and becomes effective when notifi…

§490:3-410 Acceptance varying draft. (a) If the terms of a drawee's acceptance vary from the terms of the draft as presented, the holder may refuse the acceptance and treat the draft as dishonored. In that case, the drawee may cancel the acceptance. (b) The terms of a draft are n…

§490:3-411 Refusal to pay cashier's checks, teller's checks, and certified checks. (a) In this section, "obligated bank" means the acceptor of a certified check or the issuer of a cashier's check or teller's check bought from the issuer. (b) If the obligated bank wrongfully (i) r…

§490:3-412 Obligation of issuer of note or cashier's check. The issuer of a note or cashier's check or other draft drawn on the drawer is obliged to pay the instrument (i) according to its terms at the time it was issued or, if not issued, at the time it first came into possessio…

§490:3-413 Obligation of acceptor. (a) The acceptor of a draft is obliged to pay the draft (i) according to its terms at the time it was accepted, even though the acceptance states that the draft is payable "as originally drawn" or equivalent terms, (ii) if the acceptance varies …

§490:3-414 Obligation of drawer. (a) This section does not apply to cashier's checks or other drafts drawn on the drawer. (b) If an unaccepted draft is dishonored, the drawer is obliged to pay the draft (i) according to its terms at the time it was issued or, if not issued, at th…

§490:3-415 Obligation of indorser. (a) Subject to subsections (b), (c), and (d) and to section 490:3-419(d), if an instrument is dishonored, an indorser is obliged to pay the amount due on the instrument (i) according to the terms of the instrument at the time it was indorsed, or…

§490:3-416 Transfer warranties. (a) A person who transfers an instrument for consideration warrants to the transferee and, if the transfer is by indorsement, to any subsequent transferee that: (b) A person to whom the warranties under subsection (a) are made and who took the inst…

§490:3-417 Presentment warranties. (a) If an unaccepted draft is presented to the drawee for payment or acceptance and the drawee pays or accepts the draft: (b) A drawee making payment may recover from any warrantor damages for breach of warranty equal to the amount paid by the d…

§490:3-418 Payment or acceptance by mistake. (a) Except as provided in subsection (c), if the drawee of a draft pays or accepts the draft and the drawee acted on the mistaken belief that (i) payment of the draft had not been stopped pursuant to section 490:4-403 or (ii) the signa…

§490:3-419 Instruments signed for accommodation. (a) If an instrument is issued for value given for the benefit of a party to the instrument ("accommodated party") and another party to the instrument ("accommodation party") signs the instrument for the purpose of incurring liabil…

§490:3-420 Conversion of instrument. (a) The law applicable to conversion of personal property applies to instruments. An instrument is also converted if it is taken by transfer, other than a negotiation, from a person not entitled to enforce the instrument or a bank makes or obt…

PART 5. DISHONOR §490:3-501 Presentment. (a) "Presentment" means a demand made by or on behalf of a person entitled to enforce an instrument (i) to pay the instrument made to the drawee or a party obliged to pay the instrument or, in the case of a note or accepted draft payable a…

§490:3-502 Dishonor. (a) Dishonor of a note is governed by the following rules: (b) Dishonor of an unaccepted draft other than a documentary draft is governed by the following rules: (c) Dishonor of an unaccepted documentary draft occurs according to the rules stated in subsectio…

§490:3-503 Notice of dishonor. (a) The obligation of an indorser stated in section 490:3-415(a) and the obligation of a drawer stated in section 490:3-414(d) may not be enforced unless (i) the indorser or drawer is given notice of dishonor of the instrument complying with this se…

§490:3-504 Excused presentment and notice of dishonor. (a) Presentment for payment or acceptance of an instrument is excused if (i) the person entitled to present the instrument cannot with reasonable diligence make presentment, (ii) the maker or acceptor has repudiated an obliga…

§490:3-505 Evidence of dishonor. (a) The following are admissible as evidence and create a presumption of dishonor and of any notice of dishonor stated: (b) A protest is a certificate of dishonor made by a United States consul or vice consul, or a notary public or other person au…

§490:3-506 Dishonored check; action for treble damages; procedures. (a) In any action against a person who makes any check, draft, or order for the payment of money that has been dishonored for lack of funds or credit to pay the check, draft, or order or because the maker has no …

§490:3-506.5 Charges for dishonored checks. The payee or a holder in due course of any check, draft, or order for the payment of money that has been dishonored for lack of funds or credit to pay the check, draft, or order or because the maker has no account with the drawee shall …

PART 6. DISCHARGE AND PAYMENT §490:3-601 Discharge and effect of discharge. (a) The obligation of a party to pay the instrument is discharged as stated in this article or by an act or agreement with the party which would discharge an obligation to pay money under a simple contrac…

§490:3-602 Payment. (a) Subject to subsection (b), an instrument is paid to the extent payment is made (i) by or on behalf of a party obliged to pay the instrument, and (ii) to a person entitled to enforce the instrument. To the extent of the payment, the obligation of the party …

§490:3-603 Tender of payment. (a) If tender of payment of an obligation to pay an instrument is made to a person entitled to enforce the instrument, the effect of tender is governed by principles of law applicable to tender of payment under a simple contract. (b) If tender of pay…

§490:3-604 Discharge by cancellation or renunciation. (a) A person entitled to enforce an instrument, with or without consideration, may discharge the obligation of a party to pay the instrument (i) by an intentional voluntary act, including surrender of the instrument to the par…

§490:3-605 Discharge of indorsers and accommodation parties. (a) In this section, the term "indorser" includes a drawer having the obligation described in section 490:3-414(d). (b) Discharge, under section 490:3-604, of the obligation of a party to pay an instrument does not disc…

ARTICLE 4. BANK DEPOSITS AND COLLECTIONS PART 1. GENERAL PROVISIONS AND DEFINITIONS §490:4-101 Short title. This article may be cited as Uniform Commercial Code--Bank Deposits and Collections. [L 1965, c 208, §4-101; HRS §490:4-101; am L 1991, c 118, pt of §4]

§490:4-102 Applicability. (a) To the extent that items within this article are also within articles 3 and 8, they are subject to those articles. If there is conflict, this article governs article 3, but article 8 governs this article. (b) The liability of a bank for action or non…

§490:4-103 Variation by agreement; measure of damages; action constituting ordinary care. (a) The effect of the provisions of this article may be varied by agreement, but the parties to the agreement cannot disclaim a bank's responsibility for its lack of good faith or failure to…

§490:4-104 Definitions and index of definitions. (a) In this article, unless the context otherwise requires: (b) Other definitions applying to this article and the sections in which they appear are: "Agreement for electronic presentment". Section 490:4-110. "Bank". Section 490:4-…

§490:4-105 "Bank"; "depositary bank"; "payor bank"; "intermediary bank"; "collecting bank"; "presenting bank". In this article:

§490:4-107 Separate office of a bank. A branch or separate office of a bank is a separate bank for the purpose of computing the time within which and determining the place at or to which action may be taken or notices or orders must be given under this article and under article 3…

§490:4-108 Time of receipt of items. (a) For the purpose of allowing time to process items, prove balances, and make the necessary entries on its books to determine its position for the day, a bank may fix an afternoon hour of 2:00 p.m. or later as a cut-off hour for the handling…

§490:4-109 [OLD] REPEALED. L 1991, c 118, pt of §4. §490:4-109 Delays. (a) Unless otherwise instructed, a collecting bank in a good faith effort to secure payment of a specific item drawn on a payor other than a bank, and with or without the approval of any person involved, may w…

PART 2. COLLECTION OF ITEMS: DEPOSITARY AND COLLECTING BANKS §490:4-201 Status of collecting bank as agent and provisional status of credits; applicability of article; item indorsed "pay any bank". (a) Unless a contrary intent clearly appears and before the time that a settlement…

§490:4-202 Responsibility for collection or return; when action timely. (a) A collecting bank must exercise ordinary care in: (b) A collecting bank exercises ordinary care under subsection (a) by taking proper action before its midnight deadline following receipt of an item, noti…

§490:4-203 Effect of instructions. Subject to article 3 concerning conversion of instruments (section 490:3-420) and restrictive indorsements (section 490:3-206), only a collecting bank's transferor can give instructions that affect the bank or constitute notice to it, and a coll…

§490:4-204 Methods of sending and presenting; sending directly to payor bank. (a) A collecting bank shall send items by a reasonably prompt method, taking into consideration relevant instructions, the nature of the item, the number of those items on hand, the cost of collection i…

§490:4-206 Transfer between banks. Any agreed method that identifies the transferor bank is sufficient for the item's further transfer to another bank. [L 1965, c 208, §4-206; HRS §490:4-206; am L 1991, c 118, pt of §4]

§490:4-207 Transfer warranties. (a) A customer or collecting bank that transfers an item and receives a settlement or other consideration warrants to the transferee and to any subsequent collecting bank that: (b) If an item is dishonored, a customer or collecting bank transferrin…

§490:4-211 [OLD] REPEALED. L 1991, c 118, pt of §4. §490:4-211 When bank gives value for purposes of holder in due course. For purposes of determining its status as a holder in due course, a bank has given value to the extent it has a security interest in an item, if the bank oth…

§490:4-212 Presentment by notice of item not payable by, through, or at a bank; liability of drawer or indorser. (a) Unless otherwise instructed, a collecting bank may present an item not payable by, through, or at a bank by sending to the party to accept or pay a written notice …

§490:4-214 Right of charge back or refund; liability of collecting bank; return of item. (a) If a collecting bank has made provisional settlement with its customer for an item and fails by reason of dishonor, suspension of payments by a bank, or otherwise to receive settlement fo…

§490:4-215 Final payment of item by payor bank; when provisional debits and credits become final; when certain credits become available for withdrawal. (a) An item is finally paid by a payor bank when the bank has first done any of the following: (b) If provisional settlement for…

§490:4-216 Insolvency and preference. (a) If an item is in or comes into the possession of a payor or collecting bank that suspends payment and the item has not been finally paid, the item must be returned by the receiver, trustee, or agent in charge of the closed bank to the pre…

PART 3. COLLECTION OF ITEMS; PAYOR BANKS §490:4-301 Deferred posting; recovery of payment by return of items; time of dishonor; return of items by payor bank. (a) If a payor bank settles for a demand item other than a documentary draft presented otherwise than for immediate payme…

§490:4-302 Payor bank's responsibility for late return of item. (a) If an item is presented to and received by a payor bank, the bank is accountable for the amount of: (b) The liability of a payor bank to pay an item pursuant to subsection (a) is subject to defenses based on brea…

§490:4-303 When items subject to notice, stop-payment order, legal process, or setoff; order in which items may be charged or certified. (a) Any knowledge, notice, or stop-payment order received by, legal process served upon, or setoff exercised by a payor bank comes too late to …