Title 26, COMMERCIAL LAW

Sec. 204. (a) "Endorsement" means a signature, other than that of a signer as maker, drawer, or acceptor, that alone or accompanied by other words is made on an instrument for the purpose of: (1) negotiating the instrument; (2) restricting payment of the instrument; or (3) incurr…

Sec. 205. (a) If an endorsement is made by the holder of an instrument, whether payable to an identified person or payable to bearer, and the endorsement identifies a person to whom it makes the instrument payable, it is a "special endorsement". When specially endorsed, an instru…

Sec. 206. (a) An endorsement limiting payment to a particular person or otherwise prohibiting further transfer or negotiation of the instrument is not effective to prevent further transfer or negotiation of the instrument. (b) An endorsement stating a condition to the right of th…

Sec. 207. Reacquisition of an instrument occurs if it is transferred to a former holder, by negotiation or otherwise. A former holder who reacquires the instrument may cancel endorsements made after the reacquirer first became a holder of the instrument. If the cancellation cause…

Sec. 301. "Person entitled to enforce" an instrument means: (1) the holder of the instrument; (2) a nonholder in possession of the instrument who has the rights of a holder; or (3) a person not in possession of the instrument who is entitled to enforce the instrument under IC 26-…

Sec. 302. (a) Subject to subsection (c) and IC 26-1-3.1-106(d), "holder in due course" means the holder of an instrument if: (1) the instrument when issued or negotiated to the holder does not bear such apparent evidence of forgery or alteration or is not otherwise so irregular o…

Sec. 303. (a) An instrument is issued or transferred for value if: (1) the instrument is issued or transferred for a promise of performance, to the extent the promise has been performed; (2) the transferee acquires a security interest or other lien in the instrument other than a …

Sec. 304. (a) An instrument payable on demand becomes overdue at the earliest of the following times: (1) on the day after the day demand for payment is duly made; (2) if the instrument is a check, ninety (90) days after its date; or (3) if the instrument is not a check, when the…

Sec. 305. (a) Except as otherwise provided in this section, the right to enforce the obligation of a party to pay an instrument is subject to the following: (1) a defense of the obligor based on: (A) infancy of the obligor to the extent it is a defense to a simple contract; (B) d…

Sec. 306. 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 proceed…

Sec. 307. (a) In this section: (1) "Fiduciary" means an agent, trustee, partner, corporate officer or director, or other representative owing a fiduciary duty with respect to an instrument. (2) "Represented person" means the principal, beneficiary, partnership, corporation, or ot…

Sec. 308. (a) In an action with respect to an instrument, the authenticity of, and authority to make, each signature on the instrument is admitted unless specifically denied in the pleadings. If the validity of a signature is denied in the pleadings, the burden of establishing va…

Sec. 309. (a) A person not in possession of an instrument is entitled to enforce the instrument if: (1) the person seeking to enforce the instrument: (A) was entitled to enforce the instrument when loss of possession occurred; or (B) has directly or indirectly acquired ownership …

Sec. 310. (a) Unless otherwise agreed, if a certified check, cashier's check, or teller's check is taken for an obligation, the obligation is discharged to the same extent discharge would result if an amount of money equal to the amount of the instrument were taken in payment of …

Sec. 311. (a) If a person against whom a claim is asserted proves that: (1) that person in good faith tendered an instrument to the claimant as full satisfaction of the claim; (2) the amount of the claim was unliquidated or subject to a bona fide dispute; and (3) the claimant obt…

Sec. 312. (a) In this section: (1) "Check" means a cashier's check, teller's check, or certified check. (2) "Claimant" means a person who claims the right to receive the amount of a cashier's check, teller's check, or certified check that was lost, destroyed, or stolen. (3) "Decl…

Sec. 401. A person is not liable on an instrument unless: (1) the person signed the instrument; or (2) the person is represented by an agent or representative who signed the instrument and the signature is binding on the represented person under IC 26-1-3.1-402. As added by P.L.2…

Sec. 402. (a) If a person acting, or purporting to act, as a representative signs an instrument by signing either the name of the represented person or the name of the signer, the represented person is bound by the signature to the same extent the represented person would be boun…

Sec. 403. (a) Unless otherwise provided in IC 26-1-3.1 or IC 26-1-4, an unauthorized signature is ineffective except as the signature of the unauthorized signer in favor of a person who in good faith pays the instrument or takes it for value. An unauthorized signature may be rati…

Sec. 404. (a) If an impostor, by use of the mails or otherwise, induces the issuer of an instrument to issue the instrument to the impostor, or to a person acting in concert with the impostor, by impersonating the payee of the instrument or a person authorized to act for the paye…

Sec. 405. (a) In this section: (1) "Employee" includes an independent contractor and employee of an independent contractor retained by the employer. (2) "Fraudulent endorsement" means: (A) in the case of an instrument payable to the employer, a forged endorsement purporting to be…

Sec. 406. (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 the alteration or the forgery against a person who, in good faith, pays t…

Sec. 407. (a) "Alteration" means: (1) an unauthorized change in an instrument that purports to modify in any respect the obligation of a party; or (2) an unauthorized addition of words or numbers or other change to an incomplete instrument relating to the obligation of a party. (…

Sec. 408. 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. As added by P.L.222-1993, SEC.5.

Sec. 409. (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 notification pursuant to instructions is give…

Sec. 410. (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 not varied by an acceptance …

Sec. 411. (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: (1) refuses to pay a cashier's check or certified check; (2) stops payment of…

Sec. 412. The issuer of a note or cashier's check or other draft drawn on the drawer is obliged to pay the instrument: (1) according to its terms at the time it was issued or, if not issued, at the time it first came into possession of a holder; or (2) if the issuer signed an inc…

Sec. 413. (a) The acceptor of a draft is obliged to pay the draft: (1) 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; (2) if the acceptance varies the terms of the draft, a…

Sec. 414. (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: (1) according to its terms at the time it was issued or, if not issued, at the time it first came i…

Sec. 415. (a) Subject to subsections (b), (c), and (d) and to IC 26-1-3.1-419(d), if an instrument is dishonored, an endorser is obliged to pay the amount due on the instrument: (1) according to the terms of the instrument at the time it was endorsed; or (2) if the endorser endor…

Sec. 416. (a) A person who transfers an instrument for consideration warrants to the transferee and, if the transfer is by endorsement, to any subsequent transferee that: (1) the warrantor is a person entitled to enforce the instrument; (2) all signatures on the instrument are au…

Sec. 417. (a) If an unaccepted draft is presented to the drawee for payment or acceptance and the drawee pays or accepts the draft (i) the person obtaining payment or acceptance, at the time of presentment, and (ii) a previous transferor of the draft, at the time of transfer, war…

Sec. 418. (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: (1) payment of the draft had not been stopped under IC 26-1-4-403; or (2) the signature of the drawer of the draft was authoriz…

Sec. 419. (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 liability on the instrument without being a d…

Sec. 420. (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 obtains payment with respect t…

Sec. 501. (a) "Presentment" means a demand made by or on behalf of a person entitled to enforce an instrument: (1) 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 at a bank, to the bank; or (2) …

Sec. 502. (a) Dishonor of a note is governed by the following rules: (1) If the note is payable on demand, the note is dishonored if presentment is duly made to the maker and the note is not paid on the day of presentment. (2) If the note is not payable on demand and is payable a…

Sec. 502.5. (a) Except as provided in subsection (b), a person to whom a check, a draft, an order, or like instrument is tendered may, if the instrument is dishonored or returned unpaid for any reason, charge and collect from the maker or drawer, or the person for whose benefit t…

Sec. 503. (a) The obligation of an endorser stated in IC 26-1-3.1-415(a) and the obligation of a drawer stated in IC 26-1-3.1-414(d) may not be enforced unless: (1) the endorser or drawer is given notice of dishonor of the instrument complying with this section; or (2) notice of …

Sec. 504. (a) Presentment for payment or acceptance of an instrument is excused if: (1) the person entitled to present the instrument cannot with reasonable diligence make presentment; (2) the maker or acceptor has repudiated an obligation to pay the instrument or is dead or in i…

Sec. 505. (a) The following are admissible as evidence and create a presumption of dishonor and of any notice of dishonor stated: (1) A document regular in form as provided in subsection (b) which purports to be a protest. (2) A purported stamp or writing of the drawee, payor ban…

Sec. 601. (a) The obligation of a party to pay the instrument is discharged as stated in IC 26-1-3.1 or by an act or agreement with the party which would discharge an obligation to pay money under a simple contract. (b) Discharge of the obligation of a party is not effective agai…

Sec. 602. (a) Subject to subsection (e), an instrument is paid to the extent payment is made: (1) by or on behalf of a party obliged to pay the instrument; and (2) to a person entitled to enforce the instrument. (b) Subject to subsection (e), a note is paid to the extent payment …

Sec. 603. (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 payment of an obligatio…

Sec. 604. (a) A person entitled to enforce an instrument, with or without consideration, may discharge the obligation of a party to pay the instrument: (1) by an intentional voluntary act, such as surrender of the instrument to the party, destruction, mutilation, or cancellation …