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, such as surrender of the instrument to the party; destruction, mutilation or cancellation of the instrument; cancellation or striking out of the party's signature; or the addition of words to the instrument indicating discharge; or (ii) by agreeing not to sue or otherwise renouncing rights against the party by a signed record. The obligation of a party to pay a check is not discharged solely by destruction of the check in connection with a process in which information is extracted from the check and an image of the check is made and, subsequently, the information and image are transmitted for payment. (b) Cancellation or striking out of an indorsement pursuant to Subsection (a) of this section does not affect the status and rights of a party derived from the indorsement. History: 1978 Comp., § 55-3-604, enacted by Laws 1992, ch. 114, § 154; 2009, ch. 234, § 10; 2023, ch. 142, § 24. OFFICIAL COMMENTS UCC Official Comments © by ALI & the NCCUSL. Reproduced with permission of the PEB for the UCC. All rights reserved. 1. Section 3-604 [55-3-604 NMSA 1978] replaces former Section 3-605 [55-3-605 NMSA 1978. 2. The destruction of a check in connection with a truncation process in which information is extracted from the check and an image of the check is made, and then such information and image are transmitted for payment is not within the scope of this section and does not by itself discharge the obligation of a party to pay the instrument. The destruction of the check also does not affect whether the check has been issued. See Section 3-105(a) and Comment 1. 3. Former subsection (c) has been deleted as unnecessary in view of the revised definition of "sign" in Section 1-201 [55-1-201 NMSA 1978].