Title 12A, Title 12A — Uniform Commercial Code

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. Laws 1961, p. 111, § 3-408; Laws 199…

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 notification pursu…

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 not varied by…

Certified Checks. 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…

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 possession of a holde…

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 the terms of…

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 the time it fi…

OBLIGATION OF INDORSER (a) Subject to subsections (b), (c), (d), and (e) of this section and to subsection (d) of Section 3-419 of this title, if an instrument is dishonored, an indorser is obliged to pay the amount due on the instrument (i) according to the terms of the instrume…

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: (1) The warrantor is a person entitled to enforce the instrument; (2) All signatures on the instrum…

PRESENTMENT WARRANTIES (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…

PAYMENT OR ACCEPTANCE BY MISTAKE (a) Except as provided in subsection (c) of this section, 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 4-403 of this title or …

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 liability on the i…

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 obtains payment…

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 at a bank, to the bank, or (ii…

DISHONOR (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 at …

NOTICE OF DISHONOR (a) The obligation of an indorser stated in subsection (a) of Section 3-415 of this title and the obligation of a drawer stated in subsection (d) of Section 3-414 of this title may not be enforced unless (i) the indorsers or drawer is given notice of dishonor o…

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 obligation to pay …

EVIDENCE OF DISHONOR (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) of this section which purports to be a protest; (2) A purported stamp or writi…

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 contract. (b) Discharge of the obligation of a pa…

PAYMENT (a) Subject to subsection (e) of this section, an instrument is paid to the extent payment is made by or on behalf of a party obliged to pay the instrument, and to a person entitled to enforce the instrument. To the extent of the payment, the obligation of the party oblig…

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 payment of an o…

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, destructio…

DISCHARGE OF SECONDARY OBLIGORS (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…

SHORT TITLE This article may be cited as Uniform Commercial Code - Bank Deposits and Collections. Laws 1961, p. 121, § 4-101; Laws 1991, c. 117, § 94, eff. Jan. 1, 1992.

APPLICABILITY (a) To the extent that items within this article are also within Articles 3 and 8 of this title, 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 n…

Action Constituting Ordinary Care. VARIATION BY AGREEMENT; MEASURE OF DAMAGES; CERTAIN 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 l…

DEFINITIONS AND INDEX OF DEFINITIONS (a) In this article unless the context otherwise requires: (1) "Account" means any deposit or credit account with a bank, including a demand, time, savings, passbook, share draft, or like account, other than an account evidenced by a certifica…

DEFINITIONS OF TYPES OF BANKS In this article: (1) Reserved; (2) "Depositary bank" means the first bank to take an item even though it is also the payor bank, unless the item is presented for immediate payment over the counter; (3) "Payor bank" means a bank that is the drawee of …

PAYABLE THROUGH OR PAYABLE AT BANK; COLLECTING BANK (a) If an item states that it is "payable through" a bank identified in the item, (i) the item designates the bank as a collecting bank and does not by itself authorize the bank to pay the item, and (ii) the item may be presente…

SEPARATE OFFICE OF 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 notice or orders must be given under this article and under Article 3 of this title.…

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 of money an…

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 waive, modify, or extend time limits imposed or permitted by this…

ELECTRONIC PRESENTMENT (a) "Agreement for electronic presentment" means an agreement, clearing-house rule, or Federal Reserve regulation or operating circular, providing that presentment of an item may be made by transmission of an image of an item or information describing the i…

STATUTE OF LIMITATIONS An action to enforce an obligation, duty, or right arising under this article must be commenced within three (3) years after the claim for relief accrues. Added by Laws 1991, c. 117, § 104, eff. Jan. 1, 1992.

Status of Credits; Applicability of Article; Item Endorsed "Pay Any Bank". STATUS OF COLLECTING BANK AS AGENT AND PROVISIONAL STATUS OF CREDITS; APPLICABILITY OF ARTICLE; ITEM ENDORSED "PAY ANY BANK" (a) Unless a contrary intent clearly appears and before the time that a settleme…

Timely. RESPONSIBILITY FOR COLLECTION OR RETURN; WHEN ACTION TIMELY (a) A collecting bank must exercise ordinary care in: (1) Presenting an item or sending it for presentment; (2) Sending notice of dishonor or nonpayment or returning an item other than a documentary draft to the …

EFFECT OF INSTRUCTIONS Subject to Article 3 of this title concerning conversion of instruments (Section 3-420 of this title) and restrictive indorsements (Section 3-206 of this title), only a collecting bank's transferor can give instructions that affect the bank or constitute no…

Payor Bank. 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…

DEPOSITARY BANK HOLDER OF UNINDORSED ITEM If a customer delivers an item to a depositary bank for collection: (1) The depositary bank becomes a holder of the item at the time it receives the item for collection if the customer at the time of delivery was a holder of the item, whe…

TRANSFER BETWEEN BANKS Any agreed method that identifies the transferor bank is sufficient for the item's further transfer to another bank. Laws 1961, p. 124, § 4-206; Laws 1991, c. 117, § 110, eff. Jan. 1, 1992.

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: (1) The warrantor is a person entitled to enforce the item; (2) All signatures on t…

PRESENTMENT WARRANTIES (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…

ENCODING AND RETENTION WARRANTIES (a) A person who encodes information on or with respect to an item after issue warrants to any subsequent collecting bank and to the payor bank or other payor that the information is correctly encoded. If the customer of a depositary bank encodes…

accompanying documents and proceeds. SECURITY INTEREST OF COLLECTING BANK IN ITEMS, ACCOMPANYING DOCUMENTS AND PROCEEDS (a) A collecting bank has a security interest in an item and any accompanying documents or the proceeds of either: (1) In case of an item deposited in an accoun…

Course. 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 otherwise complies with the requirements of Section 3-302 o…

or At Bank; Liability of Drawer or Indorser. PRESENTMENT BY NOTICE OF ITEM NOT PAYABLE BY, THROUGH, OR AT 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 …

MEDIUM AND TIME OF SETTLEMENT BY BANK (a) With respect to settlement by a bank, the medium and time of settlement may be prescribed by Federal Reserve regulations or circulars, clearing-house rules, and the like, or agreement. In the absence of such prescription: (1) The medium o…

Bank; Return of Item. 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 set…

Debits and Credits Become Final; When Certain Credits Become Available for Withdrawal. 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 …

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 presenting bank…