text:
Page:United States Statutes at Large Volume 77.djvu/700

 668

PUBLIC LAW 88-243-DEC. 30, 1963

[77 STAT.

§ 28:2—713. Buyer's damages for non-delivery or repudiation (1) Subject to the provisions of this article with respect to proof of market price (section 28:2—723), the measure of damages for non-delivery or repudiation by the seller is the difference between the market price at the time when the buyer learned of the breach and the contract price together with any incidental and consequential damages provided in this article (section 28:2—715), but less expenses saved in consequence of the seller's breach. (2) Market price is to be determined as of the place for tender or, in cases of rejection after arrival or revocation of acceptance, as of the place of arrival. §28:2—714. Buyer's damages for breach in regard to accepted goods (1) Where the buyer has accepted goods and given notification (subsection (3) of section 28:2—607) he may recover as damages for any non-conformity of tender the lo'ss resulting in the ordinary coui"se of events from the seller's breach as determined in any manner which is reasonable. (2) The measure of damages for breach of warranty is the difference at the time and place of acceptance between the value of the goods accepted and the value they would have had if they had been as warranted, unless special circumstances show proximate damages of a different amount. (3) I n a proper case any incidental and consequential damages under the next section may also be recovered. § 28:2—715. Buyer's incidental and consequential damages (1) Incidental damages resulting from the seller's breach include expenses reasonably incurred in inspection, receipt, transportation and care and custody of goods rightfully rejected, any commerciallj' reasonable charges, expenses or commissions m connection with effecting cover and any other reasonable expense incident to the delay or other breach. (2) Consequential damages resulting from the seller's breach include (a) any loss resulting from general or particular requirements and needs of which the seller at the time of contracting had reason to know and which could not reasonably be prevented by cover or otherwise; and (b) injury to person or property proximately resulting from any breach of warranty. § 28:2—716. Buyer's right to specific performance or replevin (1) Specific performance may be decreed where the goods are unique or in other proper circumstances. (2) The decree for specific performance may include such terms and conditions as to payment of the price, damages, or other relief as the court may deem just. (3) The buyer has a right of replevin for goods identified to the contract if after reasonable effort he is unable to effect cover for such goods or the circmnstances reasonably indicate that such effort will be unavailing or if the goods have been shipped under reservation and satisfaction of the security interest in them has been made or tendered. § 28:2—717. Deduction of damages from the price The buyer on notifying the seller of his intention to do so may deduct all or any part of the damages resulting from any breach of the contract from any part of the price still due under the same contract.

�


text:
Page:United States Statutes at Large Volume 77.djvu/701

 77 STAT. ]

PUBLIC LAW 88-243-DEC. 30, 1963

§28:2—718. Liquidation or limitation of damages; deposits (1) Damages for breach by either party may be liquidated in the agreement but only at an amount which is reasonable in the light of the anticipated or actual harm caused by the breach, the difficulties of proof of loss, and the inconvenience or non-feasibility of otherwise obtaining an adequate remedy. A term fixing unreasonably large liquidated damages is void as a penalty. (2) Where the seller justifiably withholds delivery of goods because of the buyer's breach, the buyer is entitled to restitution of any amount by which the sum of his payments exceeds (a) the amount to which the seller is entitled by virtue of terms liquidating the seller's damages in accordance with subsection (1), or (b) in the absence of such terms, twenty per cent of the value of the total performance for which the buyer is obligated under the contract or $500, whichever is smaller. (3) The buyer's right to restitution under subsection (2) is subject to offset to the extent that the seller establishes (a) a right to recover damages under the provisions of this article other than subsection (1), and (b) the amount or value of any benefits received by the buyer directly or indirectly by reason of the contract. (4) Where a seller has received payment in goods their reasonable , value or the proceeds of their resale shall be treated as payments for the purposes of subsection (2); but if the seller has notice of the buyer's oreach before reselling goods received in part performance, his resale is subject to the conditions laid down in this article on resale by an aggrieved seller (section 28:2—706). § 28:2—719. Contractual modification or limitation of remedy (1) Subject to the provisions of subsections (2) and (3) of this section and of the preceding section on liquidation and limitation of damages, (a) the agreement may provide for remedies in addition to or in substitution for those provided in this article and may limit or alter the measure of damages recoverable under this article, as by limiting the buyer's remedies to return of the goods and repayment of the price or to repair and replacement ot nonconforming goods or parts; and (b) resort to a remedy as provided is optional unless the remedy is expressly agreed to be exclusive, in which case it is the sole remedy. (2) Where circumstances cause an exclusive or limited remedy to fail of its essential purpose, remedy may be had as provided in this subtitle. (3) Consequential damages may be limited or excluded unless the limitation or exclusion is unconscionable. Limitation of consequential damages for injury to the person in the case of consumer goods is prima facie unconscionable but limitation of damages where the loss is commercial is not. § 28:2—720. Effect of "cancellation" or "rescission" on claims for antecedent breach Unless the contrary intention clearly appears, expressions of "cancellation" or "rescission" of the contract or the like shall not be construed as a renunciation or discharge of any claim in damages for an antecedent breach.

669

�

license: Creative Commons - Attribution Share-Alike - https://creativecommons.org/licenses/by-sa/4.0/


text:
Page:United States Statutes at Large Volume 77.djvu/702

 670

PUBLIC LAW 88-243-DEC. 30, 1963

[77 STAT.

§ 28:2—721. Remedies for fraud Remedies for material misrepresentation or fraud inchide all remedies available under this article for nonfraudulent breach. Neither rescission or a claim for rescission of the contract for sale nor reiection or return of the goods shall bar or be deemed inconsistent with a claim for damages or other remedy. § 28:2—722. Who can sue third parties for injury to goods Where a third party so deals with goods which have been identified to a contract for sale as to cause actionable injury to a party to that contract (a) a right of action against the third pjirty is in either party to the contract for sale who has title to or a security interest or a special property or an insurable interest in the goods; and if the goods have been destroyed or converted a right of action is also in the party who either bore the risk of loss under the contract for sale or has since the injury assumed that risk as against the other; (b) if at the time of the injury the party plaintiff did not bear the risk of loss as against the other party to the contract for sale and there is no arrangement between them for disposition of the recovery, his suit or settlement is, subject to his own interest, as a fiduciary for the other party to the contract; (c) either party may with the consent of the other sue for the benefit of whom it may concern. § 28:2—723. Proof of market price: time and place (1) If an action based on anticipatory repudiation comes to trial before the time for performance with respect to some or all of the goods, any damages based on market price (section 28:2—708 or section 28:2—713) shall be determined according to the price of such goods prevailing at the time when the aggrieved party learned of the repudiation. (2) If evidence of a price prevailing at the times or places described in this article is not readily available the price prevailing within any reasonable time before or after the time described or at any other place which in commercial judgment or under usage of trade would serve as a resonable substitute for the one described may be used, making any proper allowance for the cost of transporting the goods to or from such other place. (3) Evidence of a relevant price prevailing at a time or place other than the one described in this article offered by one party is not admissible unless and until he has given the other party such notice as the court finds sufficient to prevent unfair surprise. §28:2—(724. Admissibility of market quotations WTienever the prevailing price or value of any goods regularly bought and sold in any established commodity market is in issue, reports in official publications or trade journals or in newspapers or periodicals of general circulation published as the reports of such market shall be admissible in evidence. The circumstances of the preparation of such a report may be shown to affect its weight but not its admissibility. § 28:2—725. Statute of limitations in contracts for sale (1) An action for breach of any contract for sale must be commenced within four years after the cause of action has accrued. By the original agreement the parties may reduce the period of limitation to not less than one year but may not extend it. (2) A cause of action accrues when the breach occurs, regardless of the aggrieved party's lack of knowledge of the breach. A breach

�


text:
Page:United States Statutes at Large Volume 77.djvu/703

 77 STAT. ]

PUBLIC LAW 88-243-DEC. 30, 1963

of warranty occurs when tender of delivery is made, except that where a warranty explicitly extends to future perfomiance of the j^oods and discovery of the breach must await the time of such performance the cause of action accrues when the breach is or should have been discovered. (3) Where an action commenced within the time limited by subsection (1) is so terminated as to leave available a remedy by another action for the same breach such other action may be commenced after the expiration of the time limited and within six months after the termination of the first action unless the termination resulted from voluntary discontinuance or from dismissal for failure or neglect to prosecute. (4) This section does not alter the law on tolling of the statute of limitations nor does it apply to causes of action which have accrued before this subtitle becomes effective.

ARTICLE 3—COMMERCIAL PAPER PAKT 1—^SHORT TITLE, FORM AM) IXTERPRETATIOX

Sec. 28:3—101. 28:3—102. 28:3—103. 28:3—104. 28:3—105. 28:3—106. 28:3—107. 28:3—108. 28:3—109. 28:3—110. 28:3—111. 28:3—112. 28:3—113. 28:3—114. 28:3—115. 28:3—116. 28:3—117. 28:3—118. 28:3—119. 28:3—120. 28:3—121. 28:3—122.

Short title. Definitions and index of definitions. Limitations on scope of article. For m of negotiable i n s t r u m e n t s: " d r a f t "; "check"; "certificate of deposit"; "note". When promise or order unconditional. Sum certain. Money. I'ayable on demand. Definite time. Payable to order. Payable to bearer. Term s and omissions not affecting negotiability. Seal. Date, antedating, postdating. Incomplete instruments. I n s t r u m e n t s payable to two or more persons. I n s t r u m e n t s payable with words of description. Ambiguous terms and rules of construction. Other writings affecting instrument. I n s t r u m e n t s "payable through" bank. I n s t r u m e n t s payable a t bank. Accrual of cause of action. PART 2 — TRANSFER AND NEGOTIATION

28:3—201. 28:3—202. 28:3—203. 28:3—204. 28:3—205. 28:3—206. 28:3—^207. 28:3—208.

Transfer: right to indorsement. Negotiation. Wrong or misspelled name. Special indorsement; blank indorsement. Restrictive indorsements. Effect of restrictive indorsement. Negotiation effective although it may be rescinded. Reacquisition. PART 3 — R I G H T S OF A HOIJ>EB

28:3—301. 28:3—302. 28:3—303. 28:3—304. 28:3—305. 28:3—306. 28:3—307.

Rights of a holder. Holder in due course. Taking for value. Notice to purchaser. Rights of a holder in due course. Rights of one not holder in due course. Burden of establishing signatures, defenses and due course.

671

�


text:
Page:United States Statutes at Large Volume 77.djvu/704

 672

PUBLIC LAW 88-243-DEC. 30, 1963

[77 STAT.

ARTICLE 3—COMMERCIAL PAPER—Continued PAKT 4 — L I A B I L I T Y OF P A R T I E S

Sec. 28:3—401. 28:3—402. 28:3—403. 28:3—404. 28:3—405. 28:3—406. 28:3—407. 28:3—408. 28:3—409. 28:3—410. 28:3—411. 28:.3—412. 28:3—413. 28:3—414. 28:3—41."». 28:3—416. 28:.3—417. 28:3—118. 28:3—41!).

Signature. Signature in ambiguous capacity. Signature by authorized representative. Unauthorized signatures. I m p o s t e r s; signature in name of payee. Negligence contributing to alteration or unauthorized signature. Alteration. Consideration. Draft not a n assignment. Definition and operation of acceptance. Certification of a check. Acceptance varying draft. Contract of maker, d r a w e r and acceptor. Contract of i n d o r s e r; order of liability. Contract of accommodation party. Contract of guarantor. W a r r a n t i e s on presentment and transfer. Finality of payment or acceptance. Conversi(m of i n s t r u m e n t; innocent representative. PART ~t—PRESENTMENT,

NOTICE OF D I S H O N O R AND PROTEST

28:3—501. When presentment, notice of dishonor, and protest necessary or pennissible. 28:3—502. Unexcused d e l a y; discharge. 28:3—503. Time of presentment. 28:3—504. How presentment made. 28:3—505. Rights of party to whom presentment is made. 28:3—506. Time allowed for acceptance or payment. 28:3—507. Dishonor; holder's right of recourse; term allowing re-presentment. 28:3—508. Notice of dishonor. 28:3—50J). P r o t e s t; noting for protest. 28:3—510. Evidence of dishonor and notice of dishonor. 28:3—511. Waived or excused presentment, protest or notice of dishonor or delay therein. PART 6—DISCHARGE

28:3—601. 28:3—602. 28:3—603. 28:3—604. 28:3—605. 28:3—606.

Discharge of parties. Effect of discharge against holder in due course. Payment or satisfaction. Tender of payment. Cancellation and renunciation. I m p a i r m e n t of recourse or of collateral. PART 7—ADVICE OF INTERNATIONAL S I G H T D R A F T

28:3—701. Letter of advice of international sight draft. PART 8—MISCELLANEOUS

28:3—801. 28:3—802. 28:3—803. 28:3—804. 28:3—805.

Drafts in a s^t. Effect of instrument on obligation for which i t is given. Notice to third party. Lost, destroyed or stolen instruments. I n s t r u m e n t s not payable to order or to bearer.

PART 1—SHORT TITLE, FORM A N D INTERPRETATION Citation of artide

§28:3—101. Short title This article shall be known and may be cited as Uniform Commercial Code—Commercial Paper. § 28:3—102. Definitions and index of definitions (1) I n this article unless the context otherwise requires (a) "Issue" means the first delivery of an instrument to a holder or a remitter. (b) An "order" is a direction to pay and must be more than an authorization or request. I t must identify the person to pay

�


text:
Page:United States Statutes at Large Volume 77.djvu/705

 77 STAT. ]

PUBLIC LAW 88-243-DEC. 30, 1963

with reasonable certainty. It may be addressed to one or more snch persons jointly or in the alternative but not in succession.' (c) A "promise" is an undertaking to pay and must be more than an acknowledgment of an obligation. (d) "Secondary party" means a drawer or endorser. (e) "Instrument" means a negotiable instrument. (2) Other definitions applying to this article and the sections in which they appear are: "Acceptance". Section 28:3—110. "Accommodation party-'. Section 28:3—115. "Alteration". Section 2 8: 3 - ^ 0 7. "Certificate of deposit". Section 28:3—104. "Certification". Section 28:3—411. "Check". Section 28:3—104. "Definite time". Section 28:3—109. "Dishonor". Section 28:3—507. "Draft". Section 28:3—104. "Holder in due course". Section 28:3—302. "Negotiation". Section 28:3—202. "Note". Section 28:3—104. "Notice of dishonor". Section 28:3—508. "On demand". Section 28:3—108. "Presentment". Section 28:3—504. "Protest". Section 28:3—509. "Restrictive Indorsement". Section 28:3—205. "Signature". Section 28:3—401. (3) The following definitions in other articles apply to this article. "Account". Section 28:4—104. "Banking day". Section 28:4^104. "Clearing house". Section 28:4—104. "Collecting bank". Section 28:4—105. "Customer". Section 28:4—104. "Depositary bank". Section 28:4—105. "Documentary draft". Section 28:4—104. "Intermediary bank". Section 28:4—105. "Item". Section 28:4^104. "Midnight deadline". Section 28:4—104. "Payor bank". Section 28:4—105. (4) In addition article 1 contains general definitions and principles of construction and interpretation applicable throughout this article. § 28:3—103. Limitations on scope of article (1) This article does not apply to money, documents of title or j uvestment securities. (2) The provisions of this article are subject to the provisions oi the article on bank deposits and collections (article 4) and secured transactions (article 9). §28:3—104. Form of negotiable instruments; "draft"; "check"; "certificate of deposit"; "note" (1) Any writing to be a negotiable instrument within this article must (a) be signed by the maker or drawer; and (b^ contain an unconditional promise or order to pay a sum certain in money and no other promise, order, obligation or power given by the maker or drawer except as authorized by this article; and (c) be payable on demand or at a definite time; and (d) be payable to order or to bearer. 93-025 0-64-45

673

�


text:
Page:United States Statutes at Large Volume 77.djvu/706

 674

PUBLIC LAW 88-243-DEC. 30, 1963

[77

STAT.

(2) A writing whioli complies with the requirements of this section is (a) a "draft" ("bill of exchange") if it is an order; (b) a "check" if it is a draft drawn on a bank and payable on demand; (c) a "certificate of deposit" if it is an acknowledgment by a bank of receipt of money with an engagement to repay it; (d) a "note" if it is a promise other than a certificate of deposit. (3) As used in other articles of this subtitle, and as the context may require, the terms "draft", "check", "certificate of deposit" and "note" may refer to instruments which are not negotiable within this article as well as to instruments which are so negotiable. §28:3—105. When promise or order unconditional (1) A promise or order otherwise unconditional is not made conditional by the fact that the instrument (a^ is subject to implied or constructive conditions; or (b) states its consideration, whether performed or promised, or the transaction which gave rise to the instrument, or that the promise or order is made or the instrmnent matures in accordance with or "as per" such transaction; or (c) refers to or states that it arises out of a separate agreement or refers to a separate agreement for rights as to prepayment or acceleration; or (d) states that it is drawn under a letter of credit; or (e) states that it is secured, whether by mortgage, reservation of title or otherwise; or (f) indicates a particular account to be debited or any other fund or source from which reimbursement is expected; or (g) is limited to payment out of a particular fund or the proceeds of a particular source, if the instrument is issued by a government or governmental agency or unit; or, (h) is limited to payment out of the entire assets of a partnership, unincorporated association, trust or estate by or on behalf of which the instrument is issued. (2) A promise or order is not unconditional if the instrument (a) states that it is subject to or governed by any other agreement; or (b) states that it is to he paid only out of a particular fund or source except as provided in this section. §28:3—106. Sum certain (1) The sum payable is a sum certain even though it is to be paid (a) with stated interest or by stated installments; or (b) with stated different rates of interest before and after default or a specified date; or (c) with a stated discount or addition if paid before or after the date fixed for payment; or (d) with exchange or less exchange, whether at a fixed rate or at the current rate; or (e) with costs of collection or an attorney's fee or both upon default. (2) Nothing in this section shall validate any term which is otherwise illegal. §28:3—107. Money (1) An instrument is payable in money if the medium of exchange in which it is payable is money at the time the instrument is made. An instrument payable in "currency" or "current funds" is payable in money.

�


text:
Page:United States Statutes at Large Volume 77.djvu/707

 77 STAT.,]

PUBLIC LAW 8 8 - 2 4 3 - D E C. 30, 1963

(2) A promise or order to pay a sum stated in a foreign currency is for a sum certain in money and, unless a different medium of payment is specified in the instrument, may be satisfied by payment of that number of dollars which the stated foreign currency will purchase at the buying sight rate for that currency on the day on which the instrument is payable or, if payable on demand, on the day of demand. If such an instrument specifies a foreign currency as the medium of payment the instrument is payable in that currency. §28:3—108. Payable on demand Instruments payable on demand include those payable at sight or on presentation and those in which no time for payment is stated. §28:3—109. Definite time (1) An instrument is payable at a definite time if by its terms it is payable— (a) on or before a stated date or at a fixed period after a stated date; or (b) at a fixed period after sight; or (c) at a definite time subject to any acceleration; or (d) at a definite time subject to extension at the option of the holder, or to extension to a further definite time at the option of the maker or acceptor or automatically upon or after a specified act or event. (2) An instrument which by its terms is otherwise payable only upon an act or event uncertain as to time of occurrence is not payable at a definite time even though the act or event has occurred. § 28:3—110. Payable to order (1) An instrument is payable to order when by its terms it is payable to the order or assies of any person therein specified with reasonable certainty, or to him or his order, or when it is conspicuously designated on its face as "exchange'' or the like and names a payee. It may be payable to the order of (a) the maker or drawer; or (b) the drawee; or (c) a payee who is not maker, drawer or drawee; or (d^ two or more payees together or in the alternative; or (e) an estate, trust or fund, in which case it is payable to the order of the representative of such estate, trust or fund or his successors; or (f) an office, or an officer by his title as such in which case it is payable to the principal but the incumbent of the office or his successors may act as if he or they were the holder; or (g) a partnership or unincorporated association, in which case it is payable to the partnership or association and may be indorsed or transferred by any person thereto authorized. (2) An instrument not payaole to order is not made so payable by such words as "payable upon return of this instrument properly indorsed". (3) An instrument made payable both to order and to bearer is payable to order unless the bearer words are handwritten or typewritten. §28:3—111. Payable to bearer An instrument is payable to bearer when by its terms it is payable to— (a^ bearer or the order of bearer; or (h) a specified person or bearer; or [h) (c) "cash" or the order of "cash", or any other indication which does not purport to designate a specific payee.

675

�


text:
Page:United States Statutes at Large Volume 77.djvu/708

 676

PUBLIC LAW 88-243-DEC. 30, 1963

[77 STAT.

§ 28:3—112. Terms and omissions not affecting negotiability (1) The negotiability of an instrument is not affected b}^— (a) the omission of a statement of any consideration or of the place where the instniment is drawn or payable; or (b) a statement that collateral has been given to secure obligations either on the instrument or otherwise of an obligor on the instrument or that in the case of default on those obligations the holder may realize on or dispose of the collateral; or (c) a promise or power to maintain or protect collateral or to give additional collateral; or (d) a term authorizing a confession of judgment on the instrument if it is not paid when due; or (e) a term purporting to waive the benefit of any law intended for the advantage or protection of any obligor; or (f) a term in a draft providing that the payee by indorsing or cashing it acknowledges full satisfaction of an obligation of the drawer; or (g) a statement in a draft drawn in a set of parts (section. 28:3—801) to the effect that the order is effective only if no other part has been honored. (2) Nothing in this section shall validate any term M'hich is otherwise illegal. §28:3—113. Seal An instrument otherwise negotiable is within this article even though it is under a seal. §28:3—114. Date, antedating, postdating (1) The negotiability of an instrument is not affected by the fact that it is undated, antedated, or postdated. (2) Where an instrument is antedated or postdated the time when it is payable is determined by" the stated date if the instrument is payable on demand or at a fixed period after date. (3) Where the instrument or any signature thereon is dated, the date is presumed to be correct. § 28:3—115. Incomplete instruments (1) When a paper whose contents at the time of signing show that it is intended to become an instrument is signed while still incomplete in any necessary respect it cannot be enforced until completed, but when it is completed in accordance with authority given it is effective as completed. (2) If the completion is unauthorized the rules as to material alteration apply (section 28:3—407), even though the paper was not delivered by the maker or drawer; but the burden of establishing that any completion is unauthorized is on the party so asserting. § 28:3—116. Instruments payable to two or more persons An instrument payable to the order of two or more persons (a) if in the alternative is payable to any one of them and may be negotiated, discharged or enforced by any of them who has possession of it; (b) if not in the alternative is payable to all of them and may be negotiated, discharged or enforced only by all of them. § 28:3—117. Instruments payable with words of description An instrument made payable to a named person with the addition of words describing him (a) as agent or of&cer of a specified person is payable to his principal but the agent or officer may act as if he were the holder; (b) as any other fiduciary for a specified person or purpose is

�


text:
Page:United States Statutes at Large Volume 77.djvu/709

 77 STAT. ]

PUBLIC LAW 88-243-DEC. 30, 1963

payable to the payee and may be negotiated, discharged or enforced by him; (c) in any other manner is payable to the payee miconditionally and the additional words are without effect on subsequent parties. § 28:3—118. Ambiguous terms and rules of construction The following rules apply to every instrument: (a) Where there is doubt whether the instrument is a draft or a note the holder may treat it as either. A draft drawn on the drawer is effective as a note. (b) Handwritten terms control typewritten and printed terms, and typewritten control printed. (c) Words control figures except that if the words are ambiguous figures control. (d) Unless otherwise specified a provision for interest means interest at the judgment rate at the place of payment from the date of the instrument, or if it is undated from the date of issue. (e) Unless the instrument otherwise specifies two or more persons who sign as maker, acceptor or drawer or indorser and as a part of the same transaction are jointly and severally liable even though the instrument contains such words as " I promise to pay". (f) Unless otherwise specified consent to extension authorizes a single extension for not longer than the original period. A consent to extension, expressed in the instrument, is binding on secondary parties and accommodation makers. A holder may not exercise his option to extend an instrument over the objection of a maker or acceptor or other party who in accordance with section 28:3—604 tenders full payment when the instrument is due. § 28:3—119. Other writings affecting instrument (1) As between the obligor and his immediate obligee or any transferee the terms of an instrument may be modified or affected by any other written agreement executed as a part of the same transaction, except that a holder in due course is not affected by any limitation of his rights arising out of the separate written agreement if he had no notice of the limitation when he took the instrument. (2) A separate agreement does not affect the negotiability of an instrument. § 28:3—120. Instruments "payable through" bank An instrument which states that it is "payable through" a bank or the like designates that bank as a collecting bank to make presentment but does not of itself authorize the bank to pay the instrument. §28:3—121. Instruments payable at bank A note or acceptance which states that it is payable at a bank is the equivalent of a draft drawn on the bank payable when it falls due out of any funds of the maker or acceptor in current account or otherwise available for such payment. § 28:3—122. Accrual of cause of action (1) A cause of action against a maker or an a,cceptor accrues (a) in the case of a time instrument on the day after maturity; (b) in the case of a demand instrument upon its date or, if no date is stated, on the date of issue. (2) A cause of action against the obligor of a demand or time certificate of deposit accrues upon demand, but demand on a tim^ certificate may not be made until on or after the date of maturity.

677

�


text:
Page:United States Statutes at Large Volume 77.djvu/710

 678

PUBLIC LAW 88-243-DEC. 30, 1963

[77

STAT.

(3) A cause of action against a drawer of a draft or an indorser of any instrument accrues upon demand following dishonor of the instrument. Notice of dishonor is a demand. (4) Unless an instrument provides otherwise, interest runs at the rate provided by law for a judgment (a) in the case of a maker, acceptor or other primary obligor of a demand instrument, from the date of demand; (b) in all other cases from the date of accrual of the cause of action. PART 2—TRANSFER AND NEGOTIATION § 28:3—^201. Transfer: right to indorsement (1) Transfer of an instrument vests in the transferee such rights as the transferor has therein, except that a transferee who has himself been a party to any fraud or illegality affecting the instrument or who as a prior holder had notice of a defense or claim against it cannot improve his position by taking from a later holder in due course. (2) A transfer of a security interest in an instrument vests the foregoing rights in the transferee to the extent of the interest transferred. (3) Unless otherwise agreed any transfer for value of an instrument not then payable to bearer gives the transferee the specifically enforceable right to have the unqualified indorsement of the transferor. Negotiation takes effect only when the indorsement is made and until that time there is no presumption that the transferee is the owner. §28:3—202. Negotiation (1) Negotiation is the transfer of an instrument in such form that the transferee becomes a holder. If the instrument is payable to order it is negotiated by delivery with any necessary indorsement; if payable to bearer it is negotiated by delivery. (2) An indorsement must be written by or on behalf of the holder and on the instrument or on a paper so firmly affixed thereto as to become a part thereof. (3) An indorsement is effective for negotiation only when it conveys the entire instrument or any unpaid residue. If it purports to be of less it operates only as a partial assignment. (4) Words of assignment, condition, waiver, guaranty, limitation or disclaimer of liability and the like accompanying an indorsement do not affect its character as an indorsement. § 28:3—203. Wrong or misspelled name Where an instrument is made payable to a person under a misspelled name or one other than his own he may indorse in that name or his own or both; but signature in both names may be required by a person paying or giving value for the instrument. § 28:3—^204. Special indorsement; blank indorsement (1) A special indorsement specifies the person to whom or to whose order it makes the instrument payable. Any instrument specially indorsed becomes payable to the order of the special indorsee and may be further negotiated only by his indorsement. (2) An indorsement in blank specifies no particular indorsee and may consist of a mere signature. An instrument payable to order and indorsed in blank becomes payable to bearer and may be negotiated by delivery alone until specially indorsed. (3) The holder may convert a blank indorsement into a special indorsement by writing over the signature of the indorser in blank any contract consistent with the character of the indorsement.

�


text:
Page:United States Statutes at Large Volume 77.djvu/711

 77 STAT. ]

PUBLIC LAW 88-243-DEC. 30, 1963

§ 28:3—^205. Restrictive indorsements An indorsement is restrictive which either (a) is conditional; or (b) purports to prohibit further transfer of the instrument; or (c) includes the words "for collection", "for deposit", "pay any bank", or like terms signifying a purpose of deposit or collection; or (d) otherwise states that it is for the benefit or use of the indorser or of another person. §28:3—206. Effect of restrictive indorsement (1) No restrictive indorsement prevents further transfer or negotiation of the instrument. (2) An intermediary bank, or a payor bank which is not the depositary bank, is neither given notice nor otherwise affected by a restrictive indorsement of any person except the bank's immediate transferor or the person presenting for payment. (3) Except for an intermediary bank, any transferee under an indorsement which is conditional or includes the words "for collection", "for deposit", "pay any bank", or like terms (subparagraphs (a) and (c) of section 28:3—205) must pay or apply any value given by him for or on the security of the instrument consistently with the indorsement and to the extent that he does so he becomes a holder for value. I n addition such transferee is a holder in due course if he otherwise complies with the requirements of section 28:3—302 on what constitutes a holder in due course. (4) The first taker under an indorsement for the benefit of the indorser or another person (subparagraph (d) of section 28:3—205) must pay or apply any value ^iven by him for or on the security of the instrument consistently with the indorsement and to the extent that he does so he becomes a holder for value. In addition such taker is a holder in due course if he otherwise complies with the requirements of section 28:3—302 on what constitutes a holder in due course. A later holder for value is neither given notice nor otherwise affected by such restrictive indorsement unless he has knowledge that a fiduciary or other person has negotiated the instrument in any transaction for his own benefit or otherwise in breach of duty (subsection (2) of section 28:3—304). § 28:3—^207. Negotiation effective although it may be rescinded (1) Negotiation is effective to transfer the instrument although the negotiation is (a) made by an infant, a corporation exceeding its powers, or any other person without capacity; or (b) obtained by fraud, duress or mistake of any kind; or (c) part of an illegal transaction; or (d) made in breach of duty. (2) Except as against a subsequent holder in due course such negotiation is in an appropriate case subject to rescission^ the declaration of a constructive trust or any other remedy permitted by law. § 28:3—208. Reacquisition Where an instrument is returned to or reacquired by a prior party he may cancel any indorsement which is not necessary to his title and reissue or further negotiate the instrument, but any intervening party is discharged as against the reacquiring party and subsequent holders not in due course and if his indorsement has been cancelled is discharged as against subsequent holders in due course as well.

679

�


text:
Page:United States Statutes at Large Volume 77.djvu/712

 680

PUBLIC LAW 88-243-DEC. 30, 1963

[77 STAT.

PART 3—RIGHTS OF A HOLDER § 28:3—301. Rights of a holder The holder of an instrument whether or not he is the owner may transfer or negotiate it and, except as otherwise provided in section 28:3—603 on payment or satisfaction, discharge it or enforce payment in his own name. § 28:3—502. Holder in due course (1) A holder in due course is a holder who takes the instrument (a) for value; and (b) in good faith; aaid (c) without notice that it is overdue or has been dishonored or of any defense against or claim to it on the part of any person. (2) A payee may be a holder in due course. (3) A holder does not become a holder in due course of an instrument: (a) by purchase of it at judicial sale or by taking it under legal process; or (b) by acquiring it in taking over an estate; or (c) by purchasing it as part of a bulk transaction not in regular course of business of the transferor. (4) A purchaser of a limited interest can be a holder in due course only to the extent of the interest purchased. § 28:3—303. Taking for value A holder takes the instrument for value (a) to the extent that the agreed consideration has been performed or that he acquires a security interest in or a lien on the instrument otherwise than by legal process; or (b) when he takes the instrument in payment of or as security for an antecedent claim against any person whether or not the claim is due; or (c) when he gives a negotiable instrument for it or makes an irrevocable commitment to a third person. § 28:3—304. Notice to purchaser (1) The purchaser has notice of a claim or defense if (a) the instrument is so incomplete, bears such visible evidence of forgery or alteration, or is otherwise so irregular as to call into question its validity, terms or ownership or to create an ambiguity as to the party to pay; or (b) the purchaser has notice that the obligation of any party is voidable in whole or in part, or that all parties have been discharged. (2) The purchaser has notice of a claim against the instrument when he has knowledge that a fiduciary has negotiated the instrument in payment of or as security for his own debt or in any transaction for his own benefit or otherwise in breach of duty. (3) The purchaser has notice that an instrument is overdue if he has reason to know (a) that any part of the principal amount is overdue or that there is an uncured default in payment of another instrument of the same series; or (b) that acceleration of the instrument has been made; or (c) that he is taking a demand instrmnent after demand has been made or more than a reasonable length of time after its issue. A reasonable time for a check drawn and payable within the states and territories of the United States and the District is presumed to be thirty days.

�


text:
Page:United States Statutes at Large Volume 77.djvu/713

 77 STAT. ]

PUBLIC LAW 88-243-DEC. 30, 1963

(4) Knowledge of the following facts does not of itself give the purchaser notice of a defense or claim (a) that the instrument is antedated or postdated; (b) that it was issued or negotiated in return for an executory promise or accompanied by a separate agreement, unless the purchaser has notice that a defense or claim has arisen from the terms thereof; (c) that any party has signed for accommodation; (d) that an incomplete instrument has been completed, unless the purchaser has notice of any improper completion; (e) that any person negotiating the instrument is or was a fiduciary; (f) that there has been default in payment of interest on the instrument or in payment of any other instrument, except one of the same series. (5) The filing or recording of a document does not of itself constitute notice within the provisions of this article to a person who would otherwise be a holder in due course. (6) To be effective notice must be received at such time and in such manner as to give a reasonable opportunity to act on it. § 28:3—305. Rights of a holder in due course To the extent that a holder is a holder in due course he takes the instrument free from (1) all claims to it on the part of any person; and (2) all defenses of any party to the instrument with whom the liolder has not dealt except (a) infancy, to the extent that it is a defense to a simple contract; and (b) such other incapacity, or duress, or illegality of the transaction, as renders the obligation of the party a nullity; and (c) such misrepresentation as has induced the party to sign the instrument with neither knowledge nor reasonable opportunity to obtain knowledge of its character or its essential terms; and (d) discharge in insolvency proceedings; and (e) any other discharge of which the holder has notice when he takes the instrument. § 28:3—306. Rights of one not holder in due course Unless he has the rights of a holder in due course any person takes the instrument subject to (a) all valid claims to it on the part of any person; and (b) all defenses of any party which would be available in an action on a simple contract; and (c) the defenses of want or failure of consideration, nonperformance of any condition precedent, nondelivery, or delivery for a special purpose (section 28:3—408); and (d) the defense that he or a person through whom he holds the instrument acquired it by theft, or that payment or satisfaction to such holder would be inconsistent with the terms of a restrictive indorsement. The claim of any third person to the instrument is not otherwise available as a defense to any party liable thereon unless the third person himself defends the action for such party. § 28:3—307. Burden of establishing signatures, defenses and due course (1) L^nlass specifically denied in the pleadings each signature on an instiiiment is admitted. When the effectiveness of a signature is put in issue

681

�


text:
Page:United States Statutes at Large Volume 77.djvu/714

 682

PUBLIC LAW 88-243-DEC. 30, 1963

[77 STAT.

(a) the burden of establishing it is on the party claiming under the signature; but (b) the signature is presumed to be genuine or authorized except where the action is to enforce the obligation of a purported signer who has died or become incompetent before proof is required. (2) t\rhen signatures are admitted or established, production of the instrument entitles a holder to recover on it unless the defendant establishes a defense. (3) After it is shown that a defense exists a person claiming the rights of a holder in due course has the burden of establishing that he or some person under whom he claims is in all respects a holder in due course. PART 4—LIABILITY OF PARTIES §28:3—401. Signature (1) No person is liable on an instrument unless his signature appears thereon. (2) A signature is made by use of any name, including any trade or assumed name, upon an instrument, or by any word or mark used in lieu of a written signature. § 28:3—402. Signature in ambiguous capacity Unless the instrument clearly indicates that a signature is made in some other capacity it is an indorsement. § 28:3—403. Signature by authorized representative (1) A signature may be made by an agent or other representative, and his authority to make it may be established as in other cases of representation. "No particular form of appointment is necessary to establish such authority. (2) An authorized representative who sigiis his own name to an instrument (a) is personally obligated if the instmment neither names the person represented nor shows that the representative signed in a representative capacity; (b) except as otherwise established between the immediate parties, is personally obligated if the instrument names the person represented but does not show that the representative signed in a representative capacity, or if the instrument does not name the person represented but does show that the representative signed in a representative capacity. (8) Except as otherwise established the name of an organization preceded or followed by the name and office of an authorized individual is a signature made in a representative capacity. §28:3—404. Unauthorized signatures (1) Any unauthorized si^ature is wholly inoperative as that of the person whose name is signed unless he ratifies it or is precluded from denying it; but it operates as the signature of the unauthorized signer in favor of any person who in good faith pays the instrument or takes it for value. (2) Any unauthorized signature may be ratified for all purposes of (his article. Such ratification does not of itself affect any rights of the person ratifying against the actual signer.

�


text:
Page:United States Statutes at Large Volume 77.djvu/715

 77 STAT. ]

PUBLIC LAW 88'243-DEC. 30, 1963

§28:3—405. Impostors; signature in name of payee (1) An indorsement by any person in the name of a named payee is effective if (a) an imposter by use of the mails or otherwise has induced the maker or drawer to issue the instrument to him or his confederate in the name of the payee; or (b) a person signing as or on behalf of a maker or drawer intends the payee to have no interest in the instrument; or (c) an agent or employee of the maker or drawer has supplied him with the name of the payee intending the latter to have nb such interest. (2) Nothing in this section shall affect the criminal or civil liability of the person so indorsing. § 28:3—406. Negligence contributing to alteration or unauthorized signature Any person who by his negligence substantially contributes to a material alteration of the instrument or to the making of an unauthorized signature is precluded from asserting the alteration or lack of authority against a holder in due course or against a drawee or other payor who pays the instrument in good faith and in accordance with the reasonable commercial standards of the drawee's or payor's business. §28:3—407. Alteration (1) Any alteration of an instrument is material which changes the contract of any party thereto in any respect, including any such change in (a) the number or relations of the parties; or (b) an incomplete instrument, by completing it otherwise than as authorized; or (c) the writing as signed, by adding to it or by removing any )art part of it. (•' As against any person other than a subsequent holder in due ['2) course (a) alteration by the holder which is both fraudulent and material discharges any party whose contract is thereby changed unless that party assents or is precluded from asserting the defence; (b) no other alteration discharges any party and the instrument may be enforced according to its original tenor, or as to incomplete instruments according to the authority given. (3) A subsequent holder in due course may in all cases enforce the instrument according to its original tenor, and when an incomplete instrument has been completed, he may enforce it as completed. §28:3—408. Consideration Want or failure of consideration is a defense as against any person not having the rights of a holder in due course (section 28:3—305), except that no consideration is necessary for an instrument or obligation thereon given in payment of or as security for an antecedent obligation of any kind. Nothing in this section shall be taken to displace any statute outside this subtitle under which a promise is enforceable notwithstanding lack or failure of consideration. Partial failure of consideration is a defense pro tanto whether or not the failure is in an ascertained or liquidated amount. §28:3—409. Draft not an assignment (1) A check or other draft does not of itself operate as an assignment of any funds in the hands of the drawee available for its payment, and the drawee is not liable on the instrument until he accepts it. (2) Nothing in this section shall affect any liability in contract, tort or otherwise arising from any letter of credit or other obligation or representation whicm is not an acceptance.

683

�


text:
Page:United States Statutes at Large Volume 77.djvu/716

 684

PUBLIC LAW 88-243-DEC. 30, 1963

[77 STAT.

§ 28:3—410. Definition and operation of acceptance (1) Acceptance is the drawee's signed engagement to honor the draft as presented. I t must be written on the draft, and may consist of his signature alone. I t becomes operative when completed by delivery or notification. (2) A draft may be accepted although it has not been signed by the drawer or is otherwise incomplete or is overdue or has been dishonored. (3) Where the draft is payable at a fixed period after sight and the acceptor fails to date his acceptance the holder may complete it by supplying a date in good faith. § 28:3—411. Certification of a check (1) Certification of a check is acceptance. Where a holder procures certification the drawer and all prior indorsers are discharged. (2) Unless otherwise agreed a bank has no obligation to certify a check. (3) A bank may certify a check before returning it for lack of proper indorsement. If it does so the drawer is discharged. § 28:3—412. Acceptance varying draft (1) Where the drawee's proffered acceptance in any manner varies the draft as presented the holder may refuse the acceptance and treat the draft as dishonored in which case the drawee is entitled to have his acceptance cancelled. (2) The terms of the draft are not varied by an acceptance to pay at any particular bank or place in the United States, unless the acceptance states that the draft is to be paid only at such bank or place. (3) Where the holder assents to an acceptance varying the terms of the draft each drawer and indorser who does not affirmatively assent is discharged. § 28:3—413. Contract of maker, drawer and acceptor (1) The maker or acceptor engages that he will pay the instrument according to its tenor at the time of his engagement or as completed pursuant to section 28:3—115 on incomplete instruments. (2) The drawer engages that upon dishonor of the draft and any necessary notice of dishonor or protest he will pay the amount of the draft to the holder or to any indorser who takes it up. The drawer may disclaim this liability by drawing without recourse. (3) By making, drawing or accepting the party admits as against all subsequent parties including the drawee the existence of the payee and his then capacity to indorse. §28:3—414. Contract of indorser; order of liability (1) Unless the indorsement otherwise specifies (as by such words as "without recourse") every indorser engages that upon dishonor and any necessary notice of dishonor and protest he will pay the instrument according to its tenor at the time of his indorsement to the holder or to any subsequent indorser who takes it up, even though the indorser who takes it up was not obligated to do so. (2) Unless they otherwise agree indorsers are liable to one another in the order in which they indorse, which is presumed to be the order in which their signatures appear on the instrument. § 28:3—415. Contract of accommodation party (1) An accommodation party is one who signs the instrument in any capacity for the purpose of lending his name to another party to it.

�


text:
Page:United States Statutes at Large Volume 77.djvu/717

 77 STAT. ]

PUBLIC LAW 88-243-DEC. 30, 1963

(2) Wlien the instrument lias been taken for value before it is due the acconnnodation party is liable in the capacity in which he has signed even thoug-h the taker knows of the accommodation. (3) As against a holder in due course and without notice of the accommodation oral proof of the accommodation is not admissible to gh-e the accommodation party the benefit of discharges dependent on his character as such. In other cases the accommodation character may be shown by oral proof. (4) An indorsement which shows that it is not in the chain of title is notice of its accommodation character. (5) An accommodation party is not liable to the party accommodated, and if he pays the instrument has a right of recourse on the instrument against such party. § 28:3—416. Contract of guarantor (1) "Payment guaranteed" or equivalent words added to a signature mean that the signer engages that if the instrument is not paid M-lien due he will pay it according to its tenor without resort by the holder to any other party. (2) "Collection guaranteed" or equivalent words added to a signature mean that the signer engages that if the instrument is not paid when due he will pay it according to its tenor, but only after the liolder has reduced his claim against the maker or acceptor to judgment and execution has been returned unsatisfied, or after the maker or acceptor has become insolvent or it is otherwise apparent that it is useless to proceed against him. (3) Words of guaranty which do not otherwise specify guarantee payment. (4) No words of guaranty added to the signature of a sole maker or acceptor affect his liability on the instrument. Such words added to the signature of one of two or more makers or acceptors create a presumption that the signature is for the accommodation of the others. (5) When words of guaranty are used presentment, notice of dishonor and protest are not necessary to charge the user. (6) Any guaranty written on the instrument is enforcible notwithstanding any statute of frauds. § 28:3—417. Warranties on presentment and transfer (1) Any person who obtains payment or acceptance and any prior transferor warrants to a person who in good faith pays or accepts that (a) he has a good title to the instrument or is authorized to obtain payment or acceptance on behalf of one who has a good title; and (b) he has no knowledge that the signature of the maker or drawer is unauthorized, except that this warranty is not given by a holder in due course acting in good faith (i) to a maker with respect to the maker's own signature; or (ii) to a drawer with respect to the drawer's own signature, whether or not the drawer is also the drawee; or (iii) to an acceptor of a draft if the holder in due course took the draft after the acceptance or dbtained the acceptance without knowledge that the drawer's signature was unauthorized; and (c) the instrument has not been materially altered, except that this warranty is not given by a holder in due course acting in good faith

685

�


text:
Page:United States Statutes at Large Volume 77.djvu/718

 686

PUBLIC LAW 88-243-DEC. 30, 1963

[77 STAT.

^i) to the maker of a note; or (ii) to the drawer of a draft whether or not the drawer is also the drawee; or (iii) to the acceptor of a draft with respect to an alteration made prior to the acceptance if the holder in due course took the draft after the acceptance, even though the acceptance provided "payable as originally drawn" or equivalent terms; or (iv) to the acceptor of a draft with respect to an alteration made after the acceptance. (2) Any person who transfers an instrument and receives consideration warrants to his transferee and if the transfer is by indorsement to any subsequent holder who takes the instrument in good faith that (a) he has a good title to the instrument or is authorized to obtain payment or acceptance on behalf of one who has a good title and the transfer is otherwise rightful; and ^b) all signatures are genuine or authorized; and (c) the instrument has not been materially altered; and (d) no defense of any party is good against him; and (e) he has no knowledge of any insoh'^ency proceeding instituted with respect to the maker or acceptor or the drawer of an unaccepted instrument. (3) By transferring "without recouree" the transferor limits the obligation stated in subsection (2)(d) to a warranty that he has no knowledge of such a defense. (4) A selling agent or broker who does not disclose the fact that he is acting only as such gives the warranties provided in this section, but if he makes such disclosure warrants only his good faith and authority. §28:3—418. Finality of payment or acceptance Except for recovery of bank payments as provided in the article on bank deposits and collections (article 4) and except for liability for breach of warranty on presentment under the preceding section, payment or acceptance of any instrument is final in favor of a holder m due course, or a person who has in good faith changed his position in reliance on the payment. § 28:3—119. Conversion of instrument; innocent representative (1) A n instrument is converted when (a) a drawee to whom it is delivered for acceptance refuses to return it on demand; or (b) any person to whom it is delivered for payment refuses on demand either to pay or to return it; or (c) it is paid on a forged indorsement. (2) I n an action against a drawee under subsection (1) the measure of the drawee's liability is the face amount of the instrument. In any other action under subsection (1) the measure of liability is presumed to be the face amount of the instrument. (3) Subject to the provisions of this subtitle concerning restrictive indorsements a representative, including a depositary or collecting bank, who has a good faith and in accordance with the reasonable commercial standards applicable to the business of such representative dealt with an instrument or its proceeds on behalf of one who was not the true owner is not liable in conversion or otherwise to the true owner beyond the amount of any proceeds remaining in his hands. (4) An intermediary bank or payor bank which is not a depositary bank is not liable in conversion solely by reason of the fact that proceeds of an item indorsed restrictively (sections 28:3—205 and 28:3—206) are not paid or applied consistently with the restrictive indorsement of an indorser other than its immediate transferor.

�


text:
Page:United States Statutes at Large Volume 77.djvu/719

 77 STAT. ]

PUBLIC LAW 88-243-DEC. 30, 1963

PART 5—PRESENTMENT, NOTICE OF DISHONOR AND PROTEST §28:3—501. When presentment, notice of dishonor, and protest necessary or permissible (1) Unless excused (section 28:8—511) presentment is necessary to charge secondary parties as follows: (a) presentment for acceptance is necessary to charge the drawer and indorsers of a draft where the draft so provides, or is payable elsewhere that at the residence or place of business of the drawee, or its date of payment depends upon such presentment. The holder may at his option present for acceptance any other draft payable at a stated date; (b) presentment for payment is necessary to charge any indorser; (c) in the case of any drawer, the acceptor of a draft payable at a bank or the maker of a note payable at a bank, presentment for payment is necessary, but failure to make presentment discharges such drawer, acceptor or maker only as stated in section 28:3—502(1)(b). (2) Unless excused (section 28:3—511) (a) notice of any dishonor is necessary to charge any indorser; (b) in the case of any drawer, the acceptor of a draft payable at a bank or the maker of a note payable at a bank, notice of any dishonor is necessary, but failure to give such notice discharges such drawer, acceptor or maker only as stated in section 28:3—502 (l)"(b). (3) Unless excused (section 28:3—511) protest of any dishonor is necessary to charge the drawer and indorsers of any draft which on its face appears to be drawn or payable outside of the states and territories of the United States and the District. The holder may at his option make protest of any dishonor of any other instrument and in the case of a foreign draft may on insolvency of the acceptor before maturity make protest for better security. (4) Notwitfistanding any provision of this section, neither presentment nor notice of dishonor nor protest is necessary to charge an indorser who has indorsed an instrument after maturity. § 28:3—502. Unexcused delay; discharge (1) Where without excuse any necessary presentment or notice of dishonor is delated beyond the time when it is due (a) any indorser is discharged; and (b) any drawer or the acceptor of a draft payable at a bank or the maker of a note payable at a bank who because the drawee or payor bank becomes insolvent during the delay is deprived of funds maintained with the drawee or payor bank to cover the instrument may discharge his liability by written assignment to the holder of his rights against the drawee or payor bank in respect of such funds, but such drawer, acceptor or maker is not otherwise discharged. (2) Where without excuse a necessary protest is delayed beyond the time when it is due any drawer or indorser is discharged. §28:3—503. Time of presentment (1) Unless a different time is expressed in the instrument the time for any presentment is determined as follows: (a) where an instrument is payable at or a fixed period after a stated date sm^ presentment for acceptance must be made on or before the date it is payable;

687

�


text:
Page:United States Statutes at Large Volume 77.djvu/720

 688

PUBLIC LAW 88-243-DEC. 30, 1963

[77 STAT.

(b) where an instrument is payable after sight it must either be presented for acceptance or negotiated within a reasonable time after date or issue whichever is later; (c) where an instrument shows the date on which it is payable presentment for payment is due on that date; (d) where an instrument is accelerated presentment for payment is due within a reasonable time after the acceleration; (e) with respect to the liability of any secondary party presentment for acceptance or payment of any other instrument is due within a reasonable time after such party becomes liable thereon. (2) A reasonable time for presentment is determined by the nature of the instrument, any usage of banking or trade and the facts of the particular case. I n the case of an uncertified check which is drawn and payable within the United States and which is not a draft drawn by a bank the following are presumed to be reasonable periods within which to present for payment or to initiate bank collection: (a) with respect to the liability of the drawer, thirty days after date or issue whichever is later; and • (b) with respect to the liability of an indorser, seven days after his indorsement. (3) Where any presentment is due on a day which is not a full business day for either the person making presentment or the party to pay or accept, presentment is due on the next following day which is a full business day for both parties. (4) Presentment to be sufficient must be made at a reasonable hour, and if at a bank during its banking day. § 28:3—504. How presentment made (1) Presentment is a demand for acceptance or payment made upon the maker, acceptor, drawee or other payor by or on behalf of the holder. (2) Presentment may be made (a) by mail, in which event the time of presentment is determined by the time of receipt of the mail; or (b) through a clearing house; or (c) at the place of acceptance or payment specified in the instrument or if there be none at the place of business or residence of the party to accept or pay. If neither the party to accept or pay nor anyone authorized to act for him is present or accessible at such place presentment is excused. (3) I t may be made (a) to any one of two or more makers, acceptors, drawees or other payors; or (b) to any person who has authority to make or refuse the acceptance or payment. (4) A draft accepted or a note made payable at a ]y'Ank in the United States must be presented at such bank. (5) I n the cases described in section 28:4—210 Presentment may be made in the manner and with the result stated in that section. § 28:3—505. Rights of party to whom presentment is made (1) The party to whom presentment is made may without dishonor require (a) exhibition of the instrument; and (b) reasonable identification of the person making presentment and evidence of his authority to make it if made for another; and (c) that the instrument be produced for acceptance or payment at a place specified in it, or if there be none at any place reasonable in the circumstances; and

�


text:
Page:United States Statutes at Large Volume 77.djvu/721

 77 STAT. ]

PUBLIC LAW 88-243-DEC. 30, 1963

(d) a signed receipt on the instrument for any partial or full payment and its surrender upon full payment. (2) Failure to comply with any such requirement invalidates the presentment but the person presenting has a reasonable time in which to comply and the time for acceptance or payment nuis from the time of compliance. § 28:3—506. Time allowed for acceptance or payment (1) Acceptance may be deferred without dishonor until the close of the next business day following presentment. The holder may also in a good faith effort to obtam acceptance and without either dishonor of the instrument or discharge of secondary parties allow postponement of acceptance for an additional business day. (2) Except as a longer time is allowed in the case of documentary drafts drawn under a letter of credit, and unless an earlier time is agreed to by the party to pay, payment of an instrument may be deferred without dishonor pending reasonable examination to determine whether it is properly payable, but payment must be made in any event before the close of business on the day of presentment. §28:3—507. Dishonor; holder's right of recourse; term allowing re-presentment (1) An instrument is dishonored when (a) a necessary or optional presentment is duly made and due acceptance or payment is refused or cannot be obtained within the prescribed time or in case of bank collections the instrument is seasonably I'eturned by the midnight deadline (section 28:4—301); or (b) presentment is excused and the instrument is not duly accepted or paid. (2) Subject to any necessary notice of dishonor and protest, the holder has upon dishonor an immediate right of recourse against the drawere and indorsers. (3) Return of an instrument for lack of proper indorsement is not dishonor. (4) A term in a draft or an indorsement thereof allowing a stated time for re-presentment in the event of any dishonor of the draft by iionacce]3tance if a time draft or by nonpayment if a sight draft gives the holder as against any secondary party bound by the terai an option to waive the dishonor without affecting the liability of the secondary pai"ty and he may present again up to the end of the stated time. §28:3—508. Notice of dishonor (1) Notice of dishonor may be given to any person who may be liable on the instrument by or on behalf of the holder or any party who has himself received notice, or any other party who can be compelled to pay the instrument. In addition an agent or bank in whose liands the instrument is dishonored may give notice to his principal or customer or to another agent or bank from which the instrument was received. (2) Any necessary notice nmst be given by a bank before its midnight deadline and by any other person before midnight of the third business day after dislionor or receipt of notice of dishonor. (3) Notice may be given in any reasonable manner. I t may be oral or written and in any terms which identify the instrument and state that it has been dishonored. A misdescription which does not mislead the party notified does not vitiate the notice. Sending the instrument bearing a stamp, ticket or writing stating that acceptance or payment has been refused or sending a notice of debit with respect to the instrument is sufficient. 93-025 0-64-46

689

�


text:
Page:United States Statutes at Large Volume 77.djvu/722

 690

PUBLIC LAW 88-243-DEC. 30, 1963

[77 STAT.

(4) "Written notice is jjiven when sent althougli it is not received. (5) Xotice to one piirtner is notice to each although the firm has been dissolved. (fi) Whenanyparty is in insolvency proceedings instituted after the issue of the instrument notice may be given either to the party or to the I'epresentative of his estate. (7) When any paity is dead or incompetent notice may be sent to his last known address or given to his personal repi'eseiitative. (8) Xotice operates for the benefit of all parties who have rights on the instrument against the party notified. § 28:3—509. Protest; noting for protest (1) A protest is a certificate of dishonor made under the hand and seal of a United ^ t a t e s consul or vice consul or a notary public or other person authorized to certify dishonor by the law of the place vyhere dishonor occurs. I t may be made upon information satisfactory to such person. (2) The protest must identify the instrument and certify either that due presentment has been made or the i*eason why it is excuse<l and that the instrument has been dishonored by nonacceptance or nonpayment. (3) The protest may also certify that notice of dishonor has been given to all parties or to specified parties. (•4) Subject to subsection (5) any necessary protest is due by the time that notice of dishonor is due. (5) If, before protest is due, an instrument has been noted for protest by the officer to make protest, the protest may be made at any time thereafter as of the date of the noting. § 28:3—510. Evidence of dishonor and notice of dishonor The following are admissible as evidence and create a presumption of dishonor and of any notice of dishonor therein shown: (a) a document regular in form as provided in the preceding section which purports to be a pi*otest; (b) the purported stamp or writing of the drawee, payor bank or presenting bank on the instrument or accompanying it stating that acceptance or payment has been refused for reasons consistent with dishonor; (c) any book or record of the drawee, payor bank, or any collecting bank kept in the usual course of business which shows dishonor, even though there is no evidence of who made the entry. §28:3—511. Waived or excused presentment, protest or notice of dishonor or delay therein (1) Delay in presentment, protest or notice of dishonor is excused when the party is without notice that it is due or when the delay is caused by circumstances beyond his control and he exercises reasonable diligence after the cause of the delay ceases to operate. (2) Presentment or notice or protest as the case may be is entirely excused when (a) the party to be charged has waived it expressly or by" implication either before or after it is due; or (b) such party has himself dishonored the instrument or has countermanded payment or otherwise has no reason to expect or right to require that the instrument be accepted or paid; or (c) by reasonable diligence the presentment or protest cannot be made or the notice given. (3) Presentment is also entirely excused when (a) the maker, acceptor or drawee of any instrument except a documentary draft is dead or in insolvency proceedings instituted after the issue of the instrument; or

�


text:
Page:United States Statutes at Large Volume 77.djvu/723

 77 STAT. ]

PUBLIC LAW 88-243-DEC. 30, 1963

(b) Rcceptance or payment is refused but not for want of proper presentment. (4) Where a draft has been dishonored by nonacceptance a later presentment for payment and any notice of dishonor and jjrotest for nonpayment are excused unless m the meantime the instrument has been accepted. (5) A waiver of protest is also a waiver of presentment and of notice of dishonor even though protest is not required. (6) Where a waiver of presentment or notice or protest is embodied in the instrument itself it is binding upon all parties; but where it is written above the signature of an indorser it binds him only. PART 6—DISCHARGE §28:3—601. Discharge of parties (1) The extent of the discharge of any party from liability on an instrument is governed by the sections on (a) payment or satisfaction (section 28:3—603); or (b) tender of payment (section 28:3—604); or (c) cancellation or renunciation (section 28:3—605); or (d) impairment of right of recourse or of collateral (section 28:3—606); or (e) reacquisition of the instrument by a prior party (section 28:3—208); or (f) fraudulent and material alteration (section 28:3—407); or (g) certification of a check (section 28:3-—411); or (h) acceptance varying a draft (section 28:3—412); or (i) unexcused delay in presentment or notice of dishonor or protest (section 28:3—502). (2) Any party is also discharged from his liability on an instrument to another party by any other act or agreement with such party which would discharge his simple contract for the payment of money. (3) The liability of all parties is discharged when any party who has himself no right of action or recourse on the instrument (a) reaccfuires the instrument in his own right; or (b) is discharged under any provision of this article except as otherwise provided with respect to discharge for impairment of recourse or of collateral (section 28:3—606). § 28:3—602. Effect of discharge against holder in due course Xo discharge of any party provided by this article is effective against a subsequent holder in due course unless he has notice thereof Avhen he takes the instrument. § 28:3—603. Payment or satisfaction (1) The liability of any party is discharged to the extent of his payment or satisfaction to the holder even though it is made with knowledge of a claim of another person to the instniment unless prior to such payment or satisfaction the person making the claim either supplies indemnity deemed adequate by the party seeking the discharge or enjoins payment or satisfaction by order of a court of competent jurisdiction in an action in which the adverse claimant and the holder are parties. This subsection does not, however, result in the discharge of the liability (a) of a party who in bad faith pays or satisfies a holder who acquirea the instrument by theft or who (unless having the rights.of a holder in due course) holds through one who so acquired it; or (b) of a party (other than an intermediary bank or a payor bank which is not a depositary bank) who pays or satisfies xhe

691

�


text:
Page:United States Statutes at Large Volume 77.djvu/724

 692

PUBLIC LAW 88-243-DEC. 30, 1963

[77 STAT.

liolder of nn instnimeiit which has been restrictively indorsed in a manner not consistent with the terms of such restrictiv^e indorsement, (2) Payment or satisfaction may be made with the consent of the liolder by any person including a stranger to the instrument. Surrender of the instrument to such a person gives him the rights of a transferee (section 28:8—201). §28:3—604. Tender of payment (1) An}^ party making tender of full payment to a holder when or after it is due is discharged to the extent of all subsequent liability for interest, costs, and attorney's fees. (2) The holder's refusal of such tender wholly discharges any party who has a right of recourse against the party making the tender. (3) Where the maker or acceptor of an instrument payable otherwise than on demand is able and ready to pay at every place of payment specified in the instrument when it is due, it is equivalent to tender. § 28:3—605. Cancellation and renunciation (1) The holder of an instrument may even without consideration discharge any party (a) in any manner apparent on the face of the instrument or the indorsement, as by intentionally cancelling the instrument or the party's signature by destruction or mutilation, or by striking out the party's signature; or (b) by renouncing his rights by a writing signed and delivered or by surrender of the instrument to the party to be discharged. (2) Neither cancellation nor renunciation without surrender of the instrument affects the title thereto. § 28:3—606. Impairment of recourse or of collateral (1) The holder discharges any party to the instrument to the extent that without such party's consent the holder (a) without express reservation of rights releases or agrees not to sue any person against whom the party has to the knowledge of the holder a right of recourse or agrees to suspend the right to enforce against such person the instrument or collateral or otherwise discharges such person, except that failure or delay in effecting any required presentment, protest or notice of dishonor with respect to any such person does not discharge any party as to whom presentment, protest or notice of dishonor is effective or unnecessary; or (b) unjustifiably impairs any collateral for the instrument given by or on behalf of the party or any person against whom he has a right of recourse. (2) By express reservation of rights against a party with a right of recourse the holder preserves (a) all his rights against such party as of the time when the instrument was originally due; and (b) the right of the party to pay the instrument as of that time; and (c) all rights of such party to recourse against others.

�


text:
Page:United States Statutes at Large Volume 77.djvu/725

 77 STAT. ]

PUBLIC LAW 88-243-DEC. 30, 1963

PART 7—ADVICE OF INTERNATIONAL SIGHT DRAFT § 28:3—701. Letter of advice of international sight draft (1) A '"letter of advice" is a drawer's coniniiinifation to the drawee that a described draft has been drawn. (2) Unless otherwise agreed when a bank recei\es from another bank a letter of advice of an international sight draft the drawee bank may immediately debit the drawer's account and stop the rmining of interest pro tanto. Such a debit and any resulting credit to any account covering outstanding drafts leaves in the drawer full power to stop payment or otherwise dispose of the amount and creates no trust or interest in favor of the holder. (3) Unless otherwise agreed and except where a draft is drawn under a credit issued by the drawee, the drawee of an international s'ght draft owes the drawer no duty to pay an unadvised draft but if it does so and the draft is genuine, may appropriately debit the drawer's account. PART 8—MISCELLANEOUS § 28:3—801. Drafts in a set (1) Where a draft is drawn in a set of parts, each of which is numbered and expressed to be an order only if no other part has been honored, the whole of the parts constitutes one draft but a taker of any part may become a holder in due course of the draft. (2) Any person who negotiates, indorses or accepts a single part of a draft drawn in a set thereby becomes liable to any holder in due course of that part as if it were the whole set, but as between different holders in due course to whom different parts have been negotiated the holder whose title first accrues has all rights to the draft and its proceeds. (3) As against the drawee the first presented part of a draft drawn in a set is the part entitled to payment, or if a time draft to acceptance and payment. Acceptance of any subsequently presented part renders the drawee liable thereon under subsection (2). With respect both to a holder and to the drawer payment of a subsequently presented part of a draft payable at sight has the same effect as payment of a check notwithstanding an effective stop order (section 28:4—407). (4) Except as otherwise provided in this section, where any part of a draft in a set is discharged by payment or otherwise the whole draft is discharged. §28:3—802. Effect of instrument on obligation for which it is given (1) Unless otherwise agreed where an instrument is taken for an underlying obligation (a) the ooligation is pro tanto discharged if a bank is drawer, maker or acceptor of the instrument and there is no recourse on the instrument against the underlying obligor; and (b) in any other case the obligation is suspended pro tanto until the instrument is due or if it is payable on demand until its presentment. If the instrument is dishonored action may be maintained on either the instrument or the obligation; discharge of the underlying obligor on the instrument also discharges him on the obligation. (2) The taking in good faith of a check which is not postdated does not of itself so extend the time on the original obligation as to discharge a surety.

693

�


text:
Page:Congressional Government.djvu/335

 reformed House of Commons truly representative of the nation and readily obeyed by a responsible Ministry. The sovereignty was at see-saw between the throne and the parliament,—and the throne-end of the beam was generally uppermost. Our device of separated, individualized powers was very much better than a nominal sovereignty of the Commons which was suffered to be overridden by force, fraud, or craft, by the real sovereignty of the King. The English Constitution was at that time in reality much worse than our own; and, if it is now superior, it is so because its growth has not been hindered or destroyed by the too tight ligaments of a written fundamental law.

The natural, the inevitable tendency of every system of self-government like our own and the British is to exalt the representative body, the people’s parliament, to a position of absolute supremacy. That tendency has, I think, been quite as marked in our own constitutional history as in that of any other country, though its power has been to some extent neutralized, and its progress in great part stayed, by those denials of that supremacy which we respect because they are written in our law. The political law written in our hearts is here at variance with that which the Constitution sought to establish. A written constitution may and often will be violated in

title: Page:Congressional Government.djvu/335


text:
Page:United States Statutes at Large Volume 77.djvu/726

 694

PUBLIC LAW88-243-D1EC. 30, 1963

[77 STAT.

§28:3—803. Notice to third party W h e r e a defendant is sued for breach of an obligation for which a t h i r d person is answerable over under t h i s article he may give the t h i r d person w r i t t e n notice of the l i t i g a t i o n, and the person notified may then give s i m i l a r notice to any other person who is a n s w e r a b l e over to h i m under t h i s article. I f the notice states that the person notified may come in and defend and that if the person notified does not do so he wull in any action a g a i n s t him by the person g i v i n g the notice be b o u n d by any determination of fact common to the t w o litigations, the n unless after seasonable receipt of the notice the person notified does come in and defend he is so b o u n d. § 28:3—804. L o s t, d e s t r o y e d or s to l e n i n s t r u m e n t s The o w n e r of an i n s t r u m e n t which is lost, w h e the r by destruction, the f t or otherwise, may m a i n t a i n an action in his own n a m e and recover from any party liable thereon upon d u e proof of h i s owners h i p, the facts which prevent his p r o d u c t i o n of the. i n s t r u m e n t and its term s. The court may require security i n d e m n i f y i n g the defendant a g a i n s t loss by reason of f u r the r claims on the i n s t r u m e n t. § 28:3—805. I n s t r u m e n t s not p a y a b l e to order or to bearer T h i s article a p p l i e s to any i n s t r u m e n t whose term s do not preclude transfer and which is otherwise negotiable w i t h i n t h i s article b u t which is not p a y a b l e to o r d e r or to h e a r e r, except that the r e can be n o holder in due course of such a n i n s t r u m e n t.

ARTICLE 4—BANK DEPOSITS AND COLLECTIONS PAET 1—GENERAL PROVISIONS AXD DEFINITIONS

Sec. 28:4—101. Short title. 28:4—102. Applicability. 28:4—103. Variation by agreement; measure of damages; certain action constituting ordinary dare. 28:4—104. Definitions and index of definitions. 28:4—105. "Depositary bank"; intermediary bank"; "collecting bank"; "payor bank"; "presenting bank"; "remitting bank". 28:4—106. Separate oflSce of a bank. 28:4—107. Time of receipt of items. 28:4—108. Delays. 28:4—109. Process of posting. PART 2—^COLLECTION OF ITEMS: DEPOSITARY AND COLLECTING BANKS

28:4—^201. Presumption and duration of agency status of collecting banks and provisional status of credits; applicability of article; item indorsed "pay any bank". 28:4—202. Responsibility for collection; when action seasonable. 28:4—203. Effe,ct of instructions. 28:4—^204. Methods of sending and presenting; sending direct to payor bank.. , 28:4—^205. Supplying missing indorsement; no notice from prior indorsement. 28:4—^206. Transfer between banks. 28:4—207. Warranties of customer and collecting bank on transfer or presentment of items; time for claims. 28:4—^208. Security interest of collecting bank in items, accompanying documents and proceeds. 28:4—^209. When bank gives value for purposes of holder in due course. 28:4—^210. Presentment by notice of item not payable by, through or at a bank; liability of secondary parties. 28:4—^211. Media of remittance; provisional and final settlement in remittance cases. 28:4—212. Right of charge-back or refund. 28:4—^213. Final payment of item by payor bank; when provisional debits and credits become final; when certain credits become available for withdrawal. 28:4—^214. Insolvency and preference.

�


text:
Page:United States Statutes at Large Volume 77.djvu/727

 [77 STAT.

PUBLIC LAW 88-243-DEC. 30, 1963

695

ARTICLE 4—BANK DEPOSITS AND COLLECTIONS—Continued P A U T 3—COM-ECTION Of ITEMS: PAYOR BANKS See.

28:4—801. Deferred posting; recovery of paj'iuent by return of iteui.><; time of dishonor. 2S:4—302. Payor banlc's responsibility for late return of item. 28:-l—303. When items subject to notice, stop-order, legal process or setoff; order in which items may be charged or certified. PART 4—RELATIONSHIP BETWEEN PAYOR BANK AND ITS CUSTOMER

28:4—401. 28:4—402. 28:4—403. 28:4—404. 28:4—405. 28:4—406.

When bank may charge customer's account. Bank's liability to customer for wrongful dishonor. Customer's right to stop payment; burden of proof of loss. Bank not obligated to pay check more than six months old. Death or incompetence of customer. Customer's duty to discover and report unauthorized signaifurc or alteration. 28:4—407. Payor bank's right to subrogation on improper payment. PART.'»—COIXECTION OF DOCUMENTARY DHAETS

28:4—501. Handling of documentary drafts; duty to send for presentment and to notify customer of dishonor. 28:4—502. Presentment of "on arrival" drafts. 28:4—503. Responsibility of presenting bank for documents and goods; report of reasons for dishonor; referee in ease of need. 28:4—504. Privilege of presenting bank to deal with goodi; security interest for expe;ises.

PART 1—GENERAL PROVISIONS AND DEFINITIONS §28:4—lOL Short title This article shall be known and may be cited as Uniform Commercial Code—Bank Deposits and Collections. §28:4—102. Applicability (1) To the extent that items within this article are also within the scope of articles 3 and 8, the'y are subject to the provisions of those articles. In the event of conflict the provisions of this article govern those of article 3 but the provisions of article 8 govern those of this article. (2) The liability of a bank for action or non-action with respect to any item handled by it for purposes of presentment, payment or collection is governed by the law of the place where the oank is located. In the case of action or non-action by or at a branch or separate office of a bank, its liability is governed by the law of the place where the branch or separate office is located. §28:4—103. Variation by agreement; measure of damages; certain action constituting ordinary care (1) The effect of the provisions of this article may be varied by agreement except that no agreement can disclaim a bank's responsibility for its own lack of good faith or failure to exercise ordinary care or can limit the measure of damages for such lack or failure: but the parties may by agreement determine the standards by which such responsibility is to be measured if such standards are not manifestly unreasonable. (2) Federal Reserve regulations and operating letters, clearing house rules, and the like, have the effect of agreements under subsection (1), whether or not specifically assented to by all parties interested in items handled.

Citation of article.

�


text:
Page:United States Statutes at Large Volume 77.djvu/728

 696

PUBLIC LAW 88-243-DEC. 30, 1963

[77 STAT.

(3) Action or non-action approved by this article or pursuant to Federal Reserve regulations or operating letters constitutes the exercise of ordinary care and, in the absence of special instructions, action or non-action consistent with clearing house rules and the like or with a general banking usage not disapproved by this article, prima facie constitutes the exercise of ordinary care. (•i) The specification or approval of certain pr(X'edures by this article does not constitute disapproval of other procedures which may be reasonable under the circumstances. (5) The measure of damages for failure to exercise ordinary care in handling an item is the amount of the item reduced by an amount which could not have been realized by the use of ordinary care, and where there is bad faith it includes other damages, if any/suffered by the party as a proximate consequence, § 28:4—104. Definitions and index of definitions (1) In this arficle unless the context otherwise requires (a) "Account" means any account with a bank and includes a checking, time, interest or savings account; (b) "Afternoon" means the period of a day between noon and midnight; (c) "Banking day*' means that part of any day on which a bank is open to the public for carrying on substantially all of its banking functions; (d) "Clearing house" means any association of banks or other payors regularly clearing items; (e) "Customer"' means any person having an account with a bank or for whom a bank has agreed to collect items and includes a bank carrying an account with another bank; (f) "Documentary draft" means any negotiable or nonnegotiable draft with accompanying documents, securities or other papers to be delivered against honor of the draft; (g) "Item" means any instrument for the payment of money even though it is not negotiable but does not include money; (h) "Midnight deadline" with respect to a bank is midnight on its next banking day following the banking day on which it receives the relevant item or notice or from which the time for taking action commences to run, whichever is later; (i) "Properly payable" includes the availability of funds for payment at the time of decision to pay or dishonor; (j) "Settle" means to pay in cash, by clearing house settlement, in a charge or credit or by remittance, or otherwise as instructed. A settlement may be either provisional or final; (k) "Suspends payments" with respect to a bank means that it has been closed by order of the supervisory authorities, that a public officer has been appointed to take it over or that it ceases or refuses to make payments in the ordinary course of business. (2) Other definitions applying to this article and the sections in which they appear are: "Collecting bank". Section 28:4—105. "Depositary bank". Section 28:4—105. "Intermediary bank". Section 28:4—105. "Payor bank". Section 28:4^105. "Presenting bank". Section 28:4—105. "Remitting bank". Section 28:4^105.

�


text:
Page:United States Statutes at Large Volume 77.djvu/729

 77 STAT. ]

PUBLIC LAW 88-243-DEC. 30, 1963

(3) The following definitions in other articles apply to this article: "Acceptance", Section 28:3—410. "Certificate of deposit". Section 28:3—lOi. "Certification". Section 28:3—411. "Check". Section 28:3—104. "Draft". Section 28:3—104. "Holder in due course". Section 28:3—302. "Notice of dishonor". Section 28:3—508. "Presentment". Section 28:3—504. "Protest". Section 28:3—509. "Secondary party". Section 28:3—102. (4) I n addition article 1 contains general definitions and principles Of construction and interpretation applicable throughout this article. §28:4—105. "Depositary bank"; "intermediary bank"; "collecting bank"; "payor bank"; "presenting bank"; "remitting bank" In this article unless the context otherwise requires: (a) "Depositary bank" means the first bank to which an item is transferred for collection even though it is also the payor bank: (b) "Payor bank" means a bank by which an item is payable as drawn or accepted; (c) "Intermediary bank" means any bank to which an item is transferred in course of collection except the depositary or payor bank; (d) "Collecting bank" means any bank handling the item for collection except the payor bank; (e) "Presenting bank" means any bank presenting an item except a payor bank; (f) "Remitting bank" means any payor or intennediary bank remitting for an item. § 28:4—106. Separate office of a bank A branch or separate office of a bank is a separate bank foi* the purpose of computing the time within which and determining the place at or to which action may be taken or notices or orders shall be given under this article and under article 3. The receipt of any notice or order by or the knowledge of one branch or separate office of a bank is not actual or constructive notice to or knowledge of any other branch or office of the same bank and does not impair the right of another branch or office to be a holder in due course of an item. §28:4—107. Time of receipt of items (1) 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 two P.M. or later as a cut-off hour for the handling of money and items and the making of entries on its books. (2) Any item or deposit of money received on any day after a cutoff hour so fixed or after the close of the banking day may be treated as being received at the openinjg of the next banking day. §28:4—108. Delays (1) Unless otherwise instructed, a collecting bank in a good faith effort to secure payment may, in the case of specific items and with or without the approval of any person involved, waive, modify or extend time limits imposed or permitted by this subtitle for a period not in excess of an additional banking day without discharge of secondary parties and without liability to its transferor or any prior party. (2) Delay by a collecting bank or payor bank beyond time limits prescribed or permitted by this subtitle or by instructions is excused if

697

�


text:
Page:United States Statutes at Large Volume 77.djvu/730

 698

PUBLIC LAW 88-243-DEC. 30, 1963

[77 STAT.

caused by interruption of communication facilities, suspension of payments by another bank, war, emergency conditions or other circumstances beyond the control of the bank provided it exercises such diligence as the circumstances require. § 28:4—109. Process of posting The "process of posting" means the usual procedure followed by a payor bank in determining to pay an item and in recording the payment including one or more of the following or other steps as determined by the bank: (a) verification of any signature; (b) ascertaining that sufficient funds are available; (c) affixing a "paid" or other stamp; (d) entering a charge or entry to a custxDmer's account; (e) correcting or reversing an entry or erroneous action with respect to the item. PART 2—COLLECTION OF ITEMS: DEPOSITARY A N D COLLECTING B A N K S §28;4—^201. Presumption and duration of agency status of collecting banks and provisional status of credits; applicability of article; item indorsed **pay any bank" (1) Unless a contrary intent clearly appears and prior to the time that a settlement given by a collecting bank for an item is or becomes final (subsection (3) of section 28:4-—211 and sections 28:4—212 and 28:4—213) the bank is an agent or sub-agent of the owner of the item and any settlement given for the item is provisional. This provision applies regardless of the form of indorsement or lack of indorsement and even though credit given for the item is subject to immediate withdrawal as of right or is in fact withdrawn; but the continuance of ownership of an item by its owner and any rights of the owner to proceeds of the item are subject to rights of a collecting bank such as those resulting from outstanding advances on the item and valid rights of setoff. "V\Tien an item is handled by banks for purposes of presentment, payment and collection, the relevant provisions of this article apply even though action of parties clearly establishes that a particular bank has purchased the item and is the owner of it. (2) After an item has been indorsed with the words "pay any bank" or the like, only a bank may acquire the rights of a holder (a) until the item has been returned to the customer initiating collection; or (b) until the item has been specially indorsed by a bank to a person who is not a bank. § 28:4—^202. Responsibility for collection; when action seasonable (1) A collecting bank must use ordinary care in (a) presenting an item or sending it for presentment; and (b) sending notice of dishonor or non-payment or returning an item other than a documentary draft to the bank's transferor or directly to the depositary bank under subsection (2) of section 28:4—212 after learning that the item has not been paid or accepted, as the case may be; and (c) settling for an item when the bank receives final settlement; and (d) making or providing for any necessary protest; and (e) notifying its transferor of any loss or delay in transit within a reasonable time after discovery thereof. (2) A collecting bank taking proper action before its midnight deadline following receipt of an item, notice or payment acts season-

�