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•0 Account stated based upon check or note tendered in payment of debt, 46 A.L.R.3d 1325
•1 Buyer’s note as payment within contemplation of statute of frauds, 81 A.L.R.2d 1355
Forms
•0 Forms relating to payment by check or draft or note, generally, see Am. Jur. Pleading and Practice Forms, Payment
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Unless otherwise agreed, if a certified check, cashier’s check, or teller’s check is taken for an obligation, the obligation is
discharged to the same extent discharge would result if an amount of money equal to the amount of the instrument were taken
in payment of the obligation. Discharge of the obligation does not affect any liability that the obligor may have as an indorser
of the instrument.1 Thus, where a teller’s check is taken as payment, the underlying obligation is discharged, even though the
issuing bank stops payment on the check; 2 in such a case, the bank becomes liable in an action on the check, because the
underlying obligation had been discharged.3
Also, unless otherwise agreed and except as provided above, if a note or an uncertified check is taken for an obligation, the
obligation is suspended to the same extent the obligation would be discharged if an amount of money equal to the amount of
the instrument were taken, subject to the following rules. 4 In the case of an uncertified check, suspension of the obligation
continues until dishonor of the check, or until it is paid or certified, and payment or certification of the check results in the
discharge of the obligation to the extent of the amount of the check. 5 Thus, the tendering and acceptance of a check
constitutes conditional payment,6 which becomes absolute if the check is subsequently honored by the bank, 7 and the fact that
a check, otherwise timely delivered, is honored after a payment deadline has passed does not affect the timeliness of the
payment.8 On the other hand, a party who makes payment by an uncertified check takes the risk that the check will not be
honored and the payment obligation will not be fulfilled; this is the case regardless of whether the payor endeavors to have
sufficient funds in the account to cover the check at the time payment is due. 9 Thus, once the bank dishonors the check, and
the period for payment has expired, the payor is in material breach of the agreement, and again presenting the check does not
cure the breach.10 The obligation is no longer suspended on dishonor of the check, because then the holder of the check may
take action either on the check or on the underlying obligation.11
In the case of a note, suspension of the obligation continues until dishonor of the note or until it is paid, and payment likewise
discharges the obligation to the extent of the payment. 12 Therefore, the issuance of a note does not discharge the underlying
obligation, but rather suspends it.13
If an instrument other than one described in the provisions discussed above is taken for an obligation, the effect is the same as
for a certified or similar check if the instrument is one on which a bank is liable as maker or acceptor, or the instrument
merely suspends the obligation in any other case. 14
In accordance with the otherwise agreed language, an instrument given in payment of a preexisting debt generally will
extinguish that debt when it is the parties’ express understanding that it will have that effect. 15 The presumption that a
negotiable note given for a simple contract debt pays or satisfies that debt may be rebutted by evidence that satisfaction of the
debt was not the parties’ intention.16
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reserved.
Footnotes
1
U.C.C. § 3-310(a).
2
Malphrus v. Home Sav. Bank of City of Albany, 44 Misc. 2d 705, 254 N.Y.S.2d 980, 2 U.C.C. Rep. Serv. 373 (County
Ct. 1965).
3
Fur Funtastic, Ltd. v. Kearns, 120 Misc. 2d 794, 467 N.Y.S.2d 499, 41 U.C.C. Rep. Serv. 862 (App. Term 1983).
4
U.C.C. § 3-310(b).
5
U.C.C. § 3-310(b)(1).
The acceptance of an instrument suspends the underlying obligation until the instrument is either paid, which
discharges the obligation, or until it is dishonored, which reimposes the obligation. Harper v. K & W Trucking Co.,
725 P.2d 1066, 2 U.C.C. Rep. Serv. 2d 556 (Alaska 1986).
6
Matter of Wegener, 186 B.R. 692, 27 U.C.C. Rep. Serv. 2d 923 (Bankr. D. Neb. 1995); Scalise v. American Employers
Ins. Co., 67 Conn. App. 753, 789 A.2d 1066 (2002); Enriquillo Export & Import, Inc. v. M.B.R. Industries, Inc., 733
So. 2d 1124 (Fla. Dist. Ct. App. 4th Dist. 1999); Mariano’s Pizzeria Inc. v. Associated Mut. Ins. Co-op., 24 A.D.3d
206, 806 N.Y.S.2d 46 (1st Dep’t 2005); Deep Nines, Inc. v. McAfee, Inc., 246 S.W.3d 842 (Tex. App. Dallas 2008).
7
Scalise v. American Employers Ins. Co., 67 Conn. App. 753, 789 A.2d 1066 (2002); Deep Nines, Inc. v. McAfee, Inc.,
246 S.W.3d 842 (Tex. App. Dallas 2008).
8
Deep Nines, Inc. v. McAfee, Inc., 246 S.W.3d 842 (Tex. App. Dallas 2008).
Checks received by a Chapter 7 debtor before the sale of its assets closed, but not cleared until after the closing, were
not for accounts receivable included in the assets sold, since those debts were conditionally satisfied on receipt of the
checks and unconditionally satisfied when the checks cleared, with satisfaction deemed to relate back to the date of
receipt. In re Old Summit Mfg., LLC, 523 F.3d 134 (3d Cir. 2008) (applying Pennsylvania U.C.C.).
9
Deep Nines, Inc. v. McAfee, Inc., 246 S.W.3d 842 (Tex. App. Dallas 2008).
10
Deep Nines, Inc. v. McAfee, Inc., 246 S.W.3d 842 (Tex. App. Dallas 2008).
11
Probus Properties v. Kirby, 200 S.W.3d 258 (Tex. App. Dallas 2006), reh’g overruled, (Sept. 11, 2006) and review
denied, (Dec. 1, 2006).
As to enforcement of the check or obligation, see § 119.
12
U.C.C. § 3-310(b)(2).
13
Ingram v. Earthman, 993 S.W.2d 611, 40 U.C.C. Rep. Serv. 2d 500 (Tenn. Ct. App. 1998).
14
U.C.C. § 3-310(c).
The giving of a draft by a debtor to the creditor does not discharge the debt itself until the draft is paid, it being a
means adopted to enable the creditor to obtain payment of the debt and remains, until honored or paid, only evidence
of the debt. Scalise v. American Employers Ins. Co., 67 Conn. App. 753, 789 A.2d 1066 (2002).
15
In re Alliance Aerospace, LLC, 280 B.R. 752 (Bankr. M.D. Ga. 2002) (promissory note).
Where the circumstances of the case indicated that the parties had implicitly agreed that the acceptance of uncertified
checks was to be considered as an absolute, rather than a conditional, payment of the purchase price, the obligation to
pay the purchase price was discharged. Burnett v. Vance, 126 Misc. 2d 402, 483 N.Y.S.2d 595 (Sup 1984).
16
St. Agatha Federal Credit Union v. Ouellette, 1998 ME 279, 722 A.2d 858 (Me. 1998).
2. Am. Jur. Pl. & Pr. Forms Uniform Commercial Code s 3:60, 2017 Other —
Introductory comments Secondary
Am. Jur. Pl. & Pr. Forms Uniform Commercial Code Source
Unless otherwise agreed, if a certified check, cashier’s check, or
teller’s check is taken for an obligation, the obligation is discharged
to the same extent discharge would result...
3. Am. Jur. Pl. & Pr. Forms Uniform Commercial Code s 3:61, 2017 Other —
Answer-Defense-Obligation for which check given discharged Secondary
by payment Source
Am. Jur. Pl. & Pr. Forms Uniform Commercial Code
See generally, U.C.C. § 3-310(b).
4. Am. Jur. Pl. & Pr. Forms Uniform Commercial Code s 3:62, 2017 Other —
Instruction to jury-Effect of payment by certified check Secondary
Am. Jur. Pl. & Pr. Forms Uniform Commercial Code Source
See generally, U.C.C. § 3-310(a).