400.3-310. Effect of instrument on obligation for which taken. - Missouri Statutes

Effect of instrument on obligation for which taken.

400.3-310. (a) Unless otherwise agreed, if a certifiedcheck, cashier's check, or teller's check is taken for anobligation, the obligation is discharged to the same extentdischarge would result if an amount of money equal to the amountof the instrument were taken in payment of the obligation.Discharge of the obligation does not affect any liability thatthe obligor may have as an endorser of the instrument.

(b) Unless otherwise agreed and except as provided insubsection (a), if a note or an uncertified check is taken for anobligation, the obligation is suspended to the same extent theobligation would be discharged if an amount of money equal to theamount of the instrument were taken, and the following rulesapply:

(1) In the case of an uncertified check, suspension of theobligation continues until dishonor of the check or until it ispaid or certified. Payment or certification of the check resultsin discharge of the obligation to the extent of the amount of thecheck.

(2) In the case of a note, suspension of the obligationcontinues until dishonor of the note or until it is paid.Payment of the note results in discharge of the obligation to theextent of the payment.

(3) Except as provided in paragraph (4), if the check ornote is dishonored and the obligee of the obligation for whichthe instrument was taken is the person entitled to enforce theinstrument, the obligee may enforce either the instrument or theobligation. In the case of an instrument of a third person whichis negotiated to the obligee by the obligor, discharge of theobligor on the instrument also discharges the obligation.

(4) If the person entitled to enforce the instrument takenfor an obligation is a person other than the obligee, the obligeemay not enforce the obligation to the extent the obligation issuspended. If the obligee is the person entitled to enforce theinstrument but no longer has possession of it because it waslost, stolen, or destroyed, the obligation may not be enforced tothe extent of the amount payable on the instrument, and to thatextent the obligee's rights against the obligor are limited toenforcement of the instrument.

(c) If an instrument other than one described in subsection(a) or (b) is taken for an obligation, the effect is (i) thatstated in subsection (a) if the instrument is one on which a bankis liable as maker or acceptor, or (ii) that stated in subsection(b) in any other case.

(L. 1992 S.B. 448)