8.3A-310 - A-310. Effect of instrument on obligation for which taken. - Virginia Statutes

§ 8.3A-310. Effect of instrument on obligation for which taken.

(a) Unless otherwise agreed, if a certified check, cashier's check, orteller's check is taken for an obligation, the obligation is discharged tothe same extent discharge would result if an amount of money equal to theamount of the instrument were taken in payment of the obligation. Dischargeof the obligation does not affect any liability that the obligor may have asan endorser of the instrument.

(b) Unless otherwise agreed and except as provided in subsection (a), if anote or an uncertified check is taken for an obligation, the obligation issuspended to the same extent the obligation would be discharged if an amountof money equal to the amount of the instrument were taken, and the followingrules apply:

(1) In the case of an uncertified check, suspension of the obligationcontinues until dishonor of the check or until it is paid or certified.Payment or certification of the check results in discharge of the obligationto the extent of the amount of the check.

(2) In the case of a note, suspension of the obligation continues untildishonor of the note or until it is paid. Payment of the note results indischarge of the obligation to the extent of the payment.

(3) Except as provided in paragraph (4), if the check or note is dishonoredand the obligee of the obligation for which the instrument was taken is theperson entitled to enforce the instrument, the obligee may enforce either theinstrument or the obligation. In the case of an instrument of a third personwhich is negotiated to the obligee by the obligor, discharge of the obligoron the instrument also discharges the obligation.

(4) If the person entitled to enforce the instrument taken for an obligationis a person other than the obligee, the obligee may not enforce theobligation to the extent the obligation is suspended. If the obligee is theperson entitled to enforce the instrument but no longer has possession of itbecause it was lost, stolen, or destroyed, the obligation may not be enforcedto the extent of the amount payable on the instrument, and to that extent theobligee's rights against the obligor are limited to enforcement of theinstrument.

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

(1964, c. 219, § 8.3-802; 1992, c. 693.)