3301. "Person entitled to enforce" an instrument means (a) the
holder of the instrument, (b) a nonholder in possession of the
instrument who has the rights of a holder, or (c) a person not in
possession of the instrument who is entitled to enforce the
instrument pursuant to Section 3309 or subdivision (d) of Section
3418. A person may be a person entitled to enforce the instrument
even though the person is not the owner of the instrument or is in
wrongful possession of the instrument.
3302. (a) Subject to subdivision (c) and subdivision (d) of Section
3106, "holder in due course" means the holder of an instrument if
both of the following apply:
(1) The instrument when issued or negotiated to the holder does
not bear such apparent evidence of forgery or alteration or is not
otherwise so irregular or incomplete as to call into question its
authenticity.
(2) The holder took the instrument (A) for value, (B) in good
faith, (C) without notice that the instrument is overdue or has been
dishonored or that there is an uncured default with respect to
payment of another instrument issued as part of the same series, (D)
without notice that the instrument contains an unauthorized signature
or has been altered, (E) without notice of any claim to the
instrument described in Section 3306, and (F) without notice that any
party has a defense or claim in recoupment described in subdivision
(a) of Section 3305.
(b) Notice of discharge of a party, other than discharge in an
insolvency proceeding, is not notice of a defense under subdivision
(a), but discharge is effective against a person who became a holder
in due course with notice of the discharge. Public filing or
recording of a document does not of itself constitute notice of a
defense, claim in recoupment, or claim to the instrument.
(c) Except to the extent a transferor or predecessor in interest
has rights as a holder in due course, a person does not acquire
rights of a holder in due course of an instrument taken (1) by legal
process or by purchase in an execution, bankruptcy, or creditor's
sale or similar proceeding, (2) by purchase as part of a bulk
transaction not in ordinary course of business of the transferor, or
(3) as the successor in interest to an estate or other organization.
(d) If, under paragraph (1) of subdivision (a) of Section 3303,
the promise of performance that is the consideration for an
instrument has been partially performed, the holder may assert rights
as a holder in due course of the instrument only to the fraction of
the amount payable under the instrument equal to the value of the
partial performance divided by the value of the promised performance.
(e) If (1) the person entitled to enforce an instrument has only a
security interest in the instrument and (2) the person obliged to
pay the instrument has a defense, claim in recoupment, or claim to
the instrument that may be asserted against the person who granted
the security interest, the person entitled to enforce the instrument
may assert rights as a holder in due course only to an amount payable
under the instrument which, at the time of enforcement of the
instrument, does not exceed the amount of the unpaid obligation
secured.
(f) To be effective, notice shall be received at a time and in a
manner that gives a reasonable opportunity to act on it.
(g) This section is subject to any law limiting status as a holder
in due course in particular classes of transactions.
3303. (a) An instrument is issued or transferred for value if any
of the following apply:
(1) The instrument is issued or transferred for a promise of
performance, to the extent the promise has been performed.
(2) The transferee acquires a security interest or other lien in
the instrument other than a lien obtained by judicial proceeding.
(3) The instrument is issued or transferred as payment of, or as
security for, an antecedent claim against any person, whether or not
the claim is due.
(4) The instrument is issued or transferred in exchange for a
negotiable instrument.
(5) The instrument is issued or transferred in exchange for the
incurring of an irrevocable obligation to a third party by the person
taking the instrument.
(b) "Consideration" means any consideration sufficient to support
a simple contract. The drawer or maker of an instrument has a defense
if the instrument is issued without consideration. If an instrument
is issued for a promise of performance, the issuer has a defense to
the extent performance of the promise is due and the promise has not
been performed. If an instrument is issued for value as stated in
subdivision (a), the instrument is also issued for consideration.
3304. (a) An instrument payable on demand becomes overdue at the
earliest of the following times:
(1) On the day after the day demand for payment is duly made.
(2) If the instrument is a check, 90 days after its date.
(3) If the instrument is not a check, when the instrument has been
outstanding for a period of time after its date which is
unreasonably long under the circumstances of the particular case in
light of the nature of the instrument and usage of the trade.
(b) With respect to an instrument payable at a definite time the
following rules apply:
(1) If the principal is payable in installments and a due date has
not been accelerated, the instrument becomes overdue upon default
under the instrument for nonpayment of an installment, and the
instrument remains overdue until the default is cured.
(2) If the principal is not payable in installments and the due
date has not been accelerated, the instrument becomes overdue on the
day after the due date.
(3) If a due date with respect to principal has been accelerated,
the instrument becomes overdue on the day after the accelerated due
date.
(c) Unless the due date of principal has been accelerated, an
instrument does not become overdue if there is default in payment of
interest but no default in payment of principal.
3305. (a) Except as stated in subdivision (b), the right to enforce
the obligation of a party to pay an instrument is subject to all of
the following:
(1) A defense of the obligor based on (A) infancy of the obligor
to the extent it is a defense to a simple contract, (B) duress, lack
of legal capacity, or illegality of the transaction which, under
other law, nullifies the obligation of the obligor, (C) fraud that
induced the obligor to sign the instrument with neither knowledge nor
reasonable opportunity to learn of its character or its essential
terms, or (D) discharge of the obligor in insolvency proceedings.
(2) A defense of the obligor stated in another section of this
division or a defense of the obligor that would be available if the
person entitled to enforce the instrument were enforcing a right to
payment under a simple contract.
(3) A claim in recoupment of the obligor against the original
payee of the instrument if the claim arose from the transaction that
gave rise to the instrument; but the claim of the obligor may be
asserted against a transferee of the instrument only to reduce the
amount owing on the instrument at the time the action is brought.
(b) The right of a holder in due course to enforce the obligation
of a party to pay the instrument is subject to defenses of the
obligor stated in paragraph (1) of subdivision (a), but is not
subject to defenses of the obligor stated in paragraph (2) of
subdivision (a) or claims in recoupment stated in paragraph (3) of
subdivision (a) against a person other than the holder.
(c) Except as stated in subdivision (d), in an action to enforce
the obligation of a party to pay the instrument, the obligor may not
assert against the person entitled to enforce the instrument a
defense, claim in recoupment, or claim to the instrument (Section
3306) of another person, but the other person's claim to the
instrument may be asserted by the obligor if the other person is
joined in the action and personally asserts the claim against the
person entitled to enforce the instrument. An obligor is not obliged
to pay the instrument if the person seeking enforcement of the
instrument does not have rights of a holder in due course and the
obligor proves that the instrument is a lost or stolen instrument.
(d) In an action to enforce the obligation of an accommodation
party to pay an instrument, the accommodation party may assert
against the person entitled to enforce the instrument any defense or
claim in recoupment under subdivision (a) that the accommodated party
could assert against the person entitled to enforce the instrument,
except the defenses of discharge in insolvency proceedings, infancy,
and lack of legal capacity.
3306. A person taking an instrument, other than a person having
rights of a holder in due course, is subject to a claim of a property
or possessory right in the instrument or its proceeds, including a
claim to rescind a negotiation and to recover the instrument or its
proceeds. A person having rights of a holder in due course takes free
of the claim to the instrument.
3307. (a) In this section:
(1) "Fiduciary" means an agent, trustee, partner, corporate
officer or director, limited liability company manager, or other
representative owing a fiduciary duty with respect to an instrument.
(2) "Represented person" means the principal, beneficiary,
partnership, corporation, limited liability company, or other person
to whom the duty stated in paragraph (1) is owed.
(b) If (i) an instrument is taken from a fiduciary for payment or
collection or for value, (ii) the taker has knowledge of the
fiduciary status of the fiduciary, and (iii) the represented person
makes a claim to the instrument or its proceeds on the basis that the
transaction of the fiduciary is a breach of fiduciary duty, the
following rules apply:
(1) Notice of breach of fiduciary duty by the fiduciary is notice
of the claim of the represented person.
(2) In the case of an instrument payable to the represented person
or the fiduciary as such, the taker has notice of the breach of
fiduciary duty if the instrument is (A) taken in payment of or as
security for a debt known by the taker to be the personal debt of the
fiduciary, (B) taken in a transaction known by the taker to be for
the personal benefit of the fiduciary, or (C) deposited to an account
other than an account of the fiduciary, as such, or an account of
the represented person.
(3) If an instrument is issued by the represented person or the
fiduciary as such, and made payable to the fiduciary personally, the
taker does not have notice of the breach of fiduciary duty unless the
taker knows of the breach of fiduciary duty.
(4) If an instrument is issued by the represented person or the
fiduciary as such, to the taker as payee, the taker has notice of the
breach of fiduciary duty if the instrument is (A) taken in payment
of or as security for a debt known by the taker to be the personal
debt of the fiduciary, (B) taken in a transaction known by the taker
to be for the personal benefit of the fiduciary, or (C) deposited to
an account other than an account of the fiduciary, as such, or an
account of the represented person.
3308. (a) In an action with respect to an instrument, the
authenticity of, and authority to make, each signature on the
instrument is admitted unless specifically denied in the pleadings.
If the validity of a signature is denied in the pleadings, the burden
of establishing validity is on the person claiming validity, but the
signature is presumed to be authentic and authorized unless the
action is to enforce the liability of the purported signer and the
signer is dead or incompetent at the time of trial of the issue of
validity of the signature. If an action to enforce the instrument is
brought against a person as the undisclosed principal of a person who
signed the instrument as a party to the instrument, the plaintiff
has the burden of establishing that the defendant is liable on the
instrument as a represented person under subdivision (a) of Section
3402.
(b) If the validity of signatures is admitted or proved and there
is compliance with subdivision (a), a plaintiff producing the
instrument is entitled to payment if the plaintiff proves entitlement
to enforce the instrument under Section 3301, unless the defendant
proves a defense or claim in recoupment. If a defense or claim in
recoupment is proved, the right to payment of the plaintiff is
subject to the defense or claim, except to the extent the plaintiff
proves that the plaintiff has rights of a holder in due course which
are not subject to the defense or claim.
3309. (a) A person not in possession of an instrument is entitled
to enforce the instrument if (1) the person was in possession of the
instrument and entitled to enforce it when loss of possession
occurred, (2) the loss of possession was not the result of a transfer
by the person or a lawful seizure, and (3) the person cannot
reasonably obtain possession of the instrument because the instrument
was destroyed, its whereabouts cannot be determined, or it is in the
wrongful possession of an unknown person or a person that cannot be
found or is not amenable to service of process.
(b) A person seeking enforcement of an instrument under
subdivision (a) shall prove the terms of the instrument and the
person's right to enforce the instrument. If that proof is made,
Section 3308 applies to the case as if the person seeking enforcement
had produced the instrument. The court may not enter judgment in
favor of the person seeking enforcement unless it finds that the
person required to pay the instrument is adequately protected against
loss that might occur by reason of a claim by another person to
enforce the instrument. Adequate protection may be provided by any
reasonable means.
3310. (a) 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.
(b) Unless otherwise agreed and except as provided in subdivision
(a), 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, and the following rules apply:
(1) In the case of an uncertified check, suspension of the
obligation continues until dishonor of the check or until it is paid
or certified. Payment or certification of the check results in
discharge of the obligation to the extent of the amount of the check.
(2) In the case of a note, suspension of the obligation continues
until dishonor of the note or until it is paid. Payment of the note
results in discharge of the obligation to the extent of the payment.
(3) Except as provided in paragraph (4), if the check or note is
dishonored and the obligee of the obligation for which the instrument
was taken is the person entitled to enforce the instrument, the
obligee may enforce either the instrument or the obligation. In the
case of an instrument of a third person which is negotiated to the
obligee by the obligor, discharge of the obligor on the instrument
also discharges the obligation.
(4) If the person entitled to enforce the instrument taken for an
obligation is a person other than the obligee, the obligee may not
enforce the obligation to the extent the obligation is suspended. If
the obligee is the person entitled to enforce the instrument but no
longer has possession of it because it was lost, stolen, or
destroyed, the obligation may not be enforced to the extent of the
amount payable on the instrument, and to that extent the obligee's
rights against the obligor are limited to enforcement of the
instrument.
(c) If an instrument other than one described in subdivision (a)
or (b) is taken for an obligation, the effect is (1) that stated in
subdivision (a) if the instrument is one on which a bank is liable as
maker or acceptor, or (2) that stated in subdivision (b) in any
other case.
3311. (a) If a person against whom a claim is asserted proves that
(1) that person in good faith tendered an instrument to the claimant
as full satisfaction of the claim, (2) the amount of the claim was
unliquidated or subject to a bona fide dispute, and (3) the claimant
obtained payment of the instrument, the following subdivisions apply.
(b) Unless subdivision (c) applies, the claim is discharged if the
person against whom the claim is asserted proves that the instrument
or an accompanying written communication contained a conspicuous
statement to the effect that the instrument was tendered as full
satisfaction of the claim.
(c) Subject to subdivision (d), a claim is not discharged under
subdivision (b) if either of the following applies:
(1) The claimant, if an organization, proves that (A) within a
reasonable time before the tender, the claimant sent a conspicuous
statement to the person against whom the claim is asserted that
communications concerning disputed debts, including an instrument
tendered as full satisfaction of a debt, are to be sent to a
designated person, office, or place, and (B) the instrument or
accompanying communication was not received by that designated
person, office, or place.
(2) The claimant, whether or not an organization, proves that
within 90 days after payment of the instrument, the claimant tendered
repayment of the amount of the instrument to the person against whom
the claim is asserted. This paragraph does not apply if the claimant
is an organization that sent a statement complying with subparagraph
(A) of paragraph (1).
(d) A claim is discharged if the person against whom the claim is
asserted proves that within a reasonable time before collection of
the instrument was initiated, the claimant, or an agent of the
claimant having direct responsibility with respect to the disputed
obligation, knew that the instrument was tendered in full
satisfaction of the claim.
3312. (a) In this section:
(1) "Check" means a cashier's check, teller's check, or certified
check.
(2) "Claimant" means a person who claims the right to receive the
amount of a cashier's check, teller's check, or certified check that
was lost, destroyed, or stolen.
(3) "Declaration of loss" means a written statement, made under
penalty of perjury, to the effect that (i) the declarer lost
possession of a check, (ii) the declarer is the drawer or payee of
the check, in the case of a certified check, or the remitter or payee
of the check, in the case of a cashier's check or teller's check,
(iii) the loss of possession was not the result of a transfer by the
declarer or a lawful seizure, and (iv) the declarer cannot reasonably
obtain possession of the check because the check was destroyed, its
whereabouts cannot be determined, or it is in the wrongful possession
of an unknown person or a person that cannot be found or is not
amenable to service of process.
(4) "Obligated bank" means the issuer of a cashier's check or
teller's check or the acceptor of a certified check.
(b) A claimant may assert a claim to the amount of a check by a
communication to the obligated bank describing the check with
reasonable certainty and requesting payment of the amount of the
check, if (i) the claimant is the drawer or payee of a certified
check or the remitter or payee of a cashier's check or teller's
check, (ii) the communication contains or is accompanied by a
declaration of loss of the claimant with respect to the check, (iii)
the communication is received at a time and in a manner affording the
bank a reasonable time to act on it before the check is paid, and
(iv) the claimant provides reasonable identification if requested by
the obligated bank. Delivery of a declaration of loss is a warranty
of the truth of the statements made in the declaration. The warranty
is made to the obligated bank and any person entitled to enforce the
check. If a claim is asserted in compliance with this subdivision,
the following rules apply:
(1) The claim becomes enforceable at the later of (i) the time the
claim is asserted, or (ii) the 90th day following the date of the
check, in the case of a cashier's check or teller's check, or the
90th day following the date of the acceptance, in the case of a
certified check.
(2) Until the claim becomes enforceable, it has no legal effect
and the obligated bank may pay the check or, in the case of a teller'
s check, may permit the drawee to pay the check. Payment to a person
entitled to enforce the check discharges all liability of the
obligated bank with respect to the check.
(3) If the claim becomes enforceable before the check is presented
for payment, the obligated bank is not obliged to pay the check.
(4) When the claim becomes enforceable, the obligated bank becomes
obliged to pay the amount of the check to the claimant if payment of
the check has not been made to a person entitled to enforce the
check. Subject to paragraph (1) of subdivision (a) of Section 4302,
payment to the claimant discharges all liability of the obligated
bank with respect to the check.
(c) If the obligated bank pays the amount of a check to a claimant
under paragraph (4) of subdivision (b) and, after the claim became
enforceable, the check is presented for payment by a person having
rights of a holder in due course, the claimant is obliged to (i)
refund the payment to the obligated bank if the check is paid, or
(ii) pay the amount of the check to the person having rights of a
holder in due course if the check is dishonored.
(d) If a claimant has the right to assert a claim under
subdivision (b) and is also a person entitled to enforce a cashier's
check, teller's check, or certified check which is lost, destroyed,
or stolen, the claimant may assert rights with respect to the check
either under this section or Section 3309.
3301. "Person entitled to enforce" an instrument means (a) the
holder of the instrument, (b) a nonholder in possession of the
instrument who has the rights of a holder, or (c) a person not in
possession of the instrument who is entitled to enforce the
instrument pursuant to Section 3309 or subdivision (d) of Section
3418. A person may be a person entitled to enforce the instrument
even though the person is not the owner of the instrument or is in
wrongful possession of the instrument.
3302. (a) Subject to subdivision (c) and subdivision (d) of Section
3106, "holder in due course" means the holder of an instrument if
both of the following apply:
(1) The instrument when issued or negotiated to the holder does
not bear such apparent evidence of forgery or alteration or is not
otherwise so irregular or incomplete as to call into question its
authenticity.
(2) The holder took the instrument (A) for value, (B) in good
faith, (C) without notice that the instrument is overdue or has been
dishonored or that there is an uncured default with respect to
payment of another instrument issued as part of the same series, (D)
without notice that the instrument contains an unauthorized signature
or has been altered, (E) without notice of any claim to the
instrument described in Section 3306, and (F) without notice that any
party has a defense or claim in recoupment described in subdivision
(a) of Section 3305.
(b) Notice of discharge of a party, other than discharge in an
insolvency proceeding, is not notice of a defense under subdivision
(a), but discharge is effective against a person who became a holder
in due course with notice of the discharge. Public filing or
recording of a document does not of itself constitute notice of a
defense, claim in recoupment, or claim to the instrument.
(c) Except to the extent a transferor or predecessor in interest
has rights as a holder in due course, a person does not acquire
rights of a holder in due course of an instrument taken (1) by legal
process or by purchase in an execution, bankruptcy, or creditor's
sale or similar proceeding, (2) by purchase as part of a bulk
transaction not in ordinary course of business of the transferor, or
(3) as the successor in interest to an estate or other organization.
(d) If, under paragraph (1) of subdivision (a) of Section 3303,
the promise of performance that is the consideration for an
instrument has been partially performed, the holder may assert rights
as a holder in due course of the instrument only to the fraction of
the amount payable under the instrument equal to the value of the
partial performance divided by the value of the promised performance.
(e) If (1) the person entitled to enforce an instrument has only a
security interest in the instrument and (2) the person obliged to
pay the instrument has a defense, claim in recoupment, or claim to
the instrument that may be asserted against the person who granted
the security interest, the person entitled to enforce the instrument
may assert rights as a holder in due course only to an amount payable
under the instrument which, at the time of enforcement of the
instrument, does not exceed the amount of the unpaid obligation
secured.
(f) To be effective, notice shall be received at a time and in a
manner that gives a reasonable opportunity to act on it.
(g) This section is subject to any law limiting status as a holder
in due course in particular classes of transactions.
3303. (a) An instrument is issued or transferred for value if any
of the following apply:
(1) The instrument is issued or transferred for a promise of
performance, to the extent the promise has been performed.
(2) The transferee acquires a security interest or other lien in
the instrument other than a lien obtained by judicial proceeding.
(3) The instrument is issued or transferred as payment of, or as
security for, an antecedent claim against any person, whether or not
the claim is due.
(4) The instrument is issued or transferred in exchange for a
negotiable instrument.
(5) The instrument is issued or transferred in exchange for the
incurring of an irrevocable obligation to a third party by the person
taking the instrument.
(b) "Consideration" means any consideration sufficient to support
a simple contract. The drawer or maker of an instrument has a defense
if the instrument is issued without consideration. If an instrument
is issued for a promise of performance, the issuer has a defense to
the extent performance of the promise is due and the promise has not
been performed. If an instrument is issued for value as stated in
subdivision (a), the instrument is also issued for consideration.
3304. (a) An instrument payable on demand becomes overdue at the
earliest of the following times:
(1) On the day after the day demand for payment is duly made.
(2) If the instrument is a check, 90 days after its date.
(3) If the instrument is not a check, when the instrument has been
outstanding for a period of time after its date which is
unreasonably long under the circumstances of the particular case in
light of the nature of the instrument and usage of the trade.
(b) With respect to an instrument payable at a definite time the
following rules apply:
(1) If the principal is payable in installments and a due date has
not been accelerated, the instrument becomes overdue upon default
under the instrument for nonpayment of an installment, and the
instrument remains overdue until the default is cured.
(2) If the principal is not payable in installments and the due
date has not been accelerated, the instrument becomes overdue on the
day after the due date.
(3) If a due date with respect to principal has been accelerated,
the instrument becomes overdue on the day after the accelerated due
date.
(c) Unless the due date of principal has been accelerated, an
instrument does not become overdue if there is default in payment of
interest but no default in payment of principal.
3305. (a) Except as stated in subdivision (b), the right to enforce
the obligation of a party to pay an instrument is subject to all of
the following:
(1) A defense of the obligor based on (A) infancy of the obligor
to the extent it is a defense to a simple contract, (B) duress, lack
of legal capacity, or illegality of the transaction which, under
other law, nullifies the obligation of the obligor, (C) fraud that
induced the obligor to sign the instrument with neither knowledge nor
reasonable opportunity to learn of its character or its essential
terms, or (D) discharge of the obligor in insolvency proceedings.
(2) A defense of the obligor stated in another section of this
division or a defense of the obligor that would be available if the
person entitled to enforce the instrument were enforcing a right to
payment under a simple contract.
(3) A claim in recoupment of the obligor against the original
payee of the instrument if the claim arose from the transaction that
gave rise to the instrument; but the claim of the obligor may be
asserted against a transferee of the instrument only to reduce the
amount owing on the instrument at the time the action is brought.
(b) The right of a holder in due course to enforce the obligation
of a party to pay the instrument is subject to defenses of the
obligor stated in paragraph (1) of subdivision (a), but is not
subject to defenses of the obligor stated in paragraph (2) of
subdivision (a) or claims in recoupment stated in paragraph (3) of
subdivision (a) against a person other than the holder.
(c) Except as stated in subdivision (d), in an action to enforce
the obligation of a party to pay the instrument, the obligor may not
assert against the person entitled to enforce the instrument a
defense, claim in recoupment, or claim to the instrument (Section
3306) of another person, but the other person's claim to the
instrument may be asserted by the obligor if the other person is
joined in the action and personally asserts the claim against the
person entitled to enforce the instrument. An obligor is not obliged
to pay the instrument if the person seeking enforcement of the
instrument does not have rights of a holder in due course and the
obligor proves that the instrument is a lost or stolen instrument.
(d) In an action to enforce the obligation of an accommodation
party to pay an instrument, the accommodation party may assert
against the person entitled to enforce the instrument any defense or
claim in recoupment under subdivision (a) that the accommodated party
could assert against the person entitled to enforce the instrument,
except the defenses of discharge in insolvency proceedings, infancy,
and lack of legal capacity.
3306. A person taking an instrument, other than a person having
rights of a holder in due course, is subject to a claim of a property
or possessory right in the instrument or its proceeds, including a
claim to rescind a negotiation and to recover the instrument or its
proceeds. A person having rights of a holder in due course takes free
of the claim to the instrument.
3307. (a) In this section:
(1) "Fiduciary" means an agent, trustee, partner, corporate
officer or director, limited liability company manager, or other
representative owing a fiduciary duty with respect to an instrument.
(2) "Represented person" means the principal, beneficiary,
partnership, corporation, limited liability company, or other person
to whom the duty stated in paragraph (1) is owed.
(b) If (i) an instrument is taken from a fiduciary for payment or
collection or for value, (ii) the taker has knowledge of the
fiduciary status of the fiduciary, and (iii) the represented person
makes a claim to the instrument or its proceeds on the basis that the
transaction of the fiduciary is a breach of fiduciary duty, the
following rules apply:
(1) Notice of breach of fiduciary duty by the fiduciary is notice
of the claim of the represented person.
(2) In the case of an instrument payable to the represented person
or the fiduciary as such, the taker has notice of the breach of
fiduciary duty if the instrument is (A) taken in payment of or as
security for a debt known by the taker to be the personal debt of the
fiduciary, (B) taken in a transaction known by the taker to be for
the personal benefit of the fiduciary, or (C) deposited to an account
other than an account of the fiduciary, as such, or an account of
the represented person.
(3) If an instrument is issued by the represented person or the
fiduciary as such, and made payable to the fiduciary personally, the
taker does not have notice of the breach of fiduciary duty unless the
taker knows of the breach of fiduciary duty.
(4) If an instrument is issued by the represented person or the
fiduciary as such, to the taker as payee, the taker has notice of the
breach of fiduciary duty if the instrument is (A) taken in payment
of or as security for a debt known by the taker to be the personal
debt of the fiduciary, (B) taken in a transaction known by the taker
to be for the personal benefit of the fiduciary, or (C) deposited to
an account other than an account of the fiduciary, as such, or an
account of the represented person.
3308. (a) In an action with respect to an instrument, the
authenticity of, and authority to make, each signature on the
instrument is admitted unless specifically denied in the pleadings.
If the validity of a signature is denied in the pleadings, the burden
of establishing validity is on the person claiming validity, but the
signature is presumed to be authentic and authorized unless the
action is to enforce the liability of the purported signer and the
signer is dead or incompetent at the time of trial of the issue of
validity of the signature. If an action to enforce the instrument is
brought against a person as the undisclosed principal of a person who
signed the instrument as a party to the instrument, the plaintiff
has the burden of establishing that the defendant is liable on the
instrument as a represented person under subdivision (a) of Section
3402.
(b) If the validity of signatures is admitted or proved and there
is compliance with subdivision (a), a plaintiff producing the
instrument is entitled to payment if the plaintiff proves entitlement
to enforce the instrument under Section 3301, unless the defendant
proves a defense or claim in recoupment. If a defense or claim in
recoupment is proved, the right to payment of the plaintiff is
subject to the defense or claim, except to the extent the plaintiff
proves that the plaintiff has rights of a holder in due course which
are not subject to the defense or claim.
3309. (a) A person not in possession of an instrument is entitled
to enforce the instrument if (1) the person was in possession of the
instrument and entitled to enforce it when loss of possession
occurred, (2) the loss of possession was not the result of a transfer
by the person or a lawful seizure, and (3) the person cannot
reasonably obtain possession of the instrument because the instrument
was destroyed, its whereabouts cannot be determined, or it is in the
wrongful possession of an unknown person or a person that cannot be
found or is not amenable to service of process.
(b) A person seeking enforcement of an instrument under
subdivision (a) shall prove the terms of the instrument and the
person's right to enforce the instrument. If that proof is made,
Section 3308 applies to the case as if the person seeking enforcement
had produced the instrument. The court may not enter judgment in
favor of the person seeking enforcement unless it finds that the
person required to pay the instrument is adequately protected against
loss that might occur by reason of a claim by another person to
enforce the instrument. Adequate protection may be provided by any
reasonable means.
3310. (a) 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.
(b) Unless otherwise agreed and except as provided in subdivision
(a), 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, and the following rules apply:
(1) In the case of an uncertified check, suspension of the
obligation continues until dishonor of the check or until it is paid
or certified. Payment or certification of the check results in
discharge of the obligation to the extent of the amount of the check.
(2) In the case of a note, suspension of the obligation continues
until dishonor of the note or until it is paid. Payment of the note
results in discharge of the obligation to the extent of the payment.
(3) Except as provided in paragraph (4), if the check or note is
dishonored and the obligee of the obligation for which the instrument
was taken is the person entitled to enforce the instrument, the
obligee may enforce either the instrument or the obligation. In the
case of an instrument of a third person which is negotiated to the
obligee by the obligor, discharge of the obligor on the instrument
also discharges the obligation.
(4) If the person entitled to enforce the instrument taken for an
obligation is a person other than the obligee, the obligee may not
enforce the obligation to the extent the obligation is suspended. If
the obligee is the person entitled to enforce the instrument but no
longer has possession of it because it was lost, stolen, or
destroyed, the obligation may not be enforced to the extent of the
amount payable on the instrument, and to that extent the obligee's
rights against the obligor are limited to enforcement of the
instrument.
(c) If an instrument other than one described in subdivision (a)
or (b) is taken for an obligation, the effect is (1) that stated in
subdivision (a) if the instrument is one on which a bank is liable as
maker or acceptor, or (2) that stated in subdivision (b) in any
other case.
3311. (a) If a person against whom a claim is asserted proves that
(1) that person in good faith tendered an instrument to the claimant
as full satisfaction of the claim, (2) the amount of the claim was
unliquidated or subject to a bona fide dispute, and (3) the claimant
obtained payment of the instrument, the following subdivisions apply.
(b) Unless subdivision (c) applies, the claim is discharged if the
person against whom the claim is asserted proves that the instrument
or an accompanying written communication contained a conspicuous
statement to the effect that the instrument was tendered as full
satisfaction of the claim.
(c) Subject to subdivision (d), a claim is not discharged under
subdivision (b) if either of the following applies:
(1) The claimant, if an organization, proves that (A) within a
reasonable time before the tender, the claimant sent a conspicuous
statement to the person against whom the claim is asserted that
communications concerning disputed debts, including an instrument
tendered as full satisfaction of a debt, are to be sent to a
designated person, office, or place, and (B) the instrument or
accompanying communication was not received by that designated
person, office, or place.
(2) The claimant, whether or not an organization, proves that
within 90 days after payment of the instrument, the claimant tendered
repayment of the amount of the instrument to the person against whom
the claim is asserted. This paragraph does not apply if the claimant
is an organization that sent a statement complying with subparagraph
(A) of paragraph (1).
(d) A claim is discharged if the person against whom the claim is
asserted proves that within a reasonable time before collection of
the instrument was initiated, the claimant, or an agent of the
claimant having direct responsibility with respect to the disputed
obligation, knew that the instrument was tendered in full
satisfaction of the claim.
3312. (a) In this section:
(1) "Check" means a cashier's check, teller's check, or certified
check.
(2) "Claimant" means a person who claims the right to receive the
amount of a cashier's check, teller's check, or certified check that
was lost, destroyed, or stolen.
(3) "Declaration of loss" means a written statement, made under
penalty of perjury, to the effect that (i) the declarer lost
possession of a check, (ii) the declarer is the drawer or payee of
the check, in the case of a certified check, or the remitter or payee
of the check, in the case of a cashier's check or teller's check,
(iii) the loss of possession was not the result of a transfer by the
declarer or a lawful seizure, and (iv) the declarer cannot reasonably
obtain possession of the check because the check was destroyed, its
whereabouts cannot be determined, or it is in the wrongful possession
of an unknown person or a person that cannot be found or is not
amenable to service of process.
(4) "Obligated bank" means the issuer of a cashier's check or
teller's check or the acceptor of a certified check.
(b) A claimant may assert a claim to the amount of a check by a
communication to the obligated bank describing the check with
reasonable certainty and requesting payment of the amount of the
check, if (i) the claimant is the drawer or payee of a certified
check or the remitter or payee of a cashier's check or teller's
check, (ii) the communication contains or is accompanied by a
declaration of loss of the claimant with respect to the check, (iii)
the communication is received at a time and in a manner affording the
bank a reasonable time to act on it before the check is paid, and
(iv) the claimant provides reasonable identification if requested by
the obligated bank. Delivery of a declaration of loss is a warranty
of the truth of the statements made in the declaration. The warranty
is made to the obligated bank and any person entitled to enforce the
check. If a claim is asserted in compliance with this subdivision,
the following rules apply:
(1) The claim becomes enforceable at the later of (i) the time the
claim is asserted, or (ii) the 90th day following the date of the
check, in the case of a cashier's check or teller's check, or the
90th day following the date of the acceptance, in the case of a
certified check.
(2) Until the claim becomes enforceable, it has no legal effect
and the obligated bank may pay the check or, in the case of a teller'
s check, may permit the drawee to pay the check. Payment to a person
entitled to enforce the check discharges all liability of the
obligated bank with respect to the check.
(3) If the claim becomes enforceable before the check is presented
for payment, the obligated bank is not obliged to pay the check.
(4) When the claim becomes enforceable, the obligated bank becomes
obliged to pay the amount of the check to the claimant if payment of
the check has not been made to a person entitled to enforce the
check. Subject to paragraph (1) of subdivision (a) of Section 4302,
payment to the claimant discharges all liability of the obligated
bank with respect to the check.
(c) If the obligated bank pays the amount of a check to a claimant
under paragraph (4) of subdivision (b) and, after the claim became
enforceable, the check is presented for payment by a person having
rights of a holder in due course, the claimant is obliged to (i)
refund the payment to the obligated bank if the check is paid, or
(ii) pay the amount of the check to the person having rights of a
holder in due course if the check is dishonored.
(d) If a claimant has the right to assert a claim under
subdivision (b) and is also a person entitled to enforce a cashier's
check, teller's check, or certified check which is lost, destroyed,
or stolen, the claimant may assert rights with respect to the check
either under this section or Section 3309.
3301. "Person entitled to enforce" an instrument means (a) the
holder of the instrument, (b) a nonholder in possession of the
instrument who has the rights of a holder, or (c) a person not in
possession of the instrument who is entitled to enforce the
instrument pursuant to Section 3309 or subdivision (d) of Section
3418. A person may be a person entitled to enforce the instrument
even though the person is not the owner of the instrument or is in
wrongful possession of the instrument.
3302. (a) Subject to subdivision (c) and subdivision (d) of Section
3106, "holder in due course" means the holder of an instrument if
both of the following apply:
(1) The instrument when issued or negotiated to the holder does
not bear such apparent evidence of forgery or alteration or is not
otherwise so irregular or incomplete as to call into question its
authenticity.
(2) The holder took the instrument (A) for value, (B) in good
faith, (C) without notice that the instrument is overdue or has been
dishonored or that there is an uncured default with respect to
payment of another instrument issued as part of the same series, (D)
without notice that the instrument contains an unauthorized signature
or has been altered, (E) without notice of any claim to the
instrument described in Section 3306, and (F) without notice that any
party has a defense or claim in recoupment described in subdivision
(a) of Section 3305.
(b) Notice of discharge of a party, other than discharge in an
insolvency proceeding, is not notice of a defense under subdivision
(a), but discharge is effective against a person who became a holder
in due course with notice of the discharge. Public filing or
recording of a document does not of itself constitute notice of a
defense, claim in recoupment, or claim to the instrument.
(c) Except to the extent a transferor or predecessor in interest
has rights as a holder in due course, a person does not acquire
rights of a holder in due course of an instrument taken (1) by legal
process or by purchase in an execution, bankruptcy, or creditor's
sale or similar proceeding, (2) by purchase as part of a bulk
transaction not in ordinary course of business of the transferor, or
(3) as the successor in interest to an estate or other organization.
(d) If, under paragraph (1) of subdivision (a) of Section 3303,
the promise of performance that is the consideration for an
instrument has been partially performed, the holder may assert rights
as a holder in due course of the instrument only to the fraction of
the amount payable under the instrument equal to the value of the
partial performance divided by the value of the promised performance.
(e) If (1) the person entitled to enforce an instrument has only a
security interest in the instrument and (2) the person obliged to
pay the instrument has a defense, claim in recoupment, or claim to
the instrument that may be asserted against the person who granted
the security interest, the person entitled to enforce the instrument
may assert rights as a holder in due course only to an amount payable
under the instrument which, at the time of enforcement of the
instrument, does not exceed the amount of the unpaid obligation
secured.
(f) To be effective, notice shall be received at a time and in a
manner that gives a reasonable opportunity to act on it.
(g) This section is subject to any law limiting status as a holder
in due course in particular classes of transactions.
3303. (a) An instrument is issued or transferred for value if any
of the following apply:
(1) The instrument is issued or transferred for a promise of
performance, to the extent the promise has been performed.
(2) The transferee acquires a security interest or other lien in
the instrument other than a lien obtained by judicial proceeding.
(3) The instrument is issued or transferred as payment of, or as
security for, an antecedent claim against any person, whether or not
the claim is due.
(4) The instrument is issued or transferred in exchange for a
negotiable instrument.
(5) The instrument is issued or transferred in exchange for the
incurring of an irrevocable obligation to a third party by the person
taking the instrument.
(b) "Consideration" means any consideration sufficient to support
a simple contract. The drawer or maker of an instrument has a defense
if the instrument is issued without consideration. If an instrument
is issued for a promise of performance, the issuer has a defense to
the extent performance of the promise is due and the promise has not
been performed. If an instrument is issued for value as stated in
subdivision (a), the instrument is also issued for consideration.
3304. (a) An instrument payable on demand becomes overdue at the
earliest of the following times:
(1) On the day after the day demand for payment is duly made.
(2) If the instrument is a check, 90 days after its date.
(3) If the instrument is not a check, when the instrument has been
outstanding for a period of time after its date which is
unreasonably long under the circumstances of the particular case in
light of the nature of the instrument and usage of the trade.
(b) With respect to an instrument payable at a definite time the
following rules apply:
(1) If the principal is payable in installments and a due date has
not been accelerated, the instrument becomes overdue upon default
under the instrument for nonpayment of an installment, and the
instrument remains overdue until the default is cured.
(2) If the principal is not payable in installments and the due
date has not been accelerated, the instrument becomes overdue on the
day after the due date.
(3) If a due date with respect to principal has been accelerated,
the instrument becomes overdue on the day after the accelerated due
date.
(c) Unless the due date of principal has been accelerated, an
instrument does not become overdue if there is default in payment of
interest but no default in payment of principal.
3305. (a) Except as stated in subdivision (b), the right to enforce
the obligation of a party to pay an instrument is subject to all of
the following:
(1) A defense of the obligor based on (A) infancy of the obligor
to the extent it is a defense to a simple contract, (B) duress, lack
of legal capacity, or illegality of the transaction which, under
other law, nullifies the obligation of the obligor, (C) fraud that
induced the obligor to sign the instrument with neither knowledge nor
reasonable opportunity to learn of its character or its essential
terms, or (D) discharge of the obligor in insolvency proceedings.
(2) A defense of the obligor stated in another section of this
division or a defense of the obligor that would be available if the
person entitled to enforce the instrument were enforcing a right to
payment under a simple contract.
(3) A claim in recoupment of the obligor against the original
payee of the instrument if the claim arose from the transaction that
gave rise to the instrument; but the claim of the obligor may be
asserted against a transferee of the instrument only to reduce the
amount owing on the instrument at the time the action is brought.
(b) The right of a holder in due course to enforce the obligation
of a party to pay the instrument is subject to defenses of the
obligor stated in paragraph (1) of subdivision (a), but is not
subject to defenses of the obligor stated in paragraph (2) of
subdivision (a) or claims in recoupment stated in paragraph (3) of
subdivision (a) against a person other than the holder.
(c) Except as stated in subdivision (d), in an action to enforce
the obligation of a party to pay the instrument, the obligor may not
assert against the person entitled to enforce the instrument a
defense, claim in recoupment, or claim to the instrument (Section
3306) of another person, but the other person's claim to the
instrument may be asserted by the obligor if the other person is
joined in the action and personally asserts the claim against the
person entitled to enforce the instrument. An obligor is not obliged
to pay the instrument if the person seeking enforcement of the
instrument does not have rights of a holder in due course and the
obligor proves that the instrument is a lost or stolen instrument.
(d) In an action to enforce the obligation of an accommodation
party to pay an instrument, the accommodation party may assert
against the person entitled to enforce the instrument any defense or
claim in recoupment under subdivision (a) that the accommodated party
could assert against the person entitled to enforce the instrument,
except the defenses of discharge in insolvency proceedings, infancy,
and lack of legal capacity.
3306. A person taking an instrument, other than a person having
rights of a holder in due course, is subject to a claim of a property
or possessory right in the instrument or its proceeds, including a
claim to rescind a negotiation and to recover the instrument or its
proceeds. A person having rights of a holder in due course takes free
of the claim to the instrument.
3307. (a) In this section:
(1) "Fiduciary" means an agent, trustee, partner, corporate
officer or director, limited liability company manager, or other
representative owing a fiduciary duty with respect to an instrument.
(2) "Represented person" means the principal, beneficiary,
partnership, corporation, limited liability company, or other person
to whom the duty stated in paragraph (1) is owed.
(b) If (i) an instrument is taken from a fiduciary for payment or
collection or for value, (ii) the taker has knowledge of the
fiduciary status of the fiduciary, and (iii) the represented person
makes a claim to the instrument or its proceeds on the basis that the
transaction of the fiduciary is a breach of fiduciary duty, the
following rules apply:
(1) Notice of breach of fiduciary duty by the fiduciary is notice
of the claim of the represented person.
(2) In the case of an instrument payable to the represented person
or the fiduciary as such, the taker has notice of the breach of
fiduciary duty if the instrument is (A) taken in payment of or as
security for a debt known by the taker to be the personal debt of the
fiduciary, (B) taken in a transaction known by the taker to be for
the personal benefit of the fiduciary, or (C) deposited to an account
other than an account of the fiduciary, as such, or an account of
the represented person.
(3) If an instrument is issued by the represented person or the
fiduciary as such, and made payable to the fiduciary personally, the
taker does not have notice of the breach of fiduciary duty unless the
taker knows of the breach of fiduciary duty.
(4) If an instrument is issued by the represented person or the
fiduciary as such, to the taker as payee, the taker has notice of the
breach of fiduciary duty if the instrument is (A) taken in payment
of or as security for a debt known by the taker to be the personal
debt of the fiduciary, (B) taken in a transaction known by the taker
to be for the personal benefit of the fiduciary, or (C) deposited to
an account other than an account of the fiduciary, as such, or an
account of the represented person.
3308. (a) In an action with respect to an instrument, the
authenticity of, and authority to make, each signature on the
instrument is admitted unless specifically denied in the pleadings.
If the validity of a signature is denied in the pleadings, the burden
of establishing validity is on the person claiming validity, but the
signature is presumed to be authentic and authorized unless the
action is to enforce the liability of the purported signer and the
signer is dead or incompetent at the time of trial of the issue of
validity of the signature. If an action to enforce the instrument is
brought against a person as the undisclosed principal of a person who
signed the instrument as a party to the instrument, the plaintiff
has the burden of establishing that the defendant is liable on the
instrument as a represented person under subdivision (a) of Section
3402.
(b) If the validity of signatures is admitted or proved and there
is compliance with subdivision (a), a plaintiff producing the
instrument is entitled to payment if the plaintiff proves entitlement
to enforce the instrument under Section 3301, unless the defendant
proves a defense or claim in recoupment. If a defense or claim in
recoupment is proved, the right to payment of the plaintiff is
subject to the defense or claim, except to the extent the plaintiff
proves that the plaintiff has rights of a holder in due course which
are not subject to the defense or claim.
3309. (a) A person not in possession of an instrument is entitled
to enforce the instrument if (1) the person was in possession of the
instrument and entitled to enforce it when loss of possession
occurred, (2) the loss of possession was not the result of a transfer
by the person or a lawful seizure, and (3) the person cannot
reasonably obtain possession of the instrument because the instrument
was destroyed, its whereabouts cannot be determined, or it is in the
wrongful possession of an unknown person or a person that cannot be
found or is not amenable to service of process.
(b) A person seeking enforcement of an instrument under
subdivision (a) shall prove the terms of the instrument and the
person's right to enforce the instrument. If that proof is made,
Section 3308 applies to the case as if the person seeking enforcement
had produced the instrument. The court may not enter judgment in
favor of the person seeking enforcement unless it finds that the
person required to pay the instrument is adequately protected against
loss that might occur by reason of a claim by another person to
enforce the instrument. Adequate protection may be provided by any
reasonable means.
3310. (a) 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.
(b) Unless otherwise agreed and except as provided in subdivision
(a), 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, and the following rules apply:
(1) In the case of an uncertified check, suspension of the
obligation continues until dishonor of the check or until it is paid
or certified. Payment or certification of the check results in
discharge of the obligation to the extent of the amount of the check.
(2) In the case of a note, suspension of the obligation continues
until dishonor of the note or until it is paid. Payment of the note
results in discharge of the obligation to the extent of the payment.
(3) Except as provided in paragraph (4), if the check or note is
dishonored and the obligee of the obligation for which the instrument
was taken is the person entitled to enforce the instrument, the
obligee may enforce either the instrument or the obligation. In the
case of an instrument of a third person which is negotiated to the
obligee by the obligor, discharge of the obligor on the instrument
also discharges the obligation.
(4) If the person entitled to enforce the instrument taken for an
obligation is a person other than the obligee, the obligee may not
enforce the obligation to the extent the obligation is suspended. If
the obligee is the person entitled to enforce the instrument but no
longer has possession of it because it was lost, stolen, or
destroyed, the obligation may not be enforced to the extent of the
amount payable on the instrument, and to that extent the obligee's
rights against the obligor are limited to enforcement of the
instrument.
(c) If an instrument other than one described in subdivision (a)
or (b) is taken for an obligation, the effect is (1) that stated in
subdivision (a) if the instrument is one on which a bank is liable as
maker or acceptor, or (2) that stated in subdivision (b) in any
other case.
3311. (a) If a person against whom a claim is asserted proves that
(1) that person in good faith tendered an instrument to the claimant
as full satisfaction of the claim, (2) the amount of the claim was
unliquidated or subject to a bona fide dispute, and (3) the claimant
obtained payment of the instrument, the following subdivisions apply.
(b) Unless subdivision (c) applies, the claim is discharged if the
person against whom the claim is asserted proves that the instrument
or an accompanying written communication contained a conspicuous
statement to the effect that the instrument was tendered as full
satisfaction of the claim.
(c) Subject to subdivision (d), a claim is not discharged under
subdivision (b) if either of the following applies:
(1) The claimant, if an organization, proves that (A) within a
reasonable time before the tender, the claimant sent a conspicuous
statement to the person against whom the claim is asserted that
communications concerning disputed debts, including an instrument
tendered as full satisfaction of a debt, are to be sent to a
designated person, office, or place, and (B) the instrument or
accompanying communication was not received by that designated
person, office, or place.
(2) The claimant, whether or not an organization, proves that
within 90 days after payment of the instrument, the claimant tendered
repayment of the amount of the instrument to the person against whom
the claim is asserted. This paragraph does not apply if the claimant
is an organization that sent a statement complying with subparagraph
(A) of paragraph (1).
(d) A claim is discharged if the person against whom the claim is
asserted proves that within a reasonable time before collection of
the instrument was initiated, the claimant, or an agent of the
claimant having direct responsibility with respect to the disputed
obligation, knew that the instrument was tendered in full
satisfaction of the claim.
3312. (a) In this section:
(1) "Check" means a cashier's check, teller's check, or certified
check.
(2) "Claimant" means a person who claims the right to receive the
amount of a cashier's check, teller's check, or certified check that
was lost, destroyed, or stolen.
(3) "Declaration of loss" means a written statement, made under
penalty of perjury, to the effect that (i) the declarer lost
possession of a check, (ii) the declarer is the drawer or payee of
the check, in the case of a certified check, or the remitter or payee
of the check, in the case of a cashier's check or teller's check,
(iii) the loss of possession was not the result of a transfer by the
declarer or a lawful seizure, and (iv) the declarer cannot reasonably
obtain possession of the check because the check was destroyed, its
whereabouts cannot be determined, or it is in the wrongful possession
of an unknown person or a person that cannot be found or is not
amenable to service of process.
(4) "Obligated bank" means the issuer of a cashier's check or
teller's check or the acceptor of a certified check.
(b) A claimant may assert a claim to the amount of a check by a
communication to the obligated bank describing the check with
reasonable certainty and requesting payment of the amount of the
check, if (i) the claimant is the drawer or payee of a certified
check or the remitter or payee of a cashier's check or teller's
check, (ii) the communication contains or is accompanied by a
declaration of loss of the claimant with respect to the check, (iii)
the communication is received at a time and in a manner affording the
bank a reasonable time to act on it before the check is paid, and
(iv) the claimant provides reasonable identification if requested by
the obligated bank. Delivery of a declaration of loss is a warranty
of the truth of the statements made in the declaration. The warranty
is made to the obligated bank and any person entitled to enforce the
check. If a claim is asserted in compliance with this subdivision,
the following rules apply:
(1) The claim becomes enforceable at the later of (i) the time the
claim is asserted, or (ii) the 90th day following the date of the
check, in the case of a cashier's check or teller's check, or the
90th day following the date of the acceptance, in the case of a
certified check.
(2) Until the claim becomes enforceable, it has no legal effect
and the obligated bank may pay the check or, in the case of a teller'
s check, may permit the drawee to pay the check. Payment to a person
entitled to enforce the check discharges all liability of the
obligated bank with respect to the check.
(3) If the claim becomes enforceable before the check is presented
for payment, the obligated bank is not obliged to pay the check.
(4) When the claim becomes enforceable, the obligated bank becomes
obliged to pay the amount of the check to the claimant if payment of
the check has not been made to a person entitled to enforce the
check. Subject to paragraph (1) of subdivision (a) of Section 4302,
payment to the claimant discharges all liability of the obligated
bank with respect to the check.
(c) If the obligated bank pays the amount of a check to a claimant
under paragraph (4) of subdivision (b) and, after the claim became
enforceable, the check is presented for payment by a person having
rights of a holder in due course, the claimant is obliged to (i)
refund the payment to the obligated bank if the check is paid, or
(ii) pay the amount of the check to the person having rights of a
holder in due course if the check is dishonored.
(d) If a claimant has the right to assert a claim under
subdivision (b) and is also a person entitled to enforce a cashier's
check, teller's check, or certified check which is lost, destroyed,
or stolen, the claimant may assert rights with respect to the check
either under this section or Section 3309.
