§490:3-310  Effect of instrument on
obligation for which taken.  (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 subsection (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 subsection (a) or (b) is taken for an obligation, the effect is (i) that
stated in subsection (a) if the instrument is one on which a bank is liable as
maker or acceptor, or (ii) that stated in subsection (b) in any other case. [L
1991, c 118, pt of §1]