Substitute House Bill No. 7341
Substitute House Bill No. 7341
PUBLIC ACT NO. 91-304
AN ACT REVISING ARTICLES 3 AND 4 OF THE UNIFORM
COMMERCIAL CODE CONCERNING NEGOTIABLE INSTRUMENTS
AND BANK DEPOSITS AND COLLECTIONS.
Section 1. Section 42a-3-101 of the general
statutes is repealed and the following is
substituted in lieu thereof:
[This article shall be known and may be cited
as Uniform Commercial Code--Commercial Paper.]
THIS ARTICLE MAY BE CITED AS UNIFORM
COMMERCIAL CODE--NEGOTIABLE INSTRUMENTS.
Sec. 2. Section 42a-3-102 of the general
statutes is repealed and the following is
substituted in lieu thereof:
[(1) In this article unless the context
otherwise requires: (a) "Issue" means the first
delivery of an instrument to a holder or a
remitter. (b) An "order" is a direction to pay and
must be more than an authorization or request. It
must identify the person to pay with reasonable
certainty. It may be addressed to one or more such
persons jointly or in the alternative but not in
succession. (c) A "promise" is an undertaking to
pay and must be more than an acknowledgment of an
obligation. (d) "Secondary party" means a drawer
or endorser. (e) "Instrument" means a negotiable
instrument.
(2) Other definitions applying to this article
and the sections in which they appear are:
"Acceptance". Section 42a-3-410.
"Accommodation party". Section 42a-3-415.
"Alteration". Section 42a-3-407.
"Certificate of deposit". Section 42a-3-104.
"Certification". Section 42a-3-411.
"Check". Section 42a-3-104.
"Definite time". Section 42a-3-109.
"Dishonor". Section 42a-3-507.
"Draft". Section 42a-3-104.
"Holder in due course". Section 42a-3-302.
"Negotiation". Section 42a-3-202.
"Note". Section 42a-3-104.
"Notice of dishonor". Section 42a-3-508.
"On demand". Section 42a-3-108.
"Presentment". Section 42a-3-504.
"Protest". Section 42a-3-509.
"Restrictive endorsement". Section 42a-3-205.
"Signature". Section 42a-3-401.
(3) The following definitions in other
articles apply to this article:
"Account". Section 42a-4-104.
"Banking day". Section 42a-4-104.
"Clearing house". Section 42a-4-104.
"Collecting bank". Section 42a-4-105.
"Customer". Section 42a-4-104.
"Depositary bank". Section 42a-4-105.
"Documentary draft". Section 42a-4-104.
"Intermediary bank". Section 42a-4-105.
"Item". Section 42a-4-104.
"Midnight deadline". Section 42a-4-104.
"Payor bank". Section 42a-4-105.
(4) In addition article 1 contains general
definitions and principles of construction and
interpretation applicable throughout this
article.]
(a) THIS ARTICLE APPLIES TO NEGOTIABLE
INSTRUMENTS. IT DOES NOT APPLY TO MONEY, TO
PAYMENT ORDERS GOVERNED BY ARTICLE 4A, OR TO
SECURITIES GOVERNED BY ARTICLE 8.
(b) IF THERE IS CONFLICT BETWEEN THIS ARTICLE
AND ARTICLE 4 OR 9, ARTICLES 4 AND 9 GOVERN.
(c) REGULATIONS OF THE BOARD OF GOVERNORS OF
THE FEDERAL RESERVE SYSTEM AND OPERATING CIRCULARS
OF THE FEDERAL RESERVE BANKS SUPERSEDE ANY
INCONSISTENT PROVISION OF THIS ARTICLE TO THE
EXTENT OF THE INCONSISTENCY.
Sec. 3. Section 42a-3-103 of the general
statutes is repealed and the following is
substituted in lieu thereof:
[(1) This article does not apply to money,
documents of title or investment securities.
(2) The provisions of this article are subject
to the provisions of articles 4 and 9.]
(a) IN THIS ARTICLE:
(1) "ACCEPTOR" MEANS A DRAWEE WHO HAS ACCEPTED
A DRAFT.
(2) "DRAWEE" MEANS A PERSON ORDERED IN A DRAFT
TO MAKE PAYMENT.
(3) "DRAWER" MEANS A PERSON WHO SIGNS OR IS
IDENTIFIED IN A DRAFT AS A PERSON ORDERING
PAYMENT.
(4) "GOOD FAITH" MEANS HONESTY IN FACT AND THE
OBSERVANCE OF REASONABLE COMMERCIAL STANDARDS OF
FAIR DEALING.
(5) "MAKER" MEANS A PERSON WHO SIGNS OR IS
IDENTIFIED IN A NOTE AS A PERSON UNDERTAKING TO
PAY.
(6) "ORDER" MEANS A WRITTEN INSTRUCTION TO PAY
MONEY SIGNED BY THE PERSON GIVING THE INSTRUCTION.
THE INSTRUCTION MAY BE ADDRESSED TO ANY PERSON,
INCLUDING THE PERSON GIVING THE INSTRUCTION, OR
TO ONE OR MORE PERSONS JOINTLY OR IN THE
ALTERNATIVE BUT NOT IN SUCCESSION. AN
AUTHORIZATION TO PAY IS NOT AN ORDER UNLESS THE
PERSON AUTHORIZED TO PAY IS ALSO INSTRUCTED TO
PAY.
(7) "ORDINARY CARE" IN THE CASE OF A PERSON
ENGAGED IN BUSINESS MEANS OBSERVANCE OF REASONABLE
COMMERCIAL STANDARDS, PREVAILING IN THE AREA IN
WHICH THE PERSON IS LOCATED, WITH RESPECT TO THE
BUSINESS IN WHICH THE PERSON IS ENGAGED. IN THE
CASE OF A BANK THAT TAKES AN INSTRUMENT FOR
PROCESSING FOR COLLECTION OR PAYMENT BY AUTOMATED
MEANS, REASONABLE COMMERCIAL STANDARDS DO NOT
REQUIRE THE BANK TO EXAMINE THE INSTRUMENT IF THE
FAILURE TO EXAMINE DOES NOT VIOLATE THE BANK'S
PRESCRIBED PROCEDURES AND THE BANK'S PROCEDURES DO
NOT VARY UNREASONABLY FROM GENERAL BANKING USAGE
NOT DISAPPROVED BY THIS ARTICLE OR ARTICLE 4.
(8) "PARTY" MEANS A PARTY TO AN INSTRUMENT.
(9) "PROMISE" MEANS A WRITTEN UNDERTAKING TO
PAY MONEY SIGNED BY THE PERSON UNDERTAKING TO PAY.
AN ACKNOWLEDGMENT OF AN OBLIGATION BY THE OBLIGOR
IS NOT A PROMISE UNLESS THE OBLIGOR ALSO
UNDERTAKES TO PAY THE OBLIGATION.
(10) "PROVE" WITH RESPECT TO A FACT MEANS TO
MEET THE BURDEN OF ESTABLISHING THE FACT (SECTION
42a-1-201(8)).
(11) "REMITTER" MEANS A PERSON WHO PURCHASES
AN INSTRUMENT FROM ITS ISSUER IF THE INSTRUMENT IS
PAYABLE TO AN IDENTIFIED PERSON OTHER THAN THE
PURCHASER.
(b) OTHER DEFINITIONS APPLYING TO THIS ARTICLE
AND THE SECTIONS IN WHICH THEY APPEAR ARE:
"ACCEPTANCE". SECTION 42a-3-409.
"ACCOMMODATED PARTY". SECTION 42a-3-419.
"ACCOMMODATION PARTY". SECTION 42a-3-419.
"ALTERATION". SECTION 42a-3-407.
"ANOMALOUS INDORSEMENT". SECTION 42a-3-205.
"BLANK INDORSEMENT". SECTION 42a-3-205.
"CASHIER'S CHECK". SECTION 42a-3-104.
"CERTIFICATE OF DEPOSIT". SECTION 42a-3-104.
"CERTIFIED CHECK." SECTION 42a-3-409.
"CHECK". SECTION 42a-3-104.
"CONSIDERATION". SECTION 42a-3-303.
"DRAFT". SECTION 42a-3-104.
"HOLDER IN DUE COURSE". SECTION 42a-3-302.
"INCOMPLETE INSTRUMENT". SECTION 42a-3-115.
"INDORSEMENT". SECTION 42a-3-204.
"INDORSER". SECTION 42a-3-204.
"INSTRUMENT" SECTION 42a-3-104.
"ISSUE". SECTION 42a-3-105.
"ISSUER". SECTION 42a-3-105.
"NEGOTIABLE INSTRUMENT". SECTION 42a-3-104.
"NEGOTIATION". SECTION 42a-3-201.
"NOTE". SECTION 42a-3-104.
"PAYABLE AT A DEFINITE TIME". SECTION 42a-3-108.
"PAYABLE ON DEMAND". SECTION 42a-3-108.
"PAYABLE TO BEARER". SECTION 42a-3-109.
"PAYABLE TO ORDER". SECTION 42a-3-109.
"PAYMENT". SECTION 42a-3-602.
"PERSON ENTITLED TO ENFORCE". SECTION 42a-3-301.
"PRESENTMENT". SECTION 42a-3-501.
"REACQUISITION". SECTION 42a-3-207.
"SPECIAL INDORSEMENT". SECTION 42a-3-205.
"TELLER'S CHECK". SECTION 42a-3-104.
"TRANSFER OF INSTRUMENT". SECTION 42a-3-203.
"TRAVELER'S CHECK". SECTION 42a-3-104.
"VALUE". SECTION 42a-3-303.
(c) THE FOLLOWING DEFINITIONS IN OTHER
ARTICLES APPLY TO THIS ARTICLE:
"BANK". SECTION 42a-4-105.
"BANKING DAY". SECTION 42a-4-104.
"CLEARING HOUSE". SECTION 42a-4-104.
"COLLECTING BANK". SECTION 42a-4-105.
"DEPOSITARY BANK". SECTION 42a-4-105.
"DOCUMENTARY DRAFT" SECTION 42a-4-104.
"INTERMEDIARY BANK". SECTION 42a-4-105.
"ITEM". SECTION 42a-4-104.
"PAYOR BANK". SECTION 42a-4-105.
"SUSPENDS PAYMENTS". SECTION 42a-4-104.
(d) IN ADDITION, ARTICLE 1 CONTAINS GENERAL
DEFINITIONS AND PRINCIPLES OF CONSTRUCTION AND
INTERPRETATION APPLICABLE THROUGHOUT THIS ARTICLE.
Sec. 4. Section 42a-3-104 of the general
statutes is repealed and the following is
substituted in lieu thereof:
[(1) Any writing to be a negotiable instrument
within this article must (a) be signed by the
maker or drawer; and (b) contain an unconditional
promise or order to pay a sum certain in money and
no other promise, order, obligation or power given
by the maker or drawer except as authorized by
this article; and (c) be payable on demand or at a
definite time; and (d) be payable to order or to
bearer.
(2) A writing which complies with the
requirements of this section is (a) a "draft"
("bill of exchange") if it is an order; (b) a
"check" if it is a draft drawn on a bank and
payable on demand; (c) a "certificate of deposit"
if it is an acknowledgment by a bank of receipt of
money with an engagement to repay it; (d) a "note"
if it is a promise other than a certificate of
deposit.
(3) As used in other articles of this title,
and as the context may require, the terms "draft",
"check", "certificate of deposit", and "note" may
refer to instruments which are not negotiable
within this article as well as to instruments
which are so negotiable.]
(a) EXCEPT AS PROVIDED IN SUBSECTIONS (c) AND
(d), "NEGOTIABLE INSTRUMENT" MEANS AN
UNCONDITIONAL PROMISE OR ORDER TO PAY A FIXED
AMOUNT OF MONEY, WITH OR WITHOUT INTEREST OR OTHER
CHARGES DESCRIBED IN THE PROMISE OR ORDER, IF IT:
(1) IS PAYABLE TO BEARER OR TO ORDER AT THE
TIME IT IS ISSUED OR FIRST COMES INTO POSSESSION
OF A HOLDER;
(2) IS PAYABLE ON DEMAND OR AT A DEFINITE
TIME; AND
(3) DOES NOT STATE ANY OTHER UNDERTAKING OR
INSTRUCTION BY THE PERSON PROMISING OR ORDERING
PAYMENT TO DO ANY ACT IN ADDITION TO THE PAYMENT
OF MONEY, BUT THE PROMISE OR ORDER MAY CONTAIN (i)
AN UNDERTAKING OR POWER TO GIVE, MAINTAIN, OR
PROTECT COLLATERAL TO SECURE PAYMENT, (ii) AN
AUTHORIZATION OR POWER TO THE HOLDER TO CONFESS
JUDGMENT OR REALIZE ON OR DISPOSE OF COLLATERAL,
OR (iii) A WAIVER OF THE BENEFIT OF ANY LAW
INTENDED FOR THE ADVANTAGE OR PROTECTION OF AN
OBLIGOR.
(b) "INSTRUMENT" MEANS A NEGOTIABLE
INSTRUMENT.
(c) AN ORDER THAT MEETS ALL OF THE
REQUIREMENTS OF SUBSECTION (a), EXCEPT PARAGRAPH
(1), AND OTHERWISE FALLS WITHIN THE DEFINITION OF
"CHECK" IN SUBSECTION (f) IS A NEGOTIABLE
INSTRUMENT AND A CHECK.
(d) A PROMISE OR ORDER OTHER THAN A CHECK IS
NOT AN INSTRUMENT IF, AT THE TIME IT IS ISSUED OR
FIRST COMES INTO POSSESSION OF A HOLDER, IT
CONTAINS A CONSPICUOUS STATEMENT, HOWEVER
EXPRESSED, TO THE EFFECT THAT THE PROMISE OR ORDER
IS NOT NEGOTIABLE OR IS NOT AN INSTRUMENT GOVERNED
BY THIS ARTICLE.
(e) AN INSTRUMENT IS A "NOTE" IF IT IS A
PROMISE AND IS A "DRAFT" IF IT IS AN ORDER. IF AN
INSTRUMENT FALLS WITHIN THE DEFINITION OF BOTH
"NOTE" AND "DRAFT", A PERSON ENTITLED TO ENFORCE
THE INSTRUMENT MAY TREAT IT AS EITHER.
(f) "CHECK" MEANS (i) A DRAFT, OTHER THAN A
DOCUMENTARY DRAFT, PAYABLE ON DEMAND AND DRAWN ON
A BANK OR (ii) A CASHIER'S CHECK OR TELLER'S
CHECK. AN INSTRUMENT MAY BE A CHECK EVEN THOUGH IT
IS DESCRIBED ON ITS FACE BY ANOTHER TERM, SUCH A
"MONEY ORDER".
(g) "CASHIER'S CHECK" MEANS A DRAFT WITH
RESPECT TO WHICH THE DRAWER AND DRAWEE ARE THE
SAME BANK OR BRANCHES OF THE SAME BANK.
(h) "TELLER'S CHECK" MEANS A DRAFT DRAWN BY A
BANK (i) ON ANOTHER BANK, OR (ii) PAYABLE AT OR
THROUGH A BANK.
(i) "TRAVELER'S CHECK" MEANS AN INSTRUMENT
THAT (i) IS PAYABLE ON DEMAND, (ii) IS DRAWN ON OR
PAYABLE AT OR THROUGH A BANK, (iii) IS DESIGNATED
BY THE TERM "TRAVELER'S CHECK" OR BY A
SUBSTANTIALLY SIMILAR TERM, AND (iv) REQUIRES, AS
A CONDITION TO PAYMENT, A COUNTERSIGNATURE BY A
PERSON WHOSE SPECIMEN SIGNATURE APPEARS ON THE
INSTRUMENT.
(j) "CERTIFICATE OF DEPOSIT" MEANS AN
INSTRUMENT CONTAINING AN ACKNOWLEDGMENT BY A BANK
THAT A SUM OF MONEY HAS BEEN RECEIVED BY THE BANK
AND A PROMISE BY THE BANK TO REPAY THE SUM OF
MONEY. A CERTIFICATE OF DEPOSIT IS A NOTE OF THE
BANK.
Sec. 5. Section 42a-3-105 of the general
statutes is repealed and the following is
substituted in lieu thereof:
[(1) A promise or order otherwise
unconditional is not made conditional by the fact
that the instrument (a) is subject to implied or
constructive conditions; or (b) states its
consideration, whether performed or promised, or
the transaction which gave rise to the instrument,
or that the promise or order is made or the
instrument matures in accordance with or "as per"
such transaction; or (c) refers to or states that
it arises out of a separate agreement or refers to
a separate agreement for rights as to prepayment
or acceleration; or (d) states that it is drawn
under a letter of credit; or (e) states that it is
secured, whether by mortgage, reservation of title
or otherwise; or (f) indicates a particular
account to be debited or any other fund or source
from which reimbursement is expected; or (g) is
limited to payment out of a particular fund or the
proceeds of a particular source, if the instrument
is issued by a government or governmental agency
or unit; or (h) is limited to payment out of the
entire assets of a partnership, unincorporated
association, trust or estate by or on behalf of
which the instrument is issued.
(2) A promise or order is not unconditional if
the instrument (a) states that it is subject to or
governed by any other agreement; or (b) states
that it is to be paid only out of a particular
fund or source except as provided in this
section.]
(a) "ISSUE" MEANS THE FIRST DELIVERY OF AN
INSTRUMENT BY THE MAKER OR DRAWER, WHETHER TO A
HOLDER OR NONHOLDER, FOR THE PURPOSE OF GIVING
RIGHTS ON THE INSTRUMENT TO ANY PERSON.
(b) AN UNISSUED INSTRUMENT, OR AN UNISSUED
INCOMPLETE INSTRUMENT THAT IS COMPLETED, IS
BINDING ON THE MAKER OR DRAWER, BUT NONISSUANCE IS
A DEFENSE. AN INSTRUMENT THAT IS CONDITIONALLY
ISSUED OR IS ISSUED FOR A SPECIAL PURPOSE IS
BINDING ON THE MAKER OR DRAWER, BUT FAILURE OF THE
CONDITION OR SPECIAL PURPOSE TO BE FULFILLED IS A
DEFENSE.
(c) "ISSUER" APPLIES TO ISSUED AND UNISSUED
INSTRUMENTS AND MEANS A MAKER OR DRAWER OF AN
INSTRUMENT.
Sec. 6. Section 42a-3-106 of the general
statutes is repealed and the following is
substituted in lieu thereof:
[(1) The sum payable is a sum certain even
though it is to be paid (a) with stated interest
or by stated instalments; or (b) with stated
different rates of interest before and after
default or a specified date; or (c) with a stated
discount or addition if paid before or after the
date fixed for payment; or (d) with exchange or
less exchange, whether at a fixed rate or at the
current rate; or (e) with costs of collection or
an attorney's fee or both upon default; or (f)
with provision for payment by the maker of taxes
levied or assessed upon the instrument or the
indebtedness evidenced thereby.
(2) Nothing in this section shall validate any
term which is otherwise illegal.]
(a) EXCEPT AS PROVIDED IN THIS SECTION, FOR
THE PURPOSES OF SECTION 42a-3-104(a), A PROMISE OR
ORDER IS UNCONDITIONAL UNLESS IT STATES (i) AN
EXPRESS CONDITION TO PAYMENT, (ii) THAT THE
PROMISE OR ORDER IS SUBJECT TO OR GOVERNED BY
ANOTHER WRITING, OR (iii) THAT RIGHTS OR
OBLIGATIONS WITH RESPECT TO THE PROMISE OR ORDER
ARE STATED IN ANOTHER WRITING. A REFERENCE TO
ANOTHER WRITING DOES NOT OF ITSELF MAKE THE
PROMISE OR ORDER CONDITIONAL.
(b) A PROMISE OR ORDER IS NOT MADE CONDITIONAL
(i) BY A REFERENCE TO ANOTHER WRITING FOR A
STATEMENT OF RIGHTS WITH RESPECT TO COLLATERAL,
PREPAYMENT, OR ACCELERATION, OR (ii) BECAUSE
PAYMENT IS LIMITED TO RESORT TO A PARTICULAR FUND
OR SOURCE.
(c) IF A PROMISE OR ORDER REQUIRES, AS A
CONDITION TO PAYMENT, A COUNTERSIGNATURE BY A
PERSON WHOSE SPECIMEN SIGNATURE APPEARS ON THE
PROMISE OR ORDER, THE CONDITION DOES NOT MAKE THE
PROMISE OR ORDER CONDITIONAL FOR THE PURPOSES OF
SECTION 42a-3-104(a). IF THE PERSON WHOSE SPECIMEN
SIGNATURE APPEARS ON AN INSTRUMENT FAILS TO
COUNTERSIGN THE INSTRUMENT, THE FAILURE TO
COUNTERSIGN IS A DEFENSE TO THE OBLIGATION OF THE
ISSUER, BUT THE FAILURE DOES NOT PREVENT A
TRANSFEREE OF THE INSTRUMENT FROM BECOMING A
HOLDER OF THE INSTRUMENT.
(d) IF A PROMISE OR ORDER AT THE TIME IT IS
ISSUED OR FIRST COMES INTO POSSESSION OF A HOLDER
CONTAINS A STATEMENT, REQUIRED BY APPLICABLE
STATUTORY OR ADMINISTRATIVE LAW, TO THE EFFECT
THAT THE RIGHTS OF A HOLDER OR TRANSFEREE ARE
SUBJECT TO CLAIMS OR DEFENSES THAT THE ISSUER
COULD ASSERT AGAINST THE ORIGINAL PAYEE, THE
PROMISE OR ORDER IS NOT THEREBY MADE CONDITIONAL
FOR THE PURPOSES OF SECTION 42a-3-104(a); BUT IF
THE PROMISE OR ORDER IS AN INSTRUMENT, THERE
CANNOT BE A HOLDER IN DUE COURSE OF THE
INSTRUMENT.
Sec. 7. Section 42a-3-107 of the general
statutes is repealed and the following is
substituted in lieu thereof:
[(1) An instrument is payable in money if the
medium of exchange in which it is payable is money
at the time the instrument is made. An instrument
payable in "currency" or "current funds" is
payable in money.
(2) A promise or order to pay a sum stated in
a foreign currency is for a sum certain in money
and, unless a different medium of payment is
specified in the instrument, may be satisfied by
payment of that number of dollars which the stated
foreign currency will purchase at the buying sight
rate for that currency on the day on which the
instrument is payable or, if payable on demand, on
the day of demand. If such an instrument specifies
a foreign currency as the medium of payment the
instrument is payable in that currency.]
UNLESS THE INSTRUMENT OTHERWISE PROVIDES, AN
INSTRUMENT THAT STATES THE AMOUNT PAYABLE IN
FOREIGN MONEY MAY BE PAID IN THE FOREIGN MONEY OR
IN AN EQUIVALENT AMOUNT IN DOLLARS CALCULATED BY
USING THE CURRENT BANK-OFFERED SPOT RATE AT THE
PLACE OF PAYMENT FOR THE PURCHASE OF DOLLARS ON
THE DAY ON WHICH THE INSTRUMENT IS PAID.
Sec. 8. Section 42a-3-108 of the general
statutes is repealed and the following is
substituted in lieu thereof:
[Instruments payable on demand include those
payable at sight or on presentation and those in
which no time for payment is stated.]
(a) A PROMISE OR ORDER IS "PAYABLE ON DEMAND"
IF IT (i) STATES THAT IT IS PAYABLE ON DEMAND OR
AT SIGHT, OR OTHERWISE INDICATES THAT IT IS
PAYABLE AT THE WILL OF THE HOLDER, OR (ii) DOES
NOT STATE ANY TIME OF PAYMENT.
(b) A PROMISE OR ORDER IS "PAYABLE AT A
DEFINITE TIME" IF IT IS PAYABLE ON ELAPSE OF A
DEFINITE PERIOD OF TIME AFTER SIGHT OR ACCEPTANCE
OR AT A FIXED DATE OR DATES OR AT A TIME OR TIMES
READILY ASCERTAINABLE AT THE TIME THE PROMISE OR
ORDER IS ISSUED, SUBJECT TO RIGHTS OF (i)
PREPAYMENT, (ii) ACCELERATION, (iii) EXTENSION AT
THE OPTION OF THE HOLDER, OR (iv) EXTENSION TO A
FURTHER DEFINITE TIME AT THE OPTION OF THE MAKER
OR ACCEPTOR OR AUTOMATICALLY UPON OR AFTER A
SPECIFIED ACT OR EVENT.
(c) IF AN INSTRUMENT, PAYABLE AT A FIXED
DATE, IS ALSO PAYABLE UPON DEMAND MADE BEFORE THE
FIXED DATE, THE INSTRUMENT IS PAYABLE ON DEMAND
UNTIL THE FIXED DATE AND, IF DEMAND FOR PAYMENT IS
NOT MADE BEFORE THAT DATE, BECOMES PAYABLE AT A
DEFINITE TIME ON THE FIXED DATE.
Sec. 9. Section 42a-3-109 of the general
statutes is repealed and the following is
substituted in lieu thereof:
[(1) An instrument is payable at a definite
time if by its terms it is payable (a) on or
before a stated date or at a fixed period after a
stated date; or (b) at a fixed period after sight;
or (c) at a definite time subject to any
acceleration; or (d) at a definite time subject to
extension at the option of the holder, or to
extension to a further definite time at the option
of the maker or acceptor or automatically upon or
after a specified act or event.
(2) An instrument which by its terms is
otherwise payable only upon an act or event
uncertain as to time or occurrence is not payable
at a definite time even though the act or event
has occurred.]
(a) A PROMISE OR ORDER IS PAYABLE TO BEARER IF
IT:
(1) STATES THAT IT IS PAYABLE TO BEARER OR TO
THE ORDER OF BEARER OR OTHERWISE INDICATES THAT
THE PERSON IN POSSESSION OF THE PROMISE OR ORDER
IS ENTITLED TO PAYMENT;
(2) DOES NOT STATE A PAYEE; OR
(3) STATES THAT IT IS PAYABLE TO OR TO THE
ORDER OF CASH OR OTHERWISE INDICATES THAT IT IS
NOT PAYABLE TO AN IDENTIFIED PERSON.
(b) A PROMISE OR ORDER THAT IS NOT PAYABLE TO
BEARER IS PAYABLE TO ORDER IF IT IS PAYABLE (i) TO
THE ORDER OF AN IDENTIFIED PERSON OR (ii) TO AN
IDENTIFIED PERSON OR ORDER. A PROMISE OR ORDER
THAT IS PAYABLE TO ORDER IS PAYABLE TO THE
IDENTIFIED PERSON.
(c) AN INSTRUMENT PAYABLE TO BEARER MAY BECOME
PAYABLE TO AN IDENTIFIED PERSON IF IT IS SPECIALLY
INDORSED PURSUANT TO SECTION 42a-3-205(a). AN
INSTRUMENT PAYABLE TO AN IDENTIFIED PERSON MAY
BECOME PAYABLE TO BEARER IF IT IS INDORSED IN
BLANK PURSUANT TO SECTION 42a-3-205(b).
Sec. 10. Section 42a-3-110 of the general
statutes is repealed and the following is
substituted in lieu thereof:
[(1) An instrument is payable to order when by
its terms it is payable to the order or assigns of
any person therein specified with reasonable
certainty, or to him or his order, or when it is
conspicuously designated on its face as "exchange"
or the like and names a payee. It may be payable
to the order of (a) the maker or drawer; or (b)
the drawee; or (c) a payee who is not maker,
drawer or drawee; or (d) two or more payees
together or in the alternative; or (e) an estate,
trust or fund, in which case it is payable to the
order of the representative of such estate, trust
or fund or his successors; or (f) an office, or an
officer by his title as such in which case it is
payable to the principal but the incumbent of the
office or his successors may act as if he or they
were the holder; or (g) a partnership or
unincorporated association, in which case it is
payable to the partnership or association and may
be endorsed or transferred by any person thereto
authorized.
(2) An instrument not payable to order is not
made so payable by such words as "payable upon
return of this instrument properly endorsed."
(3) An instrument made payable both to order
and to bearer is payable to order unless the
bearer words are handwritten or typewritten.]
(a) THE PERSON TO WHOM AN INSTRUMENT IS
INITIALLY PAYABLE IS DETERMINED BY THE INTENT OF
THE PERSON, WHETHER OR NOT AUTHORIZED, SIGNING AS,
OR IN THE NAME OR BEHALF OF, THE ISSUER OF THE
INSTRUMENT. THE INSTRUMENT IS PAYABLE TO THE
PERSON INTENDED BY THE SIGNER EVEN IF THAT PERSON
IS IDENTIFIED IN THE INSTRUMENT BY A NAME OR OTHER
IDENTIFICATION THAT IS NOT THAT OF THE INTENDED
PERSON. IF MORE THAN ONE PERSON SIGNS IN THE NAME
OR BEHALF OF THE ISSUER OF AN INSTRUMENT AND ALL
THE SIGNERS DO NOT INTEND THE SAME PERSON AS
PAYEE, THE INSTRUMENT IS PAYABLE TO ANY PERSON
INTENDED BY ONE OR MORE OF THE SIGNERS.
(b) IF THE SIGNATURE OF THE ISSUER OF AN
INSTRUMENT IS MADE BY AUTOMATED MEANS, SUCH AS A
CHECK-WRITING MACHINE, THE PAYEE OF THE INSTRUMENT
IS DETERMINED BY THE INTENT OF THE PERSON WHO
SUPPLIED THE NAME OR IDENTIFICATION OF THE PAYEE,
WHETHER OR NOT AUTHORIZED TO DO SO.
(c) A PERSON TO WHOM AN INSTRUMENT IS PAYABLE
MAY BE IDENTIFIED IN ANY WAY, INCLUDING BY NAME,
IDENTIFYING NUMBER, OFFICE, OR ACCOUNT NUMBER. FOR
THE PURPOSE OF DETERMINING THE HOLDER OF AN
INSTRUMENT, THE FOLLOWING RULES APPLY:
(1) IF AN INSTRUMENT IS PAYABLE TO AN ACCOUNT
AND THE ACCOUNT IS IDENTIFIED ONLY BY NUMBER, THE
INSTRUMENT IS PAYABLE TO THE PERSON TO WHOM THE
ACCOUNT IS PAYABLE. IF AN INSTRUMENT IS PAYABLE TO
AN ACCOUNT IDENTIFIED BY NUMBER AND BY THE NAME OF
A PERSON, THE INSTRUMENT IS PAYABLE TO THE NAMED
PERSON, WHETHER OR NOT THAT PERSON IS THE OWNER OF
THE ACCOUNT IDENTIFIED BY NUMBER.
(2) IF AN INSTRUMENT IS PAYABLE TO: (i) A
TRUST, AN ESTATE, OR A PERSON DESCRIBED AS TRUSTEE
OR REPRESENTATIVE OF A TRUST OR ESTATE, THE
INSTRUMENT IS PAYABLE TO THE TRUSTEE, THE
REPRESENTATIVE, OR A SUCCESSOR OF EITHER, WHETHER
OR NOT THE BENEFICIARY OR ESTATE IS ALSO NAMED;
(ii) A PERSON DESCRIBED AS AGENT OR SIMILAR
REPRESENTATIVE OF A NAMED OR IDENTIFIED PERSON,
THE INSTRUMENT IS PAYABLE TO THE REPRESENTED
PERSON, THE REPRESENTATIVE, OR A SUCCESSOR OF THE
REPRESENTATIVE; (iii) A FUND OR ORGANIZATION THAT
IS NOT A LEGAL ENTITY, THE INSTRUMENT IS PAYABLE
TO A REPRESENTATIVE OF THE MEMBERS OF THE FUND OR
ORGANIZATION; OR (iv) AN OFFICE OR TO A PERSON
DESCRIBED AS HOLDING AN OFFICE, THE INSTRUMENT IS
PAYABLE TO THE NAMED PERSON, THE INCUMBENT OF THE
OFFICE, OR A SUCCESSOR TO THE INCUMBENT.
(d) IF AN INSTRUMENT IS PAYABLE TO TWO OR MORE
PERSONS ALTERNATIVELY, IT IS PAYABLE TO ANY OF
THEM AND MAY BE NEGOTIATED, DISCHARGED, OR
ENFORCED BY ANY OR ALL OF THEM IN POSSESSION OF
THE INSTRUMENT. IF AN INSTRUMENT IS PAYABLE TO TWO
OR MORE PERSONS NOT ALTERNATIVELY, IT IS PAYABLE
TO ALL OF THEM AND MAY BE NEGOTIATED, DISCHARGED,
OR ENFORCED ONLY BY ALL OF THEM. IF AN INSTRUMENT
PAYABLE TO TWO OR MORE PERSONS IS AMBIGUOUS AS TO
WHETHER IT IS PAYABLE TO THE PERSONS
ALTERNATIVELY, THE INSTRUMENT IS PAYABLE TO THE
PERSONS ALTERNATIVELY.
Sec. 11. Section 42a-3-111 of the general
statutes is repealed and the following is
substituted in lieu thereof:
[An instrument is payable to bearer when by
its terms it is payable to (a) bearer or the order
of bearer; or (b) a specified person or bearer; or
(c) "cash" or the order of "cash," or any other
indication which does not purport to designate a
specific payee.]
EXCEPT AS OTHERWISE PROVIDED FOR ITEMS IN
ARTICLE 4, AN INSTRUMENT IS PAYABLE AT THE PLACE
OF PAYMENT STATED IN THE INSTRUMENT. IF NO PLACE
OF PAYMENT IS STATED, AN INSTRUMENT IS PAYABLE AT
THE ADDRESS OF THE DRAWEE OR MAKER STATED IN THE
INSTRUMENT. IF NO ADDRESS IS STATED, THE PLACE OF
PAYMENT IS THE PLACE OF BUSINESS OF THE DRAWEE OR
MAKER. IF A DRAWEE OR MAKER HAS MORE THAN ONE
PLACE OF BUSINESS, THE PLACE OF PAYMENT IS ANY
PLACE OF BUSINESS OF THE DRAWEE OR MAKER CHOSEN BY
THE PERSON ENTITLED TO ENFORCE THE INSTRUMENT. IF
THE DRAWEE OR MAKER HAS NO PLACE OF BUSINESS, THE
PLACE OF PAYMENT IS THE RESIDENCE OF THE DRAWEE OR
MAKER.
Sec. 12. Section 42a-3-112 of the general
statutes is repealed and the following is
substituted in lieu thereof:
[(1) The negotiability of an instrument is not
affected by (a) the omission of a statement of any
consideration or of the place where the instrument
is drawn or payable; or (b) a statement that
collateral has been given to secure obligations
either on the instrument or otherwise of an
obligor on the instrument or that in the case of
default on those obligations the holder may
realize on or dispose of the collateral; or (c) a
promise or power to maintain or protect collateral
or to give additional collateral; or (d) a term
authorizing a confession of judgment on the
instrument if it is not paid when due; or (e) a
term purporting to waive the benefit of any law
intended for the advantage or protection of any
obligor; or (f) a term in a draft providing that
the payee by endorsing or cashing it acknowledges
full satisfaction of an obligation of the drawer;
or (g) a statement in a draft drawn in a set of
parts as provided in section 42a-3-801 to the
effect that the order is effective only if no
other part has been honored.
(2) Nothing in this section shall validate any
term which is otherwise illegal.]
(a) UNLESS OTHERWISE PROVIDED IN THE
INSTRUMENT, (i) AN INSTRUMENT IS NOT PAYABLE WITH
INTEREST, AND (ii) INTEREST ON AN INTEREST-BEARING
INSTRUMENT IS PAYABLE FROM THE DATE OF THE
INSTRUMENT.
(b) INTEREST MAY BE STATED IN AN INSTRUMENT AS
A FIXED OR VARIABLE AMOUNT OF MONEY OR IT MAY BE
EXPRESSED AS A FIXED OR VARIABLE RATE OR RATES.
THE AMOUNT OR RATE OF INTEREST MAY BE STATED OR
DESCRIBED IN THE INSTRUMENT IN ANY MANNER AND MAY
REQUIRE REFERENCE TO INFORMATION NOT CONTAINED IN
THE INSTRUMENT. IF AN INSTRUMENT PROVIDES FOR
INTEREST, BUT THE AMOUNT OF INTEREST PAYABLE
CANNOT BE ASCERTAINED FROM THE DESCRIPTION,
INTEREST IS PAYABLE AT THE JUDGMENT RATE IN EFFECT
AT THE PLACE OF PAYMENT OF THE INSTRUMENT AND AT
THE TIME INTEREST FIRST ACCRUES.
Sec. 13. Section 42a-3-113 of the general
statutes is repealed and the following is
substituted in lieu thereof:
[An instrument otherwise negotiable is within
this article even though it is under a seal.]
(a) AN INSTRUMENT MAY BE ANTEDATED OR
POSTDATED. THE DATE STATED DETERMINES THE TIME OF
PAYMENT IF THE INSTRUMENT IS PAYABLE AT A FIXED
PERIOD AFTER DATE. EXCEPT AS PROVIDED IN SECTION
42a-4-401(c), AN INSTRUMENT PAYABLE ON DEMAND IS
NOT PAYABLE BEFORE THE DATE OF THE INSTRUMENT.
(b) IF AN INSTRUMENT IS UNDATED, ITS DATE IS
THE DATE OF ITS ISSUE OR, IN THE CASE OF AN
UNISSUED INSTRUMENT, THE DATE IT FIRST COMES INTO
POSSESSION OF A HOLDER.
Sec. 14. Section 42a-3-114 of the general
statutes is repealed and the following is
substituted in lieu thereof:
[(1) The negotiability of an instrument is not
affected by the fact that is undated, antedated or
postdated.
(2) Where an instrument is antedated or
postdated the time when it is payable is
determined by the stated date if the instrument is
payable on demand or at a fixed period after date.
(3) Where the instrument or any signature
thereon is dated, the date is presumed to be
correct.]
IF AN INSTRUMENT CONTAINS CONTRADICTORY TERMS,
TYPEWRITTEN TERMS PREVAIL OVER PRINTED TERMS,
HANDWRITTEN TERMS PREVAIL OVER BOTH, AND WORDS
PREVAIL OVER NUMBERS.
Sec. 15. Section 42a-3-115 of the general
statutes is repealed and the following is
substituted in lieu thereof:
[(1) When a paper whose contents at the time
of signing show that it is intended to become an
instrument is signed while still incomplete in any
necessary respect it cannot be enforced until
completed, but when it is completed in accordance
with authority given it is effective as completed.
(2) If the completion is unauthorized the
rules as to material alteration provided in
section 42a-3-407 apply, even though the paper was
not delivered by the maker or drawer; but the
burden of establishing that any completion is
unauthorized is on the party so asserting.]
(a) "INCOMPLETE INSTRUMENT" MEANS A SIGNED
WRITING, WHETHER OR NOT ISSUED BY THE SIGNER, THE
CONTENTS OF WHICH SHOW AT THE TIME OF SIGNING THAT
IT IS INCOMPLETE BUT THAT THE SIGNER INTENDED IT
TO BE COMPLETED BY THE ADDITION OF WORDS OR
NUMBERS.
(b) SUBJECT TO SUBSECTION (c), IF AN
INCOMPLETE INSTRUMENT IS AN INSTRUMENT UNDER
SECTION 42a-3-104, IT MAY BE ENFORCED ACCORDING TO
ITS TERMS IF IT IS NOT COMPLETED, OR ACCORDING TO
ITS TERMS AS AUGMENTED BY COMPLETION. IF AN
INCOMPLETE INSTRUMENT IS NOT AN INSTRUMENT UNDER
SECTION 42a-3-104, BUT, AFTER COMPLETION, THE
REQUIREMENTS OF SECTION 42a-3-104 ARE MET, THE
INSTRUMENT MAY BE ENFORCED ACCORDING TO ITS TERMS
AS AUGMENTED BY COMPLETION.
(c) IF WORDS OR NUMBERS ARE ADDED TO AN
INCOMPLETE INSTRUMENT WITHOUT AUTHORITY OF THE
SIGNER, THERE IS AN ALTERATION OF THE INCOMPLETE
INSTRUMENT UNDER SECTION 42a-3-407.
(d) THE BURDEN OF ESTABLISHING THAT WORDS OR
NUMBERS WERE ADDED TO AN INCOMPLETE INSTRUMENT
WITHOUT AUTHORITY OF THE SIGNER IS ON THE PERSON
ASSERTING THE LACK OF AUTHORITY.
Sec. 16. Section 42a-3-116 of the general
statutes is repealed and the following is
substituted in lieu thereof:
[An instrument payable to the order of two or
more persons (a) if in the alternative is payable
to any one of them and may be negotiated,
discharged or enforced by any of them who has
possession of it; (b) if not in the alternative is
payable to all of them and may be negotiated,
discharged or enforced only by all of them.]
(a) EXCEPT AS OTHERWISE PROVIDED IN THE
INSTRUMENT, TWO OR MORE PERSONS WHO HAVE THE SAME
LIABILITY ON AN INSTRUMENT AS MAKERS, DRAWERS,
ACCEPTORS, INDORSERS WHO INDORSE AS JOINT PAYEES,
OR ANOMALOUS INDORSERS ARE JOINTLY AND SEVERALLY
LIABLE IN THE CAPACITY IN WHICH THEY SIGN.
(b) EXCEPT AS PROVIDED IN SECTION 42a-3-419(e)
OR BY AGREEMENT OF THE AFFECTED PARTIES, A PARTY
HAVING JOINT AND SEVERAL LIABILITY WHO PAYS THE
INSTRUMENT IS ENTITLED TO RECEIVE FROM ANY PARTY
HAVING THE SAME JOINT AND SEVERAL LIABILITY
CONTRIBUTION IN ACCORDANCE WITH APPLICABLE LAW.
(c) DISCHARGE OF ONE PARTY HAVING JOINT AND
SEVERAL LIABILITY BY A PERSON ENTITLED TO ENFORCE
THE INSTRUMENT DOES NOT AFFECT THE RIGHT UNDER
SUBSECTION (b) OF A PARTY HAVING THE SAME JOINT
AND SEVERAL LIABILITY TO RECEIVE CONTRIBUTION FROM
THE PARTY DISCHARGED.
Sec. 17. Section 42a-3-117 of the general
statutes is repealed and the following is
substituted in lieu thereof:
[An instrument made payable to a named person
with the addition of words describing him (a) as
agent or officer of a specified person is payable
to his principal but the agent or officer may act
as if he were the holder; (b) as any other
fiduciary for a specified person or purpose is
payable to the payee and may be negotiated,
discharged or enforced by him; (c) in any other
manner is payable to the payee unconditionally and
the additional words are without effect on
subsequent parties.]
SUBJECT TO APPLICABLE LAW REGARDING EXCLUSION
OF PROOF OF CONTEMPORANEOUS OR PREVIOUS
AGREEMENTS, THE OBLIGATION OF A PARTY TO AN
INSTRUMENT TO PAY THE INSTRUMENT MAY BE MODIFIED,
SUPPLEMENTED, OR NULLIFIED BY A SEPARATE AGREEMENT
OF THE OBLIGOR AND A PERSON ENTITLED TO ENFORCE
THE INSTRUMENT, IF THE INSTRUMENT IS ISSUED OR THE
OBLIGATION IS INCURRED IN RELIANCE ON THE
AGREEMENT OR AS PART OF THE SAME TRANSACTION
GIVING RISE TO THE AGREEMENT. TO THE EXTENT AN
OBLIGATION IS MODIFIED, SUPPLEMENTED, OR NULLIFIED
BY AN AGREEMENT UNDER THIS SECTION, THE AGREEMENT
IS A DEFENSE TO THE OBLIGATION.
Sec. 18. Section 42a-3-118 of the general
statutes is repealed and the following is
substituted in lieu thereof:
[The following rules apply to every
instrument: (a) Where there is doubt whether the
instrument is a draft or a note the holder may
treat it as either. A draft drawn on the drawer is
effective as a note. (b) Handwritten terms control
typewritten and printed terms, and typewritten
control printed. (c) Words control figures except
that if the words are ambiguous figures control.
(d) Unless otherwise specified a provision for
interest means interest at the judgment rate at
the place of payment from the date of the
instrument, or if it is undated from the date of
issue. (e) Unless the instrument otherwise
specifies two or more persons who sign as maker,
acceptor or drawer or endorser and as a part of
the same transaction are jointly and severally
liable even though the instrument contains such
words as "I promise to pay." (f) Unless otherwise
specified consent to extension authorizes a single
extension for not longer than the original period.
A consent to extension, expressed in the
instrument, is binding on secondary parties and
accommodation makers. A holder may not exercise
his option to extend an instrument over the
objection of a maker or acceptor or other party
who in accordance with section 42a-3-604 tenders
full payment when the instrument is due.]
(a) EXCEPT AS PROVIDED IN SUBSECTION (e), AN
ACTION TO ENFORCE THE OBLIGATION OF A PARTY TO PAY
A NOTE PAYABLE AT A DEFINITE TIME MUST BE
COMMENCED WITHIN SIX YEARS AFTER THE DUE DATE OR
DATES STATED IN THE NOTE OR, IF A DUE DATE IS
ACCELERATED, WITHIN SIX YEARS AFTER THE
ACCELERATED DUE DATE.
(b) EXCEPT AS PROVIDED IN SUBSECTION (d) OR
(e), IF DEMAND FOR PAYMENT IS MADE TO THE MAKER OF
A NOTE PAYABLE ON DEMAND, AN ACTION TO ENFORCE THE
OBLIGATION OF A PARTY TO PAY THE NOTE MUST BE
COMMENCED WITHIN SIX YEARS AFTER THE DEMAND. IF NO
DEMAND FOR PAYMENT IS MADE TO THE MAKER, AN ACTION
TO ENFORCE THE NOTE IS BARRED IF NEITHER PRINCIPAL
NOR INTEREST ON THE NOTE HAS BEEN PAID FOR A
CONTINUOUS PERIOD OF TEN YEARS.
(c) EXCEPT AS PROVIDED IN SUBSECTION (d), AN
ACTION TO ENFORCE THE OBLIGATION OF A PARTY TO AN
UNACCEPTED DRAFT TO PAY THE DRAFT MUST BE
COMMENCED WITHIN THREE YEARS AFTER DISHONOR OF THE
DRAFT OR TEN YEARS AFTER THE DATE OF THE DRAFT,
WHICHEVER PERIOD EXPIRES FIRST.
(d) AN ACTION TO ENFORCE THE OBLIGATION OF THE
ACCEPTOR OF A CERTIFIED CHECK OR THE ISSUER OF A
TELLER'S CHECK, CASHIER'S CHECK, OR TRAVELER'S
CHECK MUST BE COMMENCED WITHIN THREE YEARS AFTER
DEMAND FOR PAYMENT IS MADE TO THE ACCEPTOR OR
ISSUER, AS THE CASE MAY BE.
(e) AN ACTION TO ENFORCE THE OBLIGATION OF A
PARTY TO A CERTIFICATE OF DEPOSIT TO PAY THE
INSTRUMENT MUST BE COMMENCED WITHIN SIX YEARS
AFTER DEMAND FOR PAYMENT IS MADE TO THE MAKER, BUT
IF THE INSTRUMENT STATES A DUE DATE AND THE MAKER
IS NOT REQUIRED TO PAY BEFORE THAT DATE, THE
SIX-YEAR PERIOD BEGINS WHEN A DEMAND FOR PAYMENT
IS IN EFFECT AND THE DUE DATE HAS PASSED.
(f) AN ACTION TO ENFORCE THE OBLIGATION OF A
PARTY TO PAY AN ACCEPTED DRAFT, OTHER THAN A
CERTIFIED CHECK, MUST BE COMMENCED (i) WITHIN SIX
YEARS AFTER THE DUE DATE OR DATES STATED IN THE
DRAFT OR ACCEPTANCE IF THE OBLIGATION OF THE
ACCEPTOR IS PAYABLE AT A DEFINITE TIME, OR (ii)
WITHIN SIX YEARS AFTER THE DATE OF THE ACCEPTANCE
IF THE OBLIGATION OF THE ACCEPTOR IS PAYABLE ON
DEMAND.
(g) UNLESS GOVERNED BY OTHER LAW REGARDING
CLAIMS FOR INDEMNITY OR CONTRIBUTION, AN ACTION
(i) FOR CONVERSION OF AN INSTRUMENT, FOR MONEY HAD
AND RECEIVED, OR LIKE ACTION BASED ON CONVERSION,
(ii) FOR BREACH OF WARRANTY, OR (iii) TO ENFORCE
AN OBLIGATION, DUTY, OR RIGHT ARISING UNDER THIS
ARTICLE AND NOT GOVERNED BY THIS SECTION MUST BE
COMMENCED WITHIN THREE YEARS AFTER THE CAUSE OF
ACTION ACCRUES.
Sec. 19. Section 42a-3-119 of the general
statutes is repealed and the following is
substituted in lieu thereof:
[(1) As between the obligor and his immediate
obligee or any transferee the terms of an
instrument may be modified or affected by any
other written agreement executed as a part of the
same transaction, except that a holder in due
course is not affected by any limitation of his
rights arising out of the separate written
agreement if he had no notice of the limitation
when he took the instrument.
(2) A separate agreement does not affect the
negotiability of an instrument.]
IN AN ACTION FOR BREACH OF AN OBLIGATION FOR
WHICH A THIRD PERSON IS ANSWERABLE OVER PURSUANT
TO THIS ARTICLE OR ARTICLE 4, THE DEFENDANT MAY
GIVE THE THIRD PERSON WRITTEN NOTICE OF THE
LITIGATION, AND THE PERSON NOTIFIED MAY THEN GIVE
SIMILAR NOTICE TO ANY OTHER PERSON WHO IS
ANSWERABLE OVER. IF THE NOTICE STATES (i) THAT THE
PERSON NOTIFIED MAY COME IN AND DEFEND AND (ii)
THAT FAILURE TO DO SO WILL BIND THE PERSON
NOTIFIED IN AN ACTION LATER BROUGHT BY THE PERSON
GIVING THE NOTICE AS TO ANY DETERMINATION OF FACT
COMMON TO THE TWO LITIGATIONS, THE PERSON NOTIFIED
IS SO BOUND UNLESS AFTER SEASONABLE RECEIPT OF THE
NOTICE THE PERSON NOTIFIED DOES COME IN AND
DEFEND.
Sec. 20. Section 42a-3-201 of the general
statutes is repealed and the following is
substituted in lieu thereof:
[(1) Transfer of an instrument vests in the
transferee such rights as the transferor has
therein, except that a transferee who has himself
been a party to any fraud or illegality affecting
the instrument or who as a prior holder had notice
of a defense or claim against it cannot improve
his position by taking from a later holder in due
course.
(2) A transfer of a security interest in an
instrument vests the foregoing rights in the
transferee to the extent of the interest
transferred.
(3) Unless otherwise agreed any transfer for
value of an instrument not then payable to bearer
gives the transferee the specifically enforceable
right to have the unqualified endorsement of the
transferor. Negotiation takes effect only when the
endorsement is made and until that time there is
no presumption that the transferee is the owner.]
(a) "NEGOTIATION" MEANS A TRANSFER OF
POSSESSION, WHETHER VOLUNTARY OR INVOLUNTARY, OF
AN INSTRUMENT BY A PERSON OTHER THAN THE ISSUER TO
A PERSON WHO THEREBY BECOMES ITS HOLDER.
(b) EXCEPT FOR NEGOTIATION BY A REMITTER, IF
AN INSTRUMENT IS PAYABLE TO AN IDENTIFIED PERSON,
NEGOTIATION REQUIRES TRANSFER OF POSSESSION OF THE
INSTRUMENT AND ITS INDORSEMENT BY THE HOLDER. IF
AN INSTRUMENT IS PAYABLE TO BEARER, IT MAY BE
NEGOTIATED BY TRANSFER OF POSSESSION ALONE.
Sec. 21. Section 42a-3-202 of the general
statutes is repealed and the following is
substituted in lieu thereof:
[(1) Negotiation is the transfer of an
instrument in such form that the transferee
becomes a holder. If the instrument is payable to
order it is negotiated by delivery with any
necessary endorsement; if payable to bearer it is
negotiated by delivery.
(2) An endorsement must be written by or on
behalf of the holder and on the instrument or on a
paper so firmly affixed thereto as to become a
part thereof.
(3) An endorsement is effective for
negotiation only when it conveys the entire
instrument or any unpaid residue. If it purports
to be of less it operates only as a partial
assignment.
(4) Words of assignment, condition, waiver,
guaranty, limitation or disclaimer of liability
and the like accompanying an endorsement do not
affect its character as an endorsement.]
(a) NEGOTIATION IS EFFECTIVE EVEN IF OBTAINED
(i) FROM AN INFANT, A CORPORATION EXCEEDING ITS
POWERS, OR A PERSON WITHOUT CAPACITY, (ii) BY
FRAUD, DURESS, OR MISTAKE, OR (iii) IN BREACH OF
DUTY OR AS PART OF AN ILLEGAL TRANSACTION.
(b) TO THE EXTENT PERMITTED BY OTHER LAW,
NEGOTIATION MAY BE RESCINDED OR MAY BE SUBJECT TO
OTHER REMEDIES, BUT THOSE REMEDIES MAY NOT BE
ASSERTED AGAINST A SUBSEQUENT HOLDER IN DUE COURSE
OR A PERSON PAYING THE INSTRUMENT IN GOOD FAITH
AND WITHOUT KNOWLEDGE OF FACTS THAT ARE A BASIS
FOR RESCISSION OR OTHER REMEDY.
Sec. 22. Section 42a-3-203 of the general
statutes is repealed and the following is
substituted in lieu thereof:
[Where an instrument is made payable to a
person under a misspelled name or one other than
his own he may endorse in that name or his own or
both; but signature in both names may be required
by a person paying or giving value for the
instrument.]
(a) AN INSTRUMENT IS TRANSFERRED WHEN IT IS
DELIVERED BY A PERSON OTHER THAN ITS ISSUER FOR
THE PURPOSE OF GIVING TO THE PERSON RECEIVING
DELIVERY THE RIGHT TO ENFORCE THE INSTRUMENT.
(b) TRANSFER OF AN INSTRUMENT, WHETHER OR NOT
THE TRANSFER IS A NEGOTIATION, VESTS IN THE
TRANSFEREE ANY RIGHT OF THE TRANSFEROR TO ENFORCE
THE INSTRUMENT, INCLUDING ANY RIGHT AS A HOLDER IN
DUE COURSE, BUT THE TRANSFEREE CANNOT ACQUIRE
RIGHTS OF A HOLDER IN DUE COURSE BY A TRANSFER,
DIRECTLY OR INDIRECTLY, FROM A HOLDER IN DUE
COURSE IF THE TRANSFEREE ENGAGED IN FRAUD OR
ILLEGALITY AFFECTING THE INSTRUMENT.
(c) UNLESS OTHERWISE AGREED, IF AN INSTRUMENT
IS TRANSFERRED FOR VALUE AND THE TRANSFEREE DOES
NOT BECOME A HOLDER BECAUSE OF LACK OF INDORSEMENT
BY THE TRANSFEROR, THE TRANSFEREE HAS A
SPECIFICALLY ENFORCEABLE RIGHT TO THE UNQUALIFIED
INDORSEMENT OF THE TRANSFEROR, BUT NEGOTIATION OF
THE INSTRUMENT DOES NOT OCCUR UNTIL THE
INDORSEMENT IS MADE.
(d) IF A TRANSFEROR PURPORTS TO TRANSFER LESS
THAN THE ENTIRE INSTRUMENT, NEGOTIATION OF THE
INSTRUMENT DOES NOT OCCUR. THE TRANSFEREE OBTAINS
NO RIGHTS UNDER THIS ARTICLE AND HAS ONLY THE
RIGHTS OF A PARTIAL ASSIGNEE.
Sec. 23. Section 42a-3-204 of the general
statutes is repealed and the following is
substituted in lieu thereof:
[(1) A special endorsement specifies the
person to whom or to whose order it makes the
instrument payable. Any instrument specially
endorsed becomes payable to the order of the
special endorsee and may be further negotiated
only by his endorsement.
(2) An endorsement in blank specifies no
particular endorsee and may consist of a mere
signature. An instrument payable to order and
endorsed in blank becomes payable to bearer and
may be negotiated by delivery alone until
specially endorsed.
(3) The holder may convert a blank endorsement
into a special endorsement by writing over the
signature of the endorser in blank any contract
consistent with the character of the endorsement.]
(a) "INDORSEMENT" MEANS A SIGNATURE, OTHER
THAN THAT OF A SIGNER AS MAKER, DRAWER, OR
ACCEPTOR, THAT ALONE OR ACCOMPANIED BY OTHER WORDS
IS MADE ON AN INSTRUMENT FOR THE PURPOSE OF (i)
NEGOTIATING THE INSTRUMENT, (ii) RESTRICTING
PAYMENT OF THE INSTRUMENT, OR (iii) INCURRING
INDORSER'S LIABILITY ON THE INSTRUMENT, BUT
REGARDLESS OF THE INTENT OF THE SIGNER, A
SIGNATURE AND ITS ACCOMPANYING WORDS IS AN
INDORSEMENT UNLESS THE ACCOMPANYING WORDS, TERMS
OF THE INSTRUMENT, PLACE OF THE SIGNATURE, OR
OTHER CIRCUMSTANCES UNAMBIGUOUSLY INDICATE THAT
THE SIGNATURE WAS MADE FOR A PURPOSE OTHER THAN
INDORSEMENT. FOR THE PURPOSE OF DETERMINING
WHETHER A SIGNATURE IS MADE ON AN INSTRUMENT, A
PAPER AFFIXED TO THE INSTRUMENT IS A PART OF THE
INSTRUMENT.
(b) "INDORSER" MEANS A PERSON WHO MAKES AN
INDORSEMENT.
(c) FOR THE PURPOSE OF DETERMINING WHETHER THE
TRANSFEREE OF AN INSTRUMENT IS A HOLDER, AN
INDORSEMENT THAT TRANSFERS A SECURITY INTEREST IN
THE INSTRUMENT IS EFFECTIVE AS AN UNQUALIFIED
INDORSEMENT OF THE INSTRUMENT.
(d) IF AN INSTRUMENT IS PAYABLE TO A HOLDER
UNDER A NAME THAT IS NOT THE NAME OF THE HOLDER,
INDORSEMENT MAY BE MADE BY THE HOLDER IN THE NAME
STATED IN THE INSTRUMENT OR IN THE HOLDER'S NAME
OR BOTH, BUT SIGNATURE IN BOTH NAMES MAY BE
REQUIRED BY A PERSON PAYING OR TAKING THE
INSTRUMENT FOR VALUE OR COLLECTION.
Sec. 24. Section 42a-3-205 of the general
statutes is repealed and the following is
substituted in lieu thereof:
[An endorsement is restrictive which either
(a) is conditional; or (b) purports to prohibit
further transfer of the instrument; or (c)
includes the words "for collection", "for
deposit", "pay any bank", or like terms signifying
a purpose of deposit or collection; or (d)
otherwise states that it is for the benefit or use
of the endorser or of another person.]
(a) IF AN INDORSEMENT IS MADE BY THE HOLDER OF
AN INSTRUMENT, WHETHER PAYABLE TO AN IDENTIFIED
PERSON OR PAYABLE TO BEARER, AND THE INDORSEMENT
IDENTIFIES A PERSON TO WHOM IT MAKES THE
INSTRUMENT PAYABLE, IT IS A "SPECIAL INDORSEMENT".
WHEN SPECIALLY INDORSED, AN INSTRUMENT BECOMES
PAYABLE TO THE IDENTIFIED PERSON AND MAY BE
NEGOTIATED ONLY BY THE INDORSEMENT OF THAT PERSON.
THE PRINCIPLES STATED IN SECTION 42a-3-110 APPLY
TO SPECIAL INDORSEMENTS.
(b) IF AN INDORSEMENT IS MADE BY THE HOLDER OF
AN INSTRUMENT AND IS NOT A SPECIAL INDORSEMENT, IT
IS A "BLANK INDORSEMENT". WHEN INDORSED IN BLANK,
AN INSTRUMENT BECOMES PAYABLE TO BEARER AND MAY BE
NEGOTIATED BY TRANSFER OF POSSESSION ALONE UNTIL
SPECIALLY INDORSED.
(c) THE HOLDER MAY CONVERT A BLANK INDORSEMENT
THAT CONSISTS ONLY OF A SIGNATURE INTO A SPECIAL
INDORSEMENT BY WRITING, ABOVE THE SIGNATURE OF
THE INDORSER, WORDS IDENTIFYING THE PERSON TO WHOM
THE INSTRUMENT IS MADE PAYABLE.
(d) "ANOMALOUS INDORSEMENT" MEANS AN
INDORSEMENT MADE BY A PERSON WHO IS NOT THE HOLDER
OF THE INSTRUMENT. AN ANOMALOUS INDORSEMENT DOES
NOT AFFECT THE MANNER IN WHICH THE INSTRUMENT MAY
BE NEGOTIATED.
Sec. 25. Section 42a-3-206 of the general
statutes is repealed and the following is
substituted in lieu thereof:
[(1) No restrictive endorsement prevents
further transfer or negotiation of the instrument.
(2) An intermediary bank, or a payor bank
which is not the depositary bank, is neither given
notice nor otherwise affected by a restrictive
endorsement of any person except the bank's
immediate transferor or the person presenting for
payment.
(3) Except for an intermediary bank, any
transferee under an endorsement which is
conditional or includes the words "for
collection", "for deposit", "pay any bank", or
like terms must pay or apply any value given by
him for or on the security of the instrument
consistently with the endorsement and to the
extent that he does so he becomes a holder for
value. In addition such transferee is a holder in
due course if he otherwise complies with the
requirements of section 42a-3-302 on what
constitutes a holder in due course.
(4) The first taker under an endorsement for
the benefit of the endorser or another person must
pay or apply any value given by him for or on the
security of the instrument consistently with the
endorsement and to the extent that he does so he
becomes a holder for value. In addition such taker
is a holder in due course if he otherwise complies
with the requirements of section 42a-3-302 on what
constitutes a holder in due course. A later holder
for value is neither given notice nor otherwise
affected by such restrictive endorsement unless he
has knowledge that a fiduciary or other person has
negotiated the instrument in any transaction for
his own benefit or otherwise in breach of duty.]
(a) AN INDORSEMENT LIMITING PAYMENT TO A
PARTICULAR PERSON OR OTHERWISE PROHIBITING FURTHER
TRANSFER OR NEGOTIATION OF THE INSTRUMENT IS NOT
EFFECTIVE TO PREVENT FURTHER TRANSFER OR
NEGOTIATION OF THE INSTRUMENT.
(b) AN INDORSEMENT STATING A CONDITION TO THE
RIGHT OF THE INDORSEE TO RECEIVE PAYMENT DOES NOT
AFFECT THE RIGHT OF THE INDORSEE TO ENFORCE THE
INSTRUMENT. A PERSON PAYING THE INSTRUMENT OR
TAKING IT FOR VALUE OR COLLECTION MAY DISREGARD
THE CONDITION, AND THE RIGHTS AND LIABILITIES OF
THAT PERSON ARE NOT AFFECTED BY WHETHER THE
CONDITION HAS BEEN FULFILLED.
(c) IF AN INSTRUMENT BEARS AN INDORSEMENT (i)
DESCRIBED IN SECTION 42a-4-201(b), or (ii) IN
BLANK OR TO A PARTICULAR BANK USING THE WORDS "FOR
DEPOSIT", "FOR COLLECTION", OR OTHER WORDS
INDICATING A PURPOSE OF HAVING THE INSTRUMENT
COLLECTED BY A BANK FOR THE INDORSER OR FOR A
PARTICULAR ACCOUNT, THE FOLLOWING RULES APPLY:
(1) A PERSON OTHER THAN A BANK, WHO PURCHASES
THE INSTRUMENT WHEN SO INDORSED CONVERTS THE
INSTRUMENT UNLESS THE AMOUNT PAID FOR THE
INSTRUMENT IS RECEIVED BY THE INDORSER OR APPLIED
CONSISTENTLY WITH THE INDORSEMENT.
(2) A DEPOSITARY BANK THAT PURCHASES THE
INSTRUMENT OR TAKES IT FOR COLLECTION WHEN SO
INDORSED CONVERTS THE INSTRUMENT UNLESS THE AMOUNT
PAID BY THE BANK WITH RESPECT TO THE INSTRUMENT IS
RECEIVED BY THE INDORSER OR APPLIED CONSISTENTLY
WITH THE INDORSEMENT.
(3) A PAYOR BANK THAT IS ALSO THE DEPOSITARY
BANK OR THAT TAKES THE INSTRUMENT FOR IMMEDIATE
PAYMENT OVER THE COUNTER FROM A PERSON OTHER THAN
A COLLECTING BANK CONVERTS THE INSTRUMENT UNLESS
THE PROCEEDS OF THE INSTRUMENT ARE RECEIVED BY THE
INDORSER OR APPLIED CONSISTENTLY WITH THE
INDORSEMENT.
(4) EXCEPT AS OTHERWISE PROVIDED IN PARAGRAPH
(3), A PAYOR BANK OR INTERMEDIARY BANK MAY
DISREGARD THE INDORSEMENT AND IS NOT LIABLE IF THE
PROCEEDS OF THE INSTRUMENT ARE NOT RECEIVED BY THE
INDORSER OR APPLIED CONSISTENTLY WITH THE
INDORSEMENT.
(d) EXCEPT FOR AN INDORSEMENT COVERED BY
SUBSECTION (c), IF AN INSTRUMENT BEARS AN
INDORSEMENT USING WORDS TO THE EFFECT THAT PAYMENT
IS TO BE MADE TO THE INDORSEE AS AGENT, TRUSTEE,
OR OTHER FIDUCIARY FOR THE BENEFIT OF THE INDORSER
OR ANOTHER PERSON, THE FOLLOWING RULES APPLY:
(1) UNLESS THERE IS NOTICE OF BREACH OF
FIDUCIARY DUTY AS PROVIDED IN SECTION 42a-3-307, A
PERSON WHO PURCHASES THE INSTRUMENT FROM THE
INDORSEE OR TAKES THE INSTRUMENT FROM THE INDORSEE
FOR COLLECTION OR PAYMENT MAY PAY THE PROCEEDS OF
PAYMENT OR THE VALUE GIVEN FOR THE INSTRUMENT TO
THE INDORSEE WITHOUT REGARD TO WHETHER THE
INDORSEE VIOLATES A FIDUCIARY DUTY TO THE
INDORSER.
(2) A SUBSEQUENT TRANSFEREE OF THE INSTRUMENT
OR PERSON WHO PAYS THE INSTRUMENT IS NEITHER GIVEN
NOTICE NOR OTHERWISE AFFECTED BY THE RESTRICTION
IN THE INDORSEMENT UNLESS THE TRANSFEREE OR PAYOR
KNOWS THAT THE FIDUCIARY DEALT WITH THE INSTRUMENT
OR ITS PROCEEDS IN BREACH OF FIDUCIARY DUTY.
(e) THE PRESENCE OF AN INSTRUMENT OF AN
INDORSEMENT TO WHICH THIS SECTION APPLIES DOES NOT
PREVENT A PURCHASER OF THE INSTRUMENT FROM
BECOMING A HOLDER IN DUE COURSE OF THE INSTRUMENT
UNLESS THE PURCHASER IS A CONVERTER UNDER
SUBSECTION (c) OR HAS NOTICE OR KNOWLEDGE OF
BREACH OF FIDUCIARY DUTY AS STATED IN SUBSECTION
(d).
(f) IN AN ACTION TO ENFORCE THE OBLIGATION OF
A PARTY TO PAY THE INSTRUMENT, THE OBLIGOR HAS A
DEFENSE IF PAYMENT WOULD VIOLATE AN INDORSEMENT TO
WHICH THIS SECTION APPLIES AND THE PAYMENT IS NOT
PERMITTED BY THIS SECTION.
Sec. 26. Section 42a-3-207 of the general
statutes is repealed and the following is
substituted in lieu thereof:
[(1) Negotiation is effective to transfer the
instrument although the negotiation is (a) made by
an infant, a corporation exceeding its powers, or
any other person without capacity; or (b) obtained
by fraud, duress or mistake of any kind; or (c)
part of an illegal transaction; or (d) made in
breach of duty.
(2) Except as against a subsequent holder in
due course such negotiation is in an appropriate
case subject to rescission, the declaration of a
constructive trust or any other remedy permitted
by law.]
REACQUISITION OF AN INSTRUMENT OCCURS IF IT IS
TRANSFERRED TO A FORMER HOLDER, BY NEGOTIATION OR
OTHERWISE. A FORMER HOLDER WHO REACQUIRES THE
INSTRUMENT MAY CANCEL INDORSEMENTS MADE AFTER THE
REACQUIRER FIRST BECAME A HOLDER OF THE
INSTRUMENT. IF THE CANCELLATION CAUSES THE
INSTRUMENT TO BE PAYABLE TO THE REACQUIRER OR TO
BEARER, THE REACQUIRER MAY NEGOTIATE THE
INSTRUMENT. AN INDORSER WHOSE INDORSEMENT IS
CANCELLED IS DISCHARGED, AND THE DISCHARGE IS
EFFECTIVE AGAINST ANY SUBSEQUENT HOLDER.
Sec. 27. Section 42a-3-301 of the general
statutes is repealed and the following is
substituted in lieu thereof:
[The holder of an instrument whether or not he
is the owner may transfer or negotiate it and,
except as otherwise provided in section 42a-3-603
on payment or satisfaction, discharge it or
enforce payment in his own name.]
"PERSON ENTITLED TO ENFORCE" AN INSTRUMENT
MEANS (i) THE HOLDER OF THE INSTRUMENT, (ii) A
NONHOLDER IN POSSESSION OF THE INSTRUMENT WHO HAS
THE RIGHTS OF A HOLDER, OR (iii) A PERSON NOT IN
POSSESSION OF THE INSTRUMENT WHO IS ENTITLED TO
ENFORCE THE INSTRUMENT PURSUANT TO SECTION 35 OF
THIS ACT OR SECTION 42a-3-418(d). 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.
Sec. 28. Section 42a-3-302 of the general
statutes is repealed and the following is
substituted in lieu thereof:
[(1) A holder in due course is a holder who
takes the instrument (a) for value; and (b) in
good faith; and (c) without notice that it is
overdue or has been dishonored or of any defense
against or claim to it on the part of any person.
(2) A payee may be a holder in due course.
(3) A holder does not become a holder in due
course of an instrument (a) by purchase of it at
judicial sale or by taking it under legal process;
or (b) by acquiring it in taking over an estate;
or (c) by purchasing it as part of a bulk
transaction not in regular course of business of
the transferor.
(4) A purchaser of a limited interest can be a
holder in due course only to the extent of the
interest purchased.]
(a) SUBJECT TO SUBSECTION (c) AND SECTION
42a-3-106(d), "HOLDER IN DUE COURSE" MEANS THE
HOLDER OF AN INSTRUMENT IF:
(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; AND
(2) THE HOLDER TOOK THE INSTRUMENT (i) FOR
VALUE, (ii) IN GOOD FAITH, (iii) 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, (iv) WITHOUT
NOTICE THAT THE INSTRUMENT CONTAINS AN
UNAUTHORIZED SIGNATURE OR HAS BEEN ALTERED, (v)
WITHOUT NOTICE OF ANY CLAIM TO THE INSTRUMENT
DESCRIBED IN SECTION 42a-3-306, AND (vi) WITHOUT
NOTICE THAT ANY PARTY HAS A DEFENSE OR CLAIM IN
RECOUPMENT DESCRIBED IN SECTION 42a-3-305(a).
(b) NOTICE OF DISCHARGE OF A PARTY, OTHER THAN
DISCHARGE IN AN INSOLVENCY PROCEEDING, IS NOT
NOTICE OF A DEFENSE UNDER SUBSECTION (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 (i) BY
LEGAL PROCESS OR BY PURCHASE IN AN EXECUTION,
BANKRUPTCY, OR CREDITOR'S SALE OR SIMILAR
PROCEEDING, (ii) BY PURCHASE AS PART OF A BULK
TRANSACTION NOT IN ORDINARY COURSE OF BUSINESS OF
THE TRANSFEROR, OR (iii) AS THE SUCCESSOR IN
INTEREST TO AN ESTATE OR OTHER ORGANIZATION.
(d) IF, UNDER SECTION 42a-3-303(a)(1), 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 (i) THE PERSON ENTITLED TO ENFORCE AN
INSTRUMENT HAS ONLY A SECURITY INTEREST IN THE
INSTRUMENT AND (ii) 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 MUST 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.
Sec. 29. Section 42a-3-303 of the general
statutes is repealed and the following is
substituted in lieu thereof:
[A holder takes the instrument for value (a)
to the extent that the agreed consideration has
been performed or that he acquires a security
interest in or a lien on the instrument otherwise
than by legal process; or (b) when he takes the
instrument in payment of or as security for an
antecedent claim against any person whether or not
the claim is due; or (c) when he gives a
negotiable instrument for it or makes an
irrevocable commitment to a third person.]
(a) AN INSTRUMENT IS ISSUED OR TRANSFERRED FOR
VALUE IF:
(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; OR
(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 SUBSECTION (a),
THE INSTRUMENT IS ALSO ISSUED FOR CONSIDERATION.
Sec. 30. Section 42a-3-304 of the general
statutes is repealed and the following is
substituted in lieu thereof:
[(1) The purchaser has notice of a claim or
defense if (a) the instrument is so incomplete,
bears such visible evidence of forgery or
alteration, or is otherwise so irregular as to
call into question its validity, terms or
ownership or to create an ambiguity as to the
party to pay; or (b) the purchaser has notice that
the obligation of any party is voidable in whole
or in part, or that all parties have been
discharged.
(2) The purchaser has notice of a claim
against the instrument when he has knowledge that
a fiduciary has negotiated the instrument in
payment of or as security for his own debt or in
any transaction for his own benefit or otherwise
in breach of duty.
(3) The purchaser has notice that an
instrument is overdue if he has reason to know (a)
that any part of the principal amount is overdue
or that there is an uncured default in payment of
another instrument of the same series; or (b) that
acceleration of the instrument has been made; or
(c) that he is taking a demand instrument after
demand has been made or more than a reasonable
length of time after its issue. A reasonable time
for a check drawn and payable within the states
and territories of the United States and the
District of Columbia is presumed to be thirty
days.
(4) Knowledge of the following facts does not
of itself give the purchaser notice of a defense
or claim (a) that the instrument is antedated or
postdated; (b) that it was issued or negotiated in
return for an executory promise or accompanied by
a separate agreement, unless the purchaser has
notice that a defense or claim has arisen from the
terms thereof; (c) that any party has signed for
accommodation; (d) that an incomplete instrument
has been completed, unless the purchaser has
notice of any improper completion; (e) that any
person negotiating the instrument is or was a
fiduciary; (f) that there has been default in
payment of interest on the instrument or in
payment of any other instrument, except one of the
same series.
(5) The filing or recording of a document does
not of itself constitute notice within the
provisions of this article to a person who would
otherwise be a holder in due course.
(6) To be effective notice must be received at
such time and in such manner as to give a
reasonable opportunity to act on it.]
(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, NINETY DAYS
AFTER ITS DATE; OR
(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 INSTALMENTS
AND A DUE DATE HAS NOT BEEN ACCELERATED, THE
INSTRUMENT BECOMES OVERDUE UPON DEFAULT UNDER THE
INSTRUMENT FOR NONPAYMENT OF AN INSTALMENT, AND
THE INSTRUMENT REMAINS OVERDUE UNTIL THE DEFAULT
IS CURED.
(2) IF THE PRINCIPAL IS NOT PAYABLE IN
INSTALMENTS 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.
Sec. 31. Section 42a-3-305 of the general
statutes is repealed and the following is
substituted in lieu thereof:
[To the extent that a holder is a holder in
due course he takes the instrument free from (1)
all claims to it on the part of any person; and
(2) all defenses of any party to the instrument
with whom the holder has not dealt except (a)
infancy, to the extent that it is a defense to a
simple contract; and (b) such other incapacity, or
duress, or illegality of the transaction, as
renders the obligation of the party a nullity; and
(c) such misrepresentation as has induced the
party to sign the instrument with neither
knowledge nor reasonable opportunity to obtain
knowledge of its character or its essential terms;
and (d) discharge in insolvency proceedings; and
(e) any other discharge of which the holder has
notice when he takes the instrument.]
(a) EXCEPT AS STATED IN SUBSECTION (b), THE
RIGHT TO ENFORCE THE OBLIGATION OF A PARTY TO PAY
AN INSTRUMENT IS SUBJECT TO THE FOLLOWING:
(1) A DEFENSE OF THE OBLIGOR BASED ON (i)
INFANCY OF THE OBLIGOR TO THE EXTENT IT IS A
DEFENSE TO A SIMPLE CONTRACT, (ii) DURESS, LACK OF
LEGAL CAPACITY, OR ILLEGALITY OF THE TRANSACTION
WHICH, UNDER OTHER LAW, NULLIFIES THE OBLIGATION
OF THE OBLIGOR, (iii) 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 (iv)
DISCHARGE OF THE OBLIGOR IN INSOLVENCY
PROCEEDINGS;
(2) A DEFENSE OF THE OBLIGOR STATED IN ANOTHER
SECTION OF THIS ARTICLE 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; AND
(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 SUBSECTION (a)(1), BUT IS NOT SUBJECT TO
DEFENSES OF THE OBLIGOR STATED IN SUBSECTION
(a)(2) OR CLAIMS IN RECOUPMENT STATED IN
SUBSECTION (a)(3) AGAINST A PERSON OTHER THAN THE
HOLDER.
(c) EXCEPT AS STATED IN SUBSECTION (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 42a-3-306) 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 SUBSECTION (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.
Sec. 32. Section 42a-3-306 of the general
statutes is repealed and the following is
substituted in lieu thereof:
[Unless he has the rights of a holder in due
course any person takes the instrument subject to
(a) all valid claims to it on the part of any
person; and (b) all defenses of any party which
would be available in an action on a simple
contract; and (c) the defenses of want or failure
of consideration, nonperformance of any condition
precedent, nondelivery, or delivery for a special
purpose; and (d) the defense that he or a person
through whom he holds the instrument acquired it
by theft, or that payment or satisfaction to such
holder would be inconsistent with the terms of a
restrictive endorsement. The claim of any third
person to the instrument is not otherwise
available as a defense to any party liable thereon
unless the third person himself defends the action
for such party.]
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.
Sec. 33. Section 42a-3-307 of the general
statutes is repealed and the following is
substituted in lieu thereof:
[(1) Unless specifically denied in the
pleadings each signature on an instrument is
admitted. When the effectiveness of a signature is
put in issue (a) the burden of establishing it is
on the party claiming under the signature; but (b)
the signature is presumed to be genuine or
authorized except where the action is to enforce
the obligation of a purported signer who has died
or become incompetent before proof is required.
(2) When signatures are admitted or
established, production of the instrument entitles
a holder to recover on it unless the defendant
establishes a defense.
(3) After it is shown that a defense exists a
person claiming the rights of a holder in due
course has the burden of establishing that he or
some person under whom he claims is in all
respects a holder in due course.]
(a) IN THIS SECTION:
(1) "FIDUCIARY" MEANS AN AGENT, TRUSTEE,
PARTNER, CORPORATE OFFICER OR DIRECTOR, OR OTHER
REPRESENTATIVE OWING A FIDUCIARY DUTY WITH RESPECT
TO AN INSTRUMENT.
(2) "REPRESENTED PERSON" MEANS THE PRINCIPAL,
BENEFICIARY, PARTNERSHIP, CORPORATION, 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 MAKE 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 (i) TAKEN IN PAYMENT OF
OR AS SECURITY FOR A DEBT KNOWN BY THE TAKER TO BE
THE PERSONAL DEBT OF THE FIDUCIARY, (ii) TAKEN IN
A TRANSACTION KNOWN BY THE TAKER TO BE FOR THE
PERSONAL BENEFIT OF THE FIDUCIARY, OR (iii)
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 (i)
TAKEN IN PAYMENT OF OR AS SECURITY FOR A DEBT
KNOWN BY THE TAKER TO BE THE PERSONAL DEBT OF THE
FIDUCIARY, (ii) TAKEN IN A TRANSACTION KNOWN BY
THE TAKER TO BE FOR THE PERSONAL BENEFIT OF THE
FIDUCIARY, OR (iii) DEPOSITED TO AN ACCOUNT OTHER
THAN AN ACCOUNT OF THE FIDUCIARY, AS SUCH, OR AN
ACCOUNT OF THE REPRESENTED PERSON.
Sec. 34. (NEW) (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 section
42a-3-402(a) of the general statutes.
(b) If the validity of signatures is admitted
or proved and there is compliance with subsection
(a), a plaintiff producing the instrument is
entitled to payment if the plaintiff proves
entitlement to enforce the instrument under
section 42a-3-301 of the general statutes, 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.
Sec. 35. (NEW) (a) A person not in possession
of an instrument is entitled to enforce the
instrument if (i) the person was in possession of
the instrument and entitled to enforce it when
loss of possession occurred, (ii) the loss of
possession was not the result of a transfer by the
person or a lawful seizure, and (iii) 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 subsection (a) must prove the
terms of the instrument and the person's right to
enforce the instrument. If that proof is made,
section 34 of this act 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.
Sec. 36. (NEW) (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.
Sec. 37. (NEW) (a) If a person against whom a
claim is asserted proves that (i) that person in
good faith tendered an instrument to the claimant
as full satisfaction of the claim, (ii) the amount
of the claim was unliquidated or subject to a bona
fide dispute, and (iii) the claimant obtained
payment of the instrument, the following
subsections apply.
(b) Unless subsection (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 subsection (d), a claim is not
discharged under subsection (b) if either of the
following applies:
(1) The claimant, if an organization, proves
that (i) 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 (ii) 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 ninety 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
paragraph (1)(i).
(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.
Sec. 38. Section 42a-3-401 of the general
statutes is repealed and the following is
substituted in lieu thereof:
[(1) No person is liable on an instrument
unless his signature appears thereon.
(2) A signature is made by use of any name,
including any trade or assumed name, upon an
instrument, or by any word or mark used in lieu of
a written signature.]
(a) A PERSON IS NOT LIABLE ON AN INSTRUMENT
UNLESS (i) THE PERSON SIGNED THE INSTRUMENT, OR
(ii) THE PERSON IS REPRESENTED BY AN AGENT OR
REPRESENTATIVE WHO SIGNED THE INSTRUMENT AND THE
SIGNATURE IS BINDING ON THE REPRESENTED PERSON
UNDER SECTION 42a-3-402.
(b) A SIGNATURE MAY BE MADE (i) MANUALLY OR BY
MEANS OF A DEVICE OR MACHINE, AND (ii) BY THE USE
OF ANY NAME, INCLUDING A TRADE OR ASSUMED NAME,
OR BY A WORD, MARK, OR SYMBOL EXECUTED OR ADOPTED
BY A PERSON WITH PRESENT INTENTION TO AUTHENTICATE
A WRITING.
Sec. 39. Section 42a-3-402 of the general
statutes is repealed and the following is
substituted in lieu thereof:
[Unless the instrument clearly indicates that
a signature is made in some other capacity it is
an endorsement.]
(a) IF A PERSON ACTING, OR PURPORTING TO ACT,
AS A REPRESENTATIVE SIGNS AN INSTRUMENT BY SIGNING
EITHER THE NAME OF THE REPRESENTED PERSON OR THE
NAME OF THE SIGNER, THE REPRESENTED PERSON IS
BOUND BY THE SIGNATURE TO THE SAME EXTENT THE
REPRESENTED PERSON WOULD BE BOUND IF THE SIGNATURE
WERE ON A SIMPLE CONTRACT. IF THE REPRESENTED
PERSON IS BOUND, THE SIGNATURE OF THE
REPRESENTATIVE IS THE "AUTHORIZED SIGNATURE OF THE
REPRESENTED PERSON" AND THE REPRESENTED PERSON IS
LIABLE ON THE INSTRUMENT, WHETHER OR NOT
IDENTIFIED IN THE INSTRUMENT.
(b) IF A REPRESENTATIVE SIGNS THE NAME OF THE
REPRESENTATIVE TO AN INSTRUMENT AND THE SIGNATURE
IS AN AUTHORIZED SIGNATURE OF THE REPRESENTED
PERSON, THE FOLLOWING RULES APPLY:
(1) IF THE FORM OF THE SIGNATURE SHOWS
UNAMBIGUOUSLY THAT THE SIGNATURE IS MADE ON BEHALF
OF THE REPRESENTED PERSON WHO IS IDENTIFIED IN THE
INSTRUMENT, THE REPRESENTATIVE IS NOT LIABLE ON
THE INSTRUMENT.
(2) SUBJECT TO SUBSECTION (c), IF (i) THE
FORM OF THE SIGNATURE DOES NOT SHOW UNAMBIGUOUSLY
THAT THE SIGNATURE IS MADE IN A REPRESENTATIVE
CAPACITY OR (ii) THE REPRESENTED PERSON IS NOT
IDENTIFIED IN THE INSTRUMENT, THE REPRESENTATIVE
IS LIABLE ON THE INSTRUMENT TO A HOLDER IN DUE
COURSE THAT TOOK THE INSTRUMENT WITHOUT NOTICE
THAT THE REPRESENTATIVE WAS NOT INTENDED TO BE
LIABLE ON THE INSTRUMENT. WITH RESPECT TO ANY
OTHER PERSON, THE REPRESENTATIVE IS LIABLE ON THE
INSTRUMENT UNLESS THE REPRESENTATIVE PROVES THAT
THE ORIGINAL PARTIES DID NOT INTEND THE
REPRESENTATIVE TO BE LIABLE ON THE INSTRUMENT.
(c) IF A REPRESENTATIVE SIGNS THE NAME OF THE
REPRESENTATIVE AS DRAWER OF A CHECK WITHOUT
INDICATION OF THE REPRESENTATIVE STATUS AND THE
CHECK IS PAYABLE FROM AN ACCOUNT OF THE
REPRESENTED PERSON WHO IS IDENTIFIED ON THE CHECK,
THE SIGNER IS NOT LIABLE ON THE CHECK IF THE
SIGNATURE IS AN AUTHORIZED SIGNATURE OF THE
REPRESENTED PERSON.
Sec. 40. Section 42a-3-403 of the general
statutes is repealed and the following is
substituted in lieu thereof:
[(1) A signature may be made by an agent or
other representative, and his authority to make it
may be established as in other cases of
representation. No particular form of appointment
is necessary to establish such authority.
(2) An authorized representative who signs his
own name to an instrument (a) is personally
obligated if the instrument neither names the
person represented nor shows that the
representative signed in a representative
capacity; (b) except as otherwise established
between the immediate parties, is personally
obligated if the instrument names the person
represented but does not show that the
representative signed in a representative
capacity, or if the instrument does not name the
person represented but does show that the
representative signed in a representative
capacity.
(3) Except as otherwise established the name
of an organization preceded or followed by the
name and office of an authorized individual is a
signature made in a representative capacity.]
(a) UNLESS OTHERWISE PROVIDED IN THIS ARTICLE
OR ARTICLE 4, AN UNAUTHORIZED SIGNATURE IS
INEFFECTIVE EXCEPT AS THE SIGNATURE OF THE
UNAUTHORIZED SIGNER IN FAVOR OF A PERSON WHO IN
GOOD FAITH PAYS THE INSTRUMENT OR TAKES IT FOR
VALUE. AN UNAUTHORIZED SIGNATURE MAY BE RATIFIED
FOR ALL PURPOSES OF THIS ARTICLE.
(b) IF THE SIGNATURE OF MORE THAN ONE PERSON
IS REQUIRED TO CONSTITUTE THE AUTHORIZED SIGNATURE
OF AN ORGANIZATION, THE SIGNATURE OF THE
ORGANIZATION IS UNAUTHORIZED IF ONE OF THE
REQUIRED SIGNATURES IS LACKING.
(c) THE CIVIL OR CRIMINAL LIABILITY OF A
PERSON WHO MAKES AN UNAUTHORIZED SIGNATURE IS NOT
AFFECTED BY ANY PROVISION OF THIS ARTICLE WHICH
MAKES THE UNAUTHORIZED SIGNATURE EFFECTIVE FOR THE
PURPOSES OF THIS ARTICLE.
Sec. 41. Section 42a-3-404 of the general
statutes is repealed and the following is
substituted in lieu thereof:
[(1) Any unauthorized signature is wholly
inoperative as that of the person whose name is
signed unless he ratifies it or is precluded from
denying it; but it operates as the signature of
the unauthorized signer in favor of any person who
in good faith pays the instrument or takes it for
value.
(2) Any unauthorized signature may be ratified
for all purposes of this article. Such
ratification does not of itself affect any rights
of the person ratifying against the actual
signer.]
(a) IF AN IMPOSTER, BY USE OF THE MAILS OR
OTHERWISE, INDUCES THE ISSUER OF AN INSTRUMENT TO
ISSUE THE INSTRUMENT TO THE IMPOSTER, OR TO A
PERSON ACTING IN CONCERT WITH THE IMPOSTER, BY
IMPERSONATING THE PAYEE OF THE INSTRUMENT OR A
PERSON AUTHORIZED TO ACT FOR THE PAYEE, AN
INDORSEMENT OF THE INSTRUMENT BY ANY PERSON IN THE
NAME OF THE PAYEE IS EFFECTIVE AS THE INDORSEMENT
OF THE PAYEE IN FAVOR OF A PERSON WHO, IN GOOD
FAITH, PAYS THE INSTRUMENT OR TAKES IT FOR VALUE
OR FOR COLLECTION.
(b) IF (i) A PERSON WHOSE INTENT DETERMINES TO
WHOM AN INSTRUMENT IS PAYABLE (SECTION
42a-3-110(a) OR (b)) DOES NOT INTEND THE PERSON
IDENTIFIED AS PAYEE TO HAVE ANY INTEREST IN THE
INSTRUMENT, OR (ii) THE PERSON IDENTIFIED AS PAYEE
OF AN INSTRUMENT IS A FICTITIOUS PERSON, THE
FOLLOWING RULES APPLY UNTIL THE INSTRUMENT IS
NEGOTIATED BY SPECIAL INDORSEMENT:
(1) ANY PERSON IN POSSESSION OF THE INSTRUMENT
IS ITS HOLDER.
(2) AN INDORSEMENT BY ANY PERSON IN THE NAME
OF THE PAYEE STATED IN THE INSTRUMENT IS EFFECTIVE
AS THE INDORSEMENT OF THE PAYEE IN FAVOR OF A
PERSON WHO, IN GOOD FAITH, PAYS THE INSTRUMENT OR
TAKES IT FOR VALUE OR FOR COLLECTION.
(c) UNDER SUBSECTION (a) OR (b), AN
INDORSEMENT IS MADE IN THE NAME OF A PAYEE IF (i)
IT IS MADE IN A NAME SUBSTANTIALLY SIMILAR TO THAT
OF THE PAYEE OR (ii) THE INSTRUMENT, WHETHER OR
NOT INDORSED, IS DEPOSITED IN A DEPOSITORY BANK TO
AN ACCOUNT IN A NAME SUBSTANTIALLY SIMILAR TO THAT
OF THE PAYEE.
(d) WITH RESPECT TO AN INSTRUMENT TO WHICH
SUBSECTION (a) OR (b) APPLIES, IF A PERSON PAYING
THE INSTRUMENT OR TAKING IT FOR VALUE OR FOR
COLLECTION FAILS TO EXERCISE ORDINARY CARE IN
PAYING OR TAKING THE INSTRUMENT AND THAT FAILURE
SUBSTANTIALLY CONTRIBUTES TO LOSS RESULTING FROM
PAYMENT OF THE INSTRUMENT, THE PERSON BEARING THE
LOSS MAY RECOVER FROM THE PERSON FAILING TO
EXERCISE ORDINARY CARE TO THE EXTENT THE FAILURE
TO EXERCISE ORDINARY CARE CONTRIBUTED TO THE LOSS.
Sec. 42. Section 42a-3-405 of the general
statutes is repealed and the following is
substituted in lieu thereof:
[(1) An endorsement by any person in the name
of a named payee is effective if (a) an impostor
by use of the mails or otherwise has induced the
maker or drawer to issue the instrument to him or
his confederate in the name of the payee; or (b) a
person signing as or on behalf of a maker or
drawer intends the payee to have no interest in
the instrument; or (c) an agent or employee of the
maker or drawer has supplied him with the name of
the payee intending the latter to have no such
interest.
(2) Nothing in this section shall affect the
criminal or civil liability of the person so
endorsing.]
(a) IN THIS SECTION:
(1) "EMPLOYEE" INCLUDES AN INDEPENDENT
CONTRACTOR AND EMPLOYEE OF AN INDEPENDENT
CONTRACTOR RETAINED BY THE EMPLOYER.
(2) "FRAUDULENT INDORSEMENT" MEANS (i) IN THE
CASE OF AN INSTRUMENT PAYABLE TO THE EMPLOYER, A
FORGED INDORSEMENT PURPORTING TO BE THAT OF THE
EMPLOYER, OR (ii) IN THE CASE OF AN INSTRUMENT
WITH RESPECT TO WHICH THE EMPLOYER IS THE ISSUER,
A FORGED INDORSEMENT PURPORTING TO BE THAT OF THE
PERSON IDENTIFIED AS PAYEE.
(3) "RESPONSIBILITY" WITH RESPECT TO
INSTRUMENTS MEANS AUTHORITY (i) TO SIGN OR INDORSE
INSTRUMENTS ON BEHALF OF THE EMPLOYER, (ii) TO
PROCESS INSTRUMENTS RECEIVED BY THE EMPLOYER FOR
BOOKKEEPING PURPOSES, FOR DEPOSIT TO AN ACCOUNT,
OR FOR OTHER DISPOSITION, (iii) TO PREPARE OR
PROCESS INSTRUMENTS FOR ISSUE IN THE NAME OF THE
EMPLOYER, (iv) TO SUPPLY INFORMATION DETERMINING
THE NAMES OR ADDRESSES OF PAYEES OF INSTRUMENTS TO
BE ISSUED IN THE NAME OF THE EMPLOYER, (v) TO
CONTROL THE DISPOSITION OF INSTRUMENTS TO BE
ISSUED IN THE NAME OF THE EMPLOYER, OR (vi) TO ACT
OTHERWISE WITH RESPECT TO INSTRUMENTS IN A
RESPONSIBLE CAPACITY. "RESPONSIBILITY" DOES NOT
INCLUDE AUTHORITY THAT MERELY ALLOWS AN EMPLOYEE
TO HAVE ACCESS TO INSTRUMENTS OR BLANK OR
INCOMPLETE INSTRUMENT FORMS THAT ARE BEING STORED
OR TRANSPORTED OR ARE PART OF INCOMING OR OUTGOING
MAIL, OR SIMILAR ACCESS.
(b) FOR THE PURPOSE OF DETERMINING THE RIGHTS
AND LIABILITIES OF A PERSON WHO, IN GOOD FAITH,
PAYS AN INSTRUMENT OR TAKES IT FOR VALUE OR FOR
COLLECTION, IF AN EMPLOYER ENTRUSTED AN EMPLOYEE
WITH RESPONSIBILITY WITH RESPECT TO THE INSTRUMENT
AND THE EMPLOYEE OR A PERSON ACTING IN CONCERT
WITH THE EMPLOYEE MAKES A FRAUDULENT INDORSEMENT
OF THE INSTRUMENT, THE INDORSEMENT IS EFFECTIVE AS
THE INDORSEMENT OF THE PERSON TO WHOM THE
INSTRUMENT IS PAYABLE IF IT IS MADE IN THE NAME OF
THAT PERSON. IF THE PERSON PAYING THE INSTRUMENT
OR TAKING IT FOR VALUE OR FOR COLLECTION FAILS TO
EXERCISE ORDINARY CARE IN PAYING OR TAKING THE
INSTRUMENT AND THAT FAILURE SUBSTANTIALLY
CONTRIBUTES TO LOSS RESULTING FROM THE FRAUD, THE
PERSON BEARING THE LOSS MAY RECOVER FROM THE
PERSON FAILING TO EXERCISE ORDINARY CARE TO THE
EXTENT THE FAILURE TO EXERCISE ORDINARY CARE
CONTRIBUTED TO THE LOSS.
(c) UNDER SUBSECTION (b), AN INDORSEMENT IS
MADE IN THE NAME OF THE PERSON TO WHOM AN
INSTRUMENT IS PAYABLE IF (i) IT IS MADE IN A NAME
SUBSTANTIALLY SIMILAR TO THE NAME OF THAT PERSON
OR (ii) THE INSTRUMENT, WHETHER OR NOT INDORSED,
IS DEPOSITED IN A DEPOSITARY BANK TO AN ACCOUNT IN
A NAME SUBSTANTIALLY SIMILAR TO THE NAME OF THAT
PERSON.
Sec. 43. Section 42a-3-406 of the general
statutes is repealed and the following is
substituted in lieu thereof:
[Any person who by his negligence
substantially contributes to a material alteration
of the instrument or to the making of an
unauthorized signature is precluded from asserting
the alteration or lack of authority against a
holder in due course or against a drawee or other
payor who pays the instrument in good faith and in
accordance with the reasonable commercial
standards of the drawee's or payor's business.]
(a) A PERSON WHOSE FAILURE TO EXERCISE
ORDINARY CARE SUBSTANTIALLY CONTRIBUTES TO AN
ALTERATION OF AN INSTRUMENT OR TO THE MAKING OF A
FORGED SIGNATURE ON AN INSTRUMENT IS PRECLUDED
FROM ASSERTING THE ALTERATION OR THE FORGERY
AGAINST A PERSON WHO, IN GOOD FAITH, PAYS THE
INSTRUMENT OR TAKES IT FOR VALUE OR FOR
COLLECTION.
(b) UNDER SUBSECTION (a), IF THE PERSON
ASSERTING THE PRECLUSION FAILS TO EXERCISE
ORDINARY CARE IN PAYING OR TAKING THE INSTRUMENT
AND THAT FAILURE SUBSTANTIALLY CONTRIBUTES TO
LOSS, THE LOSS IS ALLOCATED BETWEEN THE PERSON
PRECLUDED AND THE PERSON ASSERTING THE PRECLUSION
ACCORDING TO THE EXTENT TO WHICH THE FAILURE OF
EACH TO EXERCISE ORDINARY CARE CONTRIBUTED TO THE
LOSS.
(c) UNDER SUBSECTION (a), THE BURDEN OF
PROVING FAILURE TO EXERCISE ORDINARY CARE IS ON
THE PERSON ASSERTING THE PRECLUSION. UNDER
SUBSECTION (b), THE BURDEN OF PROVING FAILURE TO
EXERCISE ORDINARY CARE IS ON THE PERSON PRECLUDED.
Sec. 44. Section 42a-3-407 of the general
statutes is repealed and the following is
substituted in lieu thereof:
[(1) Any alteration of an instrument is
material which changes the contract of any party
thereto in any respect, including any such change
in (a) the number or relations of the parties; or
(b) an incomplete instrument, by completing it
otherwise than as authorized; or (c) the writing
as signed, by adding to it or by removing any part
of it.
(2) As against any person other than a
subsequent holder in due course (a) alteration by
the holder which is both fraudulent and material
discharges any party whose contract is thereby
changed unless that party assents or is precluded
from asserting the defense; (b) no other
alteration discharges any party and the instrument
may be enforced according to its original tenor,
or as to incomplete instruments according to the
authority given.
(3) A subsequent holder in due course may in
all cases enforce the instrument according to its
original tenor, and when an incomplete instrument
has been completed, he may enforce it as
completed.]
(a) "ALTERATION" MEANS (i) AN UNAUTHORIZED
CHANGE IN AN INSTRUMENT THAT PURPORTS TO MODIFY IN
ANY RESPECT THE OBLIGATION OF A PARTY, OR (ii) AN
UNAUTHORIZED ADDITION OF WORDS OR NUMBERS OR OTHER
CHANGE TO AN INCOMPLETE INSTRUMENT RELATING TO THE
OBLIGATION OF A PARTY.
(b) EXCEPT AS PROVIDED IN SUBSECTION (c), AN
ALTERATION FRAUDULENTLY MADE DISCHARGES A PARTY
WHOSE OBLIGATION IS AFFECTED BY THE ALTERATION
UNLESS THAT PARTY ASSENTS OR IS PRECLUDED FROM
ASSERTING THE ALTERATION. NO OTHER ALTERATION
DISCHARGES A PARTY, AND THE INSTRUMENT MAY BE
ENFORCED ACCORDING TO ITS ORIGINAL TERMS.
(c) A PAYOR BANK OR DRAWEE PAYING A
FRAUDULENTLY ALTERED INSTRUMENT OR A PERSON TAKING
IT FOR VALUE, IN GOOD FAITH AND WITHOUT NOTICE OF
THE ALTERATION, MAY ENFORCE RIGHTS WITH RESPECT TO
THE INSTRUMENT (i) ACCORDING TO ITS ORIGINAL
TERMS, OR (ii) IN THE CASE OF AN INCOMPLETE
INSTRUMENT ALTERED BY UNAUTHORIZED COMPLETION,
ACCORDING TO ITS TERMS AS COMPLETED.
Sec. 45. Section 42a-3-408 of the general
statutes is repealed and the following is
substituted in lieu thereof:
[Want or failure of consideration is a defense
as against any person not having the rights of a
holder in due course as provided in section
42a-3-305, except that no consideration is
necessary for an instrument or obligation thereon
given in payment of or as security for an
antecedent obligation of any kind. Nothing in this
section shall be taken to displace any statute
outside this title under which a promise is
enforceable notwithstanding lack or failure of
consideration. Partial failure of consideration is
a defense pro tanto whether or not the failure is
in an ascertained or liquidated amount.]
A CHECK OR OTHER DRAFT DOES NOT OF ITSELF
OPERATE AS AN ASSIGNMENT OF FUNDS IN THE HANDS OF
THE DRAWEE AVAILABLE FOR ITS PAYMENT, AND THE
DRAWEE IS NOT LIABLE ON THE INSTRUMENT UNTIL THE
DRAWEE ACCEPTS IT.
Sec. 46. Section 42a-3-409 of the general
statutes is repealed and the following is
substituted in lieu thereof:
[(1) A check or other draft does not of itself
operate as an assignment of any funds in the hands
of the drawee available for its payment, and the
drawee is not liable on the instrument until he
accepts it.
(2) Nothing in this section shall affect any
liability in contract, tort or otherwise arising
from any letter of credit or other obligation or
representation which is not an acceptance.]
(a) "ACCEPTANCE" MEANS THE DRAWEE'S SIGNED
AGREEMENT TO PAY A DRAFT AS PRESENTED. IT MUST BE
WRITTEN ON THE DRAFT AND MAY CONSIST OF THE
DRAWEE'S SIGNATURE ALONE. ACCEPTANCE MAY BE MADE
AT ANY TIME AND BECOMES EFFECTIVE WHEN
NOTIFICATION PURSUANT TO INSTRUCTIONS IS GIVEN OR
THE ACCEPTED DRAFT IS DELIVERED FOR THE PURPOSE OF
GIVING RIGHTS ON THE ACCEPTANCE TO ANY PERSON.
(b) A DRAFT MAY BE ACCEPTED ALTHOUGH IT HAS
NOT BEEN SIGNED BY THE DRAWER, IS OTHERWISE
INCOMPLETE, IS OVERDUE, OR HAS BEEN DISHONORED.
(c) IF A DRAFT IS PAYABLE AT A FIXED PERIOD
AFTER SIGHT AND THE ACCEPTOR FAILS TO DATE THE
ACCEPTANCE, THE HOLDER MAY COMPLETE THE ACCEPTANCE
BY SUPPLYING A DATE IN GOOD FAITH.
(d) "CERTIFIED CHECK" MEANS A CHECK ACCEPTED
BY THE BANK ON WHICH IT IS DRAWN. ACCEPTANCE MAY
BE MADE AS STATED IN SUBSECTION (a) OR BY A
WRITING ON THE CHECK WHICH INDICATES THAT THE
CHECK IS CERTIFIED. THE DRAWEE OF A CHECK HAS NO
OBLIGATION TO CERTIFY THE CHECK, AND REFUSAL TO
CERTIFY IS NOT DISHONOR OF THE CHECK.
Sec. 47. Section 42a-3-410 of the general
statutes is repealed and the following is
substituted in lieu thereof:
[(1) Acceptance is the drawee's signed
engagement to honor the draft as presented. It
must be written on the draft, and may consist of
his signature alone. It becomes operative when
completed by delivery or notification.
(2) A draft may be accepted although it has
not been signed by the drawer or is otherwise
incomplete or is overdue or has been dishonored.
(3) Where the draft is payable at a fixed
period after sight and the acceptor fails to date
his acceptance the holder may complete it by
supplying a date in good faith.]
(a) IF THE TERMS OF A DRAWEE'S ACCEPTANCE VARY
FROM THE TERMS OF THE DRAFT AS PRESENTED, THE
HOLDER MAY REFUSE THE ACCEPTANCE AND TREAT THE
DRAFT AS DISHONORED. IN THAT CASE, THE DRAWEE MAY
CANCEL THE ACCEPTANCE.
(b) THE TERMS OF A DRAFT ARE NOT VARIED BY AN
ACCEPTANCE TO PAY AT A PARTICULAR BANK OR PLACE IN
THE UNITED STATES, UNLESS THE ACCEPTANCE STATES
THAT THE DRAFT IS TO BE PAID ONLY AT THAT BANK OR
PLACE.
(c) IF THE HOLDER ASSENTS TO AN ACCEPTANCE
VARYING THE TERMS OF A DRAFT, THE OBLIGATION OF
EACH DRAWER AND INDORSER THAT DOES NOT EXPRESSLY
ASSENT TO THE ACCEPTANCE IS DISCHARGED.
Sec. 48. Section 42a-3-411 of the general
statutes is repealed and the following is
substituted in lieu thereof:
[(1) Certification of a check is acceptance.
Where a holder procures certification the drawer
and all prior endorsers are discharged.
(2) Unless otherwise agreed a bank has no
obligation to certify a check.
(3) A bank may certify a check before
returning it for lack of proper endorsement. If it
does so the drawer is discharged.]
(a) IN THIS SECTION, "OBLIGATED BANK" MEANS
THE ACCEPTOR OF A CERTIFIED CHECK OR THE ISSUER OF
A CASHIER'S CHECK OR TELLER'S CHECK BOUGHT FROM
THE ISSUER.
(b) IF THE OBLIGATED BANK WRONGFULLY (i)
REFUSES TO PAY A CASHIER'S CHECK OR CERTIFIED
CHECK, (ii) STOPS PAYMENT OF A TELLER'S CHECK, OR
(iii) REFUSES TO PAY A DISHONORED TELLER'S CHECK,
THE PERSON ASSERTING THE RIGHT TO ENFORCE THE
CHECK IS ENTITLED TO COMPENSATION FOR EXPENSES AND
LOSS OF INTEREST RESULTING FROM THE NONPAYMENT AND
MAY RECOVER CONSEQUENTIAL DAMAGES IF THE OBLIGATED
BANK REFUSES TO PAY AFTER RECEIVING NOTICE OF
PARTICULAR CIRCUMSTANCES GIVING RISE TO THE
DAMAGES.
(c) EXPENSES OR CONSEQUENTIAL DAMAGES UNDER
SUBSECTION (b) ARE NOT RECOVERABLE IF THE REFUSAL
OF THE OBLIGATED BANK TO PAY OCCURS BECAUSE (i)
THE BANK SUSPENDS PAYMENTS, (ii) THE OBLIGATED
BANK ASSERTS A CLAIM OR DEFENSE OF THE BANK THAT
IT HAS RESONABLE GROUNDS TO BELIEVE IS AVAILABLE
AGAINST THE PERSON ENTITLED TO ENFORCE THE
INSTRUMENT, (iii) THE OBLIGATED BANK HAS A
REASONABLE DOUBT WHETHER THE PERSON DEMANDING
PAYMENT IS THE PERSON ENTITLED TO ENFORCE THE
INSTRUMENT, OR (iv) PAYMENT IS PROHIBITED BY LAW.
Sec. 49. Section 42a-3-412 of the general
statutes is repealed and the following is
substituted in lieu thereof:
[(1) Where the drawee's proffered acceptance
in any manner varies the draft as presented the
holder may refuse the acceptance and treat the
draft as dishonored in which case the drawee is
entitled to have his acceptance cancelled.
(2) The terms of the draft are not varied by
an acceptance to pay at any particular bank or
place in the United States, unless the acceptance
states that the draft is to be paid only at such
bank or place.
(3) Where the holder assents to an acceptance
varying the terms of the draft each drawer and
endorser who does not affirmatively assent is
discharged.]
THE ISSUER OF A NOTE OR CASHIER'S CHECK OR
OTHER DRAFT DRAWN ON THE DRAWER IS OBLIGED TO PAY
THE INSTRUMENT (i) ACCORDING TO ITS TERMS AT THE
TIME IT WAS ISSUED OR, IF NOT ISSUED, AT THE TIME
IT FIRST CAME INTO POSSESSION OF A HOLDER, OR (ii)
IF THE ISSUER SIGNED AN INCOMPLETE INSTRUMENT,
ACCORDING TO ITS TERMS WHEN COMPLETED, TO THE
EXTENT STATED IN SECTIONS 42a-3-115 AND 42a-3-407.
THE OBLIGATION IS OWED TO A PERSON ENTITLED TO
ENFORCE THE INSTRUMENT OR TO AN INDORSER WHO PAID
THE INSTRUMENT UNDER SECTION 42a-3-415.
Sec. 50. Section 42a-3-413 of the general
statutes is repealed and the following is
substituted in lieu thereof:
[(1) The maker or acceptor engages that he
will pay the instrument according to its tenor at
the time of his engagement or as completed
pursuant to section 42a-3-115 on incomplete
instruments.
(2) The drawer engages that upon dishonor of
the draft and any necessary notice of dishonor or
protest he will pay the amount of the draft to the
holder or to any endorser who takes it up. The
drawer may disclaim this liability by drawing
without recourse.
(3) By making, drawing or accepting the party
admits as against all subsequent parties including
the drawee the existence of the payee and his then
capacity to endorse.]
(a) THE ACCEPTOR OF A DRAFT IS OBLIGED TO PAY
THE DRAFT (i) ACCORDING TO ITS TERMS AT THE TIME
IT WAS ACCEPTED, EVEN THOUGH THE ACCEPTANCE STATES
THAT THE DRAFT IS PAYABLE "AS ORIGINALLY DRAWN" OR
EQUIVALENT TERMS, (ii) IF THE ACCEPTANCE VARIES
THE TERMS OF THE DRAFT, ACCORDING TO THE TERMS OF
THE DRAFT AS VARIED, OR (iii) IF THE ACCEPTANCE IS
OF A DRAFT THAT IS AN INCOMPLETE INSTRUMENT,
ACCORDING TO ITS TERMS WHEN COMPLETED, TO THE
EXTENT STATED IN SECTIONS 42a-3-115 AND 42a-3-407.
THE OBLIGATION IS OWED TO A PERSON ENTITLED TO
ENFORCE THE DRAFT OR TO THE DRAWER OR AN INDORSER
WHO PAID THE DRAFT UNDER SECTION 42a-3-414 OR
42a-3-415.
(b) IF THE CERTIFICATION OF A CHECK OR OTHER
ACCEPTANCE OF A DRAFT STATES THE AMOUNT CERTIFIED
OR ACCEPTED, THE OBLIGATION OF THE ACCEPTOR IS
THAT AMOUNT. IF (i) THE CERTIFICATION OR
ACCEPTANCE DOES NOT STATE AN AMOUNT, (ii) THE
AMOUNT OF THE INSTRUMENT IS SUBSEQUENTLY RAISED,
AND (iii) THE INSTRUMENT IS THEN NEGOTIATED TO A
HOLDER IN DUE COURSE, THE OBLIGATION OF THE
ACCEPTOR IS THE AMOUNT OF THE INSTRUMENT AT THE
TIME IT WAS TAKEN BY THE HOLDER IN DUE COURSE.
Sec. 51. Section 42a-3-414 of the general
statutes is repealed and the following is
substituted in lieu thereof:
[(1) Unless the endorsement otherwise
specifies, as by such words as "without recourse",
every endorser engages that upon dishonor and any
necessary notice of dishonor and protest he will
pay the instrument according to its tenor at the
time of his endorsement to the holder or to any
subsequent endorser who takes it up, even though
the endorser who takes it up was not obligated to
do so.
(2) Unless they otherwise agree endorsers are
liable to one another in the order in which they
endorse, which is presumed to be the order in
which their signatures appear on the instrument.]
(a) THIS SECTION DOES NOT APPLY TO CASHIER'S
CHECKS OR OTHER DRAFTS DRAWN ON THE DRAWER.
(b) IF AN UNACCEPTED DRAFT IS DISHONORED, THE
DRAWER IS OBLIGED TO PAY THE DRAFT (i) ACCORDING
TO ITS TERMS AT THE TIME IT WAS ISSUED OR, IF NOT
ISSUED, AT THE TIME IT FIRST CAME INTO POSSESSION
OF A HOLDER, OR (ii) IF THE DRAWER SIGNED AN
INCOMPLETE INSTRUMENT, ACCORDING TO ITS TERMS WHEN
COMPLETED, TO THE EXTENT STATED IN SECTIONS
42a-3-115 AND 42a-3-407. THE OBLIGATION IS OWED TO
A PERSON ENTITLED TO ENFORCE THE DRAFT OR TO AN
INDORSER WHO PAID THE DRAFT UNDER SECTION
42a-3-415.
(c) IF A DRAFT IS ACCEPTED BY A BANK, THE
DRAWER IS DISCHARGED, REGARDLESS OF WHEN OR BY
WHOM ACCEPTANCE WAS OBTAINED.
(d) IF A DRAFT IS ACCEPTED AND THE ACCEPTOR IS
NOT A BANK, THE OBLIGATION OF THE DRAWER TO PAY
THE DRAFT IF THE DRAFT IS DISHONORED BY THE
ACCEPTOR IS THE SAME AS THE OBLIGATION OF AN
INDORSER UNDER SUBSECTIONS (a) AND (c) OF SECTION
42a-3-415.
(e) IF A DRAFT STATES THAT IT IS DRAWN
"WITHOUT RECOURSE" OR OTHERWISE DISCLAIMS
LIABILITY OF THE DRAWER TO PAY THE DRAFT, THE
DRAWER IS NOT LIABLE UNDER SUBSECTION (b) TO PAY
THE DRAFT IF THE DRAFT IS NOT A CHECK. A
DISCLAIMER OF THE LIABILITY STATED IN SUBSECTION
(b) IS NOT EFFECTIVE IF THE DRAFT IS A CHECK.
(f) IF (i) A CHECK IS NOT PRESENTED FOR
PAYMENT OR GIVEN TO A DEPOSITARY BANK FOR
COLLECTION WITHIN THIRTY DAYS AFTER ITS DATE, (ii)
THE DRAWEE SUSPENDS PAYMENTS AFTER EXPIRATION OF
THE THIRTY-DAY PERIOD WITHOUT PAYING THE CHECK,
AND (iii) BECAUSE OF THE SUSPENSION OF PAYMENTS,
THE DRAWER IS DEPRIVED OF FUNDS MAINTAINED WITH
THE DRAWEE TO COVER PAYMENT OF THE CHECK, THE
DRAWER TO THE EXTENT DEPRIVED OF FUNDS MAY
DISCHARGE ITS OBLIGATION TO PAY THE CHECK BY
ASSIGNING TO THE PERSON ENTITLED TO ENFORCE THE
CHECK THE RIGHTS OF THE DRAWER AGAINST THE DRAWEE
WITH RESPECT TO THE FUNDS.
Sec. 52. Section 42a-3-415 of the general
statutes is repealed and the following is
substituted in lieu thereof:
[(1) An accommodation party is one who signs
the instrument in any capacity for the purpose of
lending his name to another party to it.
(2) When the instrument has been taken for
value before it is due the accommodation party is
liable in the capacity in which he has signed even
though the taker knows of the accommodation.
(3) As against a holder in due course and
without notice of the accommodation oral proof of
the accommodation is not admissible to give the
accommodation party the benefit of discharges
dependent on his character as such. In other cases
the accommodation character may be shown by oral
proof.
(4) An endorsement which shows that it is not
in the chain of title is notice of its
accommodation character.
(5) An accommodation party is not liable to
the party accommodated, and if he pays the
instrument has a right of recourse on the
instrument against such party.]
(a) SUBJECT TO SUBSECTIONS (b), (c) AND (d)
AND TO SECTION 42a-3-419(d), IF AN INSTRUMENT IS
DISHONORED, AN INDORSER IS OBLIGED TO PAY THE
AMOUNT DUE ON THE INSTRUMENT (i) ACCORDING TO THE
TERMS OF THE INSTRUMENT AT THE TIME IT WAS
INDORSED, OR (ii) IF THE INDORSER INDORSED AN
INCOMPLETE INSTRUMENT, ACCORDING TO ITS TERMS WHEN
COMPLETED, TO THE EXTENT STATED IN SECTIONS
42a-3-115 AND 42a-3-407. THE OBLIGATION OF THE
INDORSER IS OWED TO A PERSON ENTITLED TO ENFORCE
THE INSTRUMENT OR TO A SUBSEQUENT INDORSER WHO
PAID THE INSTRUMENT UNDER THIS SECTION.
(b) IF AN INDORSEMENT STATES THAT IT IS MADE
"WITHOUT RECOURSE" OR OTHERWISE DISCLAIMS
LIABILITY OF THE INDORSER, THE INDORSER IS NOT
LIABLE UNDER SUBSECTION (a) TO PAY THE INSTRUMENT.
(c) IF NOTICE OF DISHONOR OF AN INSTRUMENT IS
REQUIRED BY SECTION 42a-3-503 AND NOTICE OF
DISHONOR COMPLYING WITH THAT SECTION IS NOT GIVEN
TO AN INDORSER, THE LIABILITY OF THE INDORSER
UNDER SUBSECTION (a) IS DISCHARGED.
(d) IF A DRAFT IS ACCEPTED BY A BANK AFTER AN
INDORSEMENT IS MADE, THE LIABILITY OF THE INDORSER
UNDER SUBSECTION (a) IS DISCHARGED.
(e) IF AN INDORSER OF A CHECK IS LIABLE UNDER
SUBSECTION (a) AND THE CHECK IS NOT PRESENTED FOR
PAYMENT, OR GIVEN TO A DEPOSITARY BANK FOR
COLLECTION, WITHIN THIRTY DAYS AFTER THE DAY THE
INDORSEMENT WAS MADE, THE LIABILITY OF THE
INDORSER UNDER SUBSECTION (a) IS DISCHARGED.
Sec. 53. Section 42a-3-416 of the general
statutes is repealed and the following is
substituted in lieu thereof:
[(1) "Payment guaranteed" or equivalent words
added to a signature mean that the signer engages
that if the instrument is not paid when due he
will pay it according to its tenor without resort
by the holder to any other party.
(2) "Collection guaranteed" or equivalent
words added to a signature mean that the signer
engages that if the instrument is not paid when
due he will pay it according to its tenor, but
only after the holder has reduced his claim
against the maker or acceptor to judgment and
execution has been returned unsatisfied, or after
the maker or acceptor has become insolvent or it
is otherwise apparent that it is useless to
proceed against him.
(3) Words of guaranty which do not otherwise
specify guarantee payment.
(4) No words of guaranty added to the
signature of a sole maker or acceptor affect his
liability on the instrument. Such words added to
the signature of one of two or more makers or
acceptors create a presumption that the signature
is for the accommodation of the others.
(5) When words of guaranty are used
presentment, notice of dishonor and protest are
not necessary to charge the user.
(6) Any guaranty written on the instrument is
enforceable notwithstanding any statute of
frauds.]
(a) A PERSON WHO TRANSFERS AN INSTRUMENT FOR
CONSIDERATION WARRANTS TO THE TRANSFEREE AND, IF
THE TRANSFER IS BY INDORSEMENT TO ANY SUBSEQUENT
TRANSFEREE THAT: (1) THE WARRANTOR IS A PERSON
ENTITLED TO ENFORCE THE INSTRUMENT; (2) ALL
SIGNATURES ON THE INSTRUMENT ARE AUTHENTIC AND
AUTHORIZED; (3) THE INSTRUMENT HAS NOT BEEN
ALTERED; (4) THE INSTRUMENT IS NOT SUBJECT TO A
DEFENSE OR CLAIM IN RECOUPMENT OF ANY PARTY WHICH
CAN BE ASSERTED AGAINST THE WARRANTOR; AND (5) THE
WARRANTOR HAS NO KNOWLEDGE OF ANY INSOLVENCY
PROCEEDING COMMENCED WITH RESPECT TO THE MAKER OR
ACCEPTOR OR, IN THE CASE OF AN UNACCEPTED DRAFT,
THE DRAWER.
(b) A PERSON TO WHOM THE WARRANTIES UNDER
SUBSECTION (a) ARE MADE AND WHO TOOK THE
INSTRUMENT IN GOOD FAITH MAY RECOVER FROM THE
WARRANTOR AS DAMAGES FOR BREACH OF WARRANTY AN
AMOUNT EQUAL TO THE LOSS SUFFERED AS A RESULT OF
THE BREACH, BUT NOT MORE THAN THE AMOUNT OF THE
INSTRUMENT PLUS EXPENSES AND LOSS OF INTEREST
INCURRED AS A RESULT OF THE BREACH.
(c) THE WARRANTIES STATED IN SUBSECTION (a)
CANNOT BE DISCLAIMED WITH RESPECT TO CHECKS.
UNLESS NOTICE OF A CLAIM FOR BREACH OF WARRANTY IS
GIVEN TO THE WARRANTOR WITH THIRTY DAYS AFTER THE
CLAIMANT HAS REASON TO KNOW OF THE BREACH AND THE
IDENTITY OF THE WARRANTOR, THE LIABILITY OF THE
WARRANTOR UNDER SUBSECTION (b) IS DISCHARGED TO
THE EXTENT OF ANY LOSS CAUSED BY THE DELAY IN
GIVING NOTICE OF THE CLAIM.
(d) A CAUSE OF ACTION FOR BREACH OF WARRANTY
UNDER THIS SECTION ACCRUES WHEN THE CLAIMANT HAS
REASON TO KNOW OF THE BREACH.
Sec. 54. Section 42a-3-417 of the general
statutes is repealed and the following is
substituted in lieu thereof:
[(1) Any person who obtains payment or
acceptance and any prior transferor warrants to a
person who in good faith pays or accepts that (a)
he has a good title to the instrument or is
authorized to obtain payment or acceptance on
behalf of one who has a good title; and (b) he has
no knowledge that the signature of the maker or
drawer is unauthorized, except that this warranty
is not given by a holder in due course acting in
good faith (i) to a maker with respect to the
maker's own signature; or (ii) to a drawer with
respect to the drawer's own signature, whether or
not the drawer is also the drawee; or (iii) to an
acceptor of a draft if the holder in due course
took the draft after the acceptance or obtained
the acceptance without knowledge that the drawer's
signature was unauthorized; and (c) the instrument
has not been materially altered, except that this
warranty is not given by a holder in due course
acting in good faith (i) to the maker of a note;
or (ii) to the drawer of a draft whether or not
the drawer is also the drawee; or (iii) to the
acceptor of a draft with respect to an alteration
made prior to the acceptance if the holder in due
course took the draft after the acceptance, even
though the acceptance provided "payable as
originally drawn" or equivalent terms; or (iv) to
the acceptor of a draft with respect to an
alteration made after the acceptance.
(2) Any person who transfers an instrument and
receives consideration warrants to his transferee
and if the transfer is by endorsement to any
subsequent holder who takes the instrument in good
faith that (a) he has a good title to the
instrument or is authorized to obtain payment or
acceptance on behalf of one who has a good title
and the transfer is otherwise rightful; and (b)
all signatures are genuine or authorized; and (c)
the instrument has not been materially altered;
and (d) no defense of any party is good against
him; and (e) he has no knowledge of any insolvency
proceeding instituted with respect to the maker or
acceptor or the drawer of an unaccepted
instrument.
(3) By transferring "without recourse" the
transferor limits the obligation stated in
subsection (2) (d) to a warranty that he has no
knowledge of such a defense.
(4) A selling agent or broker who does not
disclose the fact that he is acting only as such
gives the warranties provided in this section, but
if he makes such disclosure warrants only his good
faith and authority.]
(a) IF AN UNACCEPTED DRAFT IS PRESENTED TO THE
DRAWEE FOR PAYMENT OR ACCEPTANCE AND THE DRAWEE
PAYS OR ACCEPTS THE DRAFT, (i) THE PERSON
OBTAINING PAYMENT OR ACCEPTANCE, AT THE TIME OF
PRESENTMENT, AND (ii) A PREVIOUS TRANSFEROR OF THE
DRAFT, AT THE TIME OF TRANSFER, WARRANT TO THE
DRAWEE MAKING PAYMENT OR ACCEPTING THE DRAFT IN
GOOD FAITH THAT: (1) THE WARRANTOR IS, OR WAS, AT
THE TIME THE WARRANTOR TRANSFERRED THE DRAFT, A
PERSON ENTITLED TO ENFORCE THE DRAFT OR AUTHORIZED
TO OBTAIN PAYMENT OR ACCEPTANCE OF THE DRAFT ON
BEHALF OF A PERSON ENTITLED TO ENFORCE THE DRAFT;
(2) THE DRAFT HAS NOT BEEN ALTERED; AND (3) THE
WARRANTOR HAS NO KNOWLEDGE THAT THE SIGNATURE OF
THE DRAWER OF THE DRAFT IS UNAUTHORIZED.
(b) A DRAWEE MAKING PAYMENT MAY RECOVER FROM
ANY WARRANTOR DAMAGES FOR BREACH OF WARRANTY EQUAL
TO THE AMOUNT PAID BY THE DRAWEE LESS THE AMOUNT
THE DRAWEE RECEIVED OR IS ENTITLED TO RECEIVE FROM
THE DRAWER BECAUSE OF THE PAYMENT. IN ADDITION,
THE DRAWEE IS ENTITLED TO COMPENSATION FOR
EXPENSES AND LOSS OF INTEREST RESULTING FROM THE
BREACH. THE RIGHT OF THE DRAWEE TO RECOVER DAMAGES
UNDER THIS SUBSECTION IS NOT AFFECTED BY ANY
FAILURE OF THE DRAWEE TO EXERCISE ORDINARY CARE IN
MAKING PAYMENT. IF THE DRAWEE ACCEPTS THE DRAFT,
BREACH OF WARRANTY IS A DEFENSE TO THE OBLIGATION
OF THE ACCEPTOR. IF THE ACCEPTOR MAKES PAYMENT
WITH RESPECT TO THE DRAFT, THE ACCEPTOR IS
ENTITLED TO RECOVER FROM ANY WARRANTOR FOR BREACH
OF WARRANTY THE AMOUNTS STATED IN THIS SUBSECTION.
(c) IF A DRAWEE ASSERTS A CLAIM FOR BREACH OF
WARRANTY UNDER SUBSECTION (a) BASED ON AN
UNAUTHORIZED INDORSEMENT OF THE DRAFT OR AN
ALTERATION OF THE DRAFT, THE WARRANTOR MAY DEFEND
BY PROVING THAT THE INDORSEMENT IS EFFECTIVE UNDER
SECTION 42a-3-404 OR 42a-3-405 OR THE DRAWER IS
PRECLUDED UNDER SECTION 42a-3-406 OR 42a-4-406
FROM ASSERTING AGAINST THE DRAWEE THE UNAUTHORIZED
INDORSEMENT OR ALTERATION.
(d) IF (i) A DISHONORED DRAFT IS PRESENTED FOR
PAYMENT TO THE DRAWER OR AN INDORSER OR (ii) ANY
OTHER INSTRUMENT IS PRESENTED FOR PAYMENT TO A
PARTY OBLIGED TO PAY THE INSTRUMENT, AND (iii)
PAYMENT IS RECEIVED, THE FOLLOWING RULES APPLY:
(1) THE PERSON OBTAINING PAYMENT AND A PRIOR
TRANSFEROR OF THE INSTRUMENT WARRANT TO THE PERSON
MAKING PAYMENT IN GOOD FAITH THAT THE WARRANTOR
IS, OR WAS, AT THE TIME THE WARRANTOR TRANSFERRED
THE INSTRUMENT, A PERSON ENTITLED TO ENFORCE THE
INSTRUMENT OR AUTHORIZED TO OBTAIN PAYMENT ON
BEHALF OF A PERSON ENTITLED TO ENFORCE THE
INSTRUMENT.
(2) THE PERSON MAKING PAYMENT MAY RECOVER FROM
ANY WARRANTOR FOR BREACH OF WARRANTY AN AMOUNT
EQUAL TO THE AMOUNT PAID PLUS EXPENSES AND LOSS OF
INTEREST RESULTING FROM THE BREACH.
(e) THE WARRANTIES STATED IN SUBSECTIONS (a)
AND (d) CANNOT BE DISCLAIMED WITH RESPECT TO
CHECKS. UNLESS NOTICE OF A CLAIM FOR BREACH OF
WARRANTY IS GIVEN TO THE WARRANTOR WITHIN THIRTY
DAYS AFTER THE CLAIMANT HAS REASON TO KNOW OF THE
BREACH AND THE IDENTITY OF THE WARRANTOR, THE
LIABILITY OF THE WARRANTOR UNDER SUBSECTION (b) OR
(d) IS DISCHARGED TO THE EXTENT OF ANY LOSS CAUSED
BY THE DELAY IN GIVING NOTICE OF THE CLAIM.
(f) A CAUSE OF ACTION FOR BREACH OF WARRANTY
UNDER THIS SECTION ACCRUES WHEN THE CLAIMANT HAS
REASON TO KNOW OF THE BREACH.
Sec. 55. Section 42a-3-418 of the general
statutes is repealed and the following is
substituted in lieu thereof:
[Except for recovery of bank payments as
provided in article 4 and except for liability for
breach of warranty on presentment under the
preceding section, payment or acceptance of any
instrument is final in favor of a holder in due
course, or a person who has in good faith changed
his position in reliance on the payment.]
(a) EXCEPT AS PROVIDED IN SUBSECTION (c), IF
THE DRAWEE OF A DRAFT PAYS OR ACCEPTS THE DRAFT
AND THE DRAWEE ACTED ON THE MISTAKEN BELIEF THAT
(i) PAYMENT OF THE DRAFT HAD NOT BEEN STOPPED
PURSUANT TO SECTION 42a-4-403 OR (ii) THE
SIGNATURE OF THE DRAWER OF THE DRAFT WAS
AUTHORIZED, THE DRAWEE MAY RECOVER THE AMOUNT OF
THE DRAFT FROM THE PERSON TO WHOM OR FOR WHOSE
BENEFIT PAYMENT WAS MADE OR, IN THE CASE OF
ACCEPTANCE, MAY REVOKE THE ACCEPTANCE. RIGHTS OF
THE DRAWEE UNDER THIS SUBSECTION ARE NOT AFFECTED
BY FAILURE OF THE DRAWEE TO EXERCISE ORDINARY CARE
IN PAYING OR ACCEPTING THE DRAFT.
(b) EXCEPT AS PROVIDED IN SUBSECTION (c), IF
AN INSTRUMENT HAS BEEN PAID OR ACCEPTED BY MISTAKE
AND THE CASE IS NOT COVERED BY SUBSECTION (a), THE
PERSON PAYING OR ACCEPTING MAY, TO THE EXTENT
PERMITTED BY THE LAW GOVERNING MISTAKE AND
RESTITUTION, (i) RECOVER THE PAYMENT FROM THE
PERSON TO WHOM OR FOR WHOSE BENEFIT PAYMENT WAS
MADE OR (ii) IN THE CASE OF ACCEPTANCE, MAY REVOKE
THE ACCEPTANCE.
(c) THE REMEDIES PROVIDED BY SUBSECTION (a) OR
(b) MAY NOT BE ASSERTED AGAINST A PERSON WHO TOOK
THE INSTRUMENT IN GOOD FAITH AND FOR VALUE OR WHO
IN GOOD FAITH CHANGED POSITION IN RELIANCE ON THE
PAYMENT OR ACCEPTANCE. THIS SUBSECTION DOES NOT
LIMIT REMEDIES PROVIDED BY SECTION 42a-3-417 OR
42a-4-407.
(d) NOTWITHSTANDING SECTION 93 OF THIS ACT, IF
AN INSTRUMENT IS PAID OR ACCEPTED BY MISTAKE AND
THE PAYOR OR ACCEPTOR RECOVERS PAYMENT OR REVOKES
ACCEPTANCE UNDER SUBSECTION (a) OR (b), THE
INSTRUMENT IS DEEMED NOT TO HAVE BEEN PAID OR
ACCEPTED AND IS TREATED AS DISHONORED, AND THE
PERSON FROM WHOM PAYMENT IS RECOVERED HAS RIGHTS
AS A PERSON ENTITLED TO ENFORCE THE DISHONORED
INSTRUMENT.
Sec. 56. Section 42a-3-419 of the general
statutes is repealed and the following is
substituted in lieu thereof:
[(1) An instrument is converted when (a) a
drawee to whom it is delivered for acceptance
refuses to return it on demand; or (b) any person
to whom it is delivered for payment refuses on
demand either to pay or to return it; or (c) it is
paid on a forged endorsement.
(2) In an action against a drawee under
subsection (1) the measure of the drawee's
liability is the face amount of the instrument. In
any other action under subsection (1) the measure
of liability is presumed to be the face amount of
the instrument.
(3) Subject to the provisions of this title
concerning restrictive endorsements a
representative, including a depositary or
collecting bank, who has in good faith and in
accordance with the reasonable commercial
standards applicable to the business of such
representative dealt with an instrument or its
proceeds on behalf of one who was not the true
owner is not liable in conversion or otherwise to
the true owner beyond the amount of any proceeds
remaining in his hands.
(4) An intermediary bank or payor bank which
is not a depositary bank is not liable in
conversion solely by reason of the fact that
proceeds of an item endorsed restrictively as
provided in sections 42a-3-205 and 42a-3-206 are
not paid or applied consistently with the
restrictive endorsement of an endorser other than
its immediate transferor.]
(a) IF AN INSTRUMENT IS ISSUED FOR VALUE GIVEN
FOR THE BENEFIT OF A PARTY TO THE INSTRUMENT
("ACCOMMODATED PARTY") AND ANOTHER PARTY TO THE
INSTRUMENT ("ACCOMMODATION PARTY") SIGNS THE
INSTRUMENT FOR THE PURPOSE OF INCURRING LIABILITY
ON THE INSTRUMENT WITHOUT BEING A DIRECT
BENEFICIARY OF THE VALUE GIVEN FOR THE INSTRUMENT,
THE INSTRUMENT IS SIGNED BY THE ACCOMMODATION
PARTY "FOR ACCOMMODATION".
(b) AN ACCOMMODATION PARTY MAY SIGN THE
INSTRUMENT AS MAKER, DRAWER, ACCEPTOR, OR INDORSER
AND, SUBJECT TO SUBSECTION (d), IS OBLIGED TO PAY
THE INSTRUMENT IN THE CAPACITY IN WHICH THE
ACCOMMODATION PARTY SIGNS. THE OBLIGATION OF AN
ACCOMMODATION PARTY MAY BE ENFORCED
NOTWITHSTANDING ANY STATUTE OF FRAUDS AND WHETHER
OR NOT THE ACCOMMODATION PARTY RECEIVES
CONSIDERATION FOR THE ACCOMMODATION.
(c) A PERSON SIGNING AN INSTRUMENT IS PRESUMED
TO BE AN ACCOMMODATION PARTY AND THERE IS NOTICE
THAT THE INSTRUMENT IS SIGNED FOR ACCOMMODATION IF
THE SIGNATURE IS AN ANOMALOUS INDORSEMENT OR IS
ACCOMPANIED BY WORDS INDICATING THAT THE SIGNER IS
ACTING AS SURETY OR GUARANTOR WITH RESPECT TO THE
OBLIGATION OF ANOTHER PARTY TO THE INSTRUMENT.
EXCEPT AS PROVIDED IN SECTION 42a-3-605, THE
OBLIGATION OF AN ACCOMMODATION PARTY TO PAY THE
INSTRUMENT IS NOT AFFECTED BY THE FACT THAT THE
PERSON ENFORCING THE OBLIGATION HAD NOTICE WHEN
THE INSTRUMENT WAS TAKEN BY THAT PERSON THAT THE
ACCOMMODATION PARTY SIGNED THE INSTRUMENT FOR
ACCOMMODATION.
(d) IF THE SIGNATURE OF A PARTY TO AN
INSTRUMENT IS ACCOMPANIED BY WORDS INDICATING
UNAMBIGUOUSLY THAT THE PARTY IS GUARANTEEING
COLLECTION RATHER THAN PAYMENT OF THE OBLIGATION
OF ANOTHER PARTY TO THE INSTRUMENT, THE SIGNER IS
OBLIGED TO PAY THE AMOUNT DUE ON THE INSTRUMENT TO
A PERSON ENTITLED TO ENFORCE THE INSTRUMENT ONLY
IF (i) EXECUTION OF JUDGMENT AGAINST THE OTHER
PARTY HAS BEEN RETURNED UNSATISFIED, (ii) THE
OTHER PARTY IS INSOLVENT OR IN AN INSOLVENCY
PROCEEDING, (iii) THE OTHER PARTY CANNOT BE SERVED
WITH PROCESS, OR (iv) IT IS OTHERWISE APPARENT
THAT PAYMENT CANNOT BE OBTAINED FROM THE OTHER
PARTY.
(e) AN ACCOMMODATION PARTY WHO PAYS THE
INSTRUMENT IS ENTITLED TO REIMBURSEMENT FROM THE
ACCOMMODATED PARTY AND IS ENTITLED TO ENFORCE THE
INSTRUMENT AGAINST THE ACCOMMODATED PARTY. AN
ACCOMMODATED PARTY WHO PAYS THE INSTRUMENT HAS NO
RIGHT OF RECOURSE AGAINST, AND IS NOT ENTITLED TO
CONTRIBUTION FROM, AN ACCOMMODATION PARTY.
Sec. 57. (NEW) (a) The law applicable to
conversion of personal property applies to
instruments. An instrument is also converted if it
is taken by transfer, other than a negotiation,
from a person not entitled to enforce the
instrument or a bank makes or obtains payment with
respect to the instrument for a person not
entitled to enforce the instrument or receive
payment. An action for conversion of an instrument
may not be brought by (i) the issuer or acceptor
of the instrument or (ii) a payee or indorsee who
did not receive delivery of the instrument either
directly or through delivery to an agent or a
co-payee.
(b) In an action under subsection (a), the
measure of liability is presumed to be the amount
payable on the instrument, but recovery may not
exceed the amount of the plaintiff's interest in
the instrument.
(c) A representative, other than a depositary
bank, who has in good faith dealt with an
instrument or its proceeds on behalf of one who
was not the person entitled to enforce the
instrument is not liable in conversion to that
person beyond the amount of any proceeds that it
has not paid out.
Sec. 58. Section 42a-3-501 of the general
statutes is repealed and the following is
substituted in lieu thereof:
[(1) Unless excused as provided in section
42a-3-511 presentment is necessary to charge
secondary parties as follows: (a) Presentment for
acceptance is necessary to charge the drawer and
endorsers of a draft where the draft so provides,
or is payable elsewhere than at the residence or
place of business of the drawee, or its date of
payment depends upon such presentment. The holder
may at his option present for acceptance any other
draft payable at a stated date; (b) presentment
for payment is necessary to charge any endorser;
(c) in the case of any drawer, the acceptor of a
draft payable at a bank or the maker of a note
payable at a bank, presentment for payment is
necessary, but failure to make presentment
discharges such drawer, acceptor or maker only as
stated in section 42a-3-502 (1) (b).
(2) Unless excused as provided in section
42a-3-511 (a) notice of any dishonor is necessary
to charge any endorser; (b) in the case of any
drawer, the acceptor of a draft payable at a bank
or the maker of a note payable at a bank, notice
of any dishonor is necessary, but failure to give
such notice discharges such drawer, acceptor or
maker only as stated in section 42a-3-502(1) (b).
(3) Unless excused as provided in section
42a-3-511 protest of any dishonor is necessary to
charge the drawer and endorsers of any draft which
on its face appears to be drawn or payable outside
of the states and territories of the United States
and the District of Columbia. The holder may at
his option make protest of any dishonor of any
other instrument and in the case of a foreign
draft may on insolvency of the acceptor before
maturity make protest for better security.
(4) Notwithstanding any provision of this
section, neither presentment nor notice of
dishonor nor protest is necessary to charge an
endorser who has endorsed an instrument after
maturity.]
(a) "PRESENTMENT" MEANS A DEMAND MADE BY OR ON
BEHALF OF A PERSON ENTITLED TO ENFORCE AN
INSTRUMENT (i) TO PAY THE INSTRUMENT MADE TO THE
DRAWEE OR A PARTY OBLIGED TO PAY THE INSTRUMENT
OR, IN THE CASE OF A NOTE OR ACCEPTED DRAFT
PAYABLE AT A BANK, TO THE BANK, OR (ii) TO ACCEPT
A DRAFT MADE TO THE DRAWEE.
(b) THE FOLLOWING RULES ARE SUBJECT TO ARTICLE
4, AGREEMENT OF THE PARTIES, AND CLEARING-HOUSE
RULES AND THE LIKE:
(1) PRESENTMENT MAY BE MADE AT THE PLACE OF
PAYMENT OF THE INSTRUMENT AND MUST BE MADE AT THE
PLACE OF PAYMENT IF THE INSTRUMENT IS PAYABLE AT A
BANK IN THE UNITED STATES; MAY BE MADE BY ANY
COMMERCIALLY REASONABLE MEANS, INCLUDING AN ORAL,
WRITTEN, OR ELECTRONIC COMMUNICATION; IS EFFECTIVE
WHEN THE DEMAND FOR PAYMENT OR ACCEPTANCE IS
RECEIVED BY THE PERSON TO WHOM PRESENTMENT IS
MADE; AND IS EFFECTIVE IF MADE TO ANY ONE OF TWO
OR MORE MAKERS, ACCEPTORS, DRAWEES, OR OTHER
PAYORS.
(2) UPON DEMAND OF THE PERSON TO WHOM
PRESENTMENT IS MADE, THE PERSON MAKING PRESENTMENT
MUST (i) EXHIBIT THE INSTRUMENT, (ii) GIVE
REASONABLE IDENTIFICATION AND, IF PRESENTMENT IS
MADE ON BEHALF OF ANOTHER PERSON, REASONABLE
EVIDENCE OF AUTHORITY TO DO SO, AND (iii) SIGN A
RECEIPT ON THE INSTRUMENT FOR ANY PAYMENT MADE OR
SURRENDER THE INSTRUMENT IF FULL PAYMENT IS MADE.
(3) WITHOUT DISHONORING THE INSTRUMENT, THE
PARTY TO WHOM PRESENTMENT IS MADE MAY (i) RETURN
THE INSTRUMENT FOR LACK OF A NECESSARY
INDORSEMENT, OR (ii) REFUSE PAYMENT OR ACCEPTANCE
FOR FAILURE OF THE PRESENTMENT TO COMPLY WITH THE
TERMS OF THE INSTRUMENT, AN AGREEMENT OF THE
PARTIES, OR OTHER APPLICABLE LAW OR RULE.
(4) THE PARTY TO WHOM PRESENTMENT IS MADE MAY
TREAT PRESENTMENT AS OCCURRING ON THE NEXT
BUSINESS DAY AFTER THE DAY OF PRESENTMENT IF THE
PARTY TO WHOM PRESENTMENT IS MADE HAS ESTABLISHED
A CUT-OFF HOUR NOT EARLIER THAN TWO O'CLOCK P.M.
FOR THE RECEIPT AND PROCESSING OF INSTRUMENTS
PRESENTED FOR PAYMENT OR ACCEPTANCE AND
PRESENTMENT IS MADE AFTER THE CUT-OFF HOUR.
Sec. 59. Section 42a-3-502 of the general
statutes is repealed and the following is
substituted in lieu thereof:
[(1) Where without excuse any necessary
presentment or notice of dishonor is delayed
beyond the time when it is due (a) any endorser is
discharged; and (b) any drawer or the acceptor of
a draft payable at a bank or the maker of a note
payable at a bank who because the drawee or payor
bank becomes insolvent during the delay is
deprived of funds maintained with the drawee or
payor bank to cover the instrument may discharge
his liability by written assignment to the holder
of his rights against the drawee or payor bank in
respect of such funds, but such drawer, acceptor
or maker is not otherwise discharged.
(2) Where without excuse a necessary protest
is delayed beyond the time when it is due any
drawer or endorser is discharged.]
(a) DISHONOR OF A NOTE IS GOVERNED BY THE
FOLLOWING RULES:
(1) IF THE NOTE IS PAYABLE ON DEMAND, THE NOTE
IS DISHONORED IF PRESENTMENT IS DULY MADE TO THE
MAKER AND THE NOTE IS NOT PAID ON THE DAY OF
PRESENTMENT.
(2) IF THE NOTE IS NOT PAYABLE ON DEMAND AND
IS PAYABLE AT OR THROUGH A BANK OR THE TERMS OF
THE NOTE REQUIRE PRESENTMENT, THE NOTE IS
DISHONORED IF PRESENTMENT IS DULY MADE AND THE
NOTE IS NOT PAID ON THE DAY IT BECOMES PAYABLE OR
THE DAY OF PRESENTMENT, WHICHEVER IS LATER.
(3) IF THE NOTE IS NOT PAYABLE ON DEMAND AND
PARAGRAPH (2) DOES NOT APPLY, THE NOTE IS
DISHONORED IF IT IS NOT PAID ON THE DAY IT BECOMES
PAYABLE.
(b) DISHONOR OF AN UNACCEPTED DRAFT OTHER THAN
A DOCUMENTARY DRAFT IS GOVERNED BY THE FOLLOWING
RULES:
(1) IF A CHECK IS DULY PRESENTED FOR PAYMENT
TO THE PAYOR BANK OTHERWISE THAN FOR IMMEDIATE
PAYMENT OVER THE COUNTER, THE CHECK IS DISHONORED
IF THE PAYOR BANK MAKES TIMELY RETURN OF THE CHECK
OR SENDS TIMELY NOTICE OF DISHONOR OR NONPAYMENT
UNDER SECTION 42a-4-301 OR 42a-4-302, OR BECOMES
ACCOUNTABLE FOR THE AMOUNT OF THE CHECK UNDER
SECTION 42a-4-302.
(2) IF A DRAFT IS PAYABLE ON DEMAND AND
PARAGRAPH (1) DOES NOT APPLY, THE DRAFT IS
DISHONORED IF PRESENTMENT FOR PAYMENT IS DULY MADE
TO THE DRAWEE AND THE DRAFT IS NOT PAID ON THE DAY
OF PRESENTMENT.
(3) IF A DRAFT IS PAYABLE ON A DATE STATED IN
THE DRAFT, THE DRAFT IS DISHONORED IF (i)
PRESENTMENT FOR PAYMENT IS DULY MADE TO THE DRAWEE
AND PAYMENT IS NOT MADE ON THE DAY THE DRAFT
BECOMES PAYABLE OR THE DAY OF PRESENTMENT,
WHICHEVER IS LATER, OR (ii) PRESENTMENT FOR
ACCEPTANCE IS DULY MADE BEFORE THE DAY THE DRAFT
BECOMES PAYABLE AND THE DRAFT IS NOT ACCEPTED ON
THE DAY OF PRESENTMENT.
(4) IF A DRAFT IS PAYABLE ON ELAPSE OF A
PERIOD OF TIME AFTER SIGHT OR ACCEPTANCE, THE
DRAFT IS DISHONORED IF PRESENTMENT FOR ACCEPTANCE
IS DULY MADE AND THE DRAFT IS NOT ACCEPTED ON THE
DAY OF PRESENTMENT.
(c) DISHONOR OF AN UNACCEPTED DOCUMENTARY
DRAFT OCCURS ACCORDING TO THE RULES STATED IN
SUBSECTION (b)(2), (3) AND (4), EXCEPT THAT
PAYMENT OR ACCEPTANCE MAY BE DELAYED WITHOUT
DISHONOR UNTIL NO LATER THAN THE CLOSE OF THE
THIRD BUSINESS DAY OF THE DRAWEE FOLLOWING THE DAY
ON WHICH PAYMENT OR ACCEPTANCE IS REQUIRED BY
THOSE PARAGRAPHS.
(d) DISHONOR OF AN ACCEPTED DRAFT IS GOVERNED
BY THE FOLLOWING RULES:
(1) IF THE DRAFT IS PAYABLE ON DEMAND, THE
DRAFT IS DISHONORED IF PRESENTMENT FOR PAYMENT IS
DULY MADE TO THE ACCEPTOR AND THE DRAFT IS NOT
PAID ON THE DAY OF PRESENTMENT.
(2) IF THE DRAFT IS NOT PAYABLE ON DEMAND, THE
DRAFT IS DISHONORED IF PRESENTMENT FOR PAYMENT IS
DULY MADE TO THE ACCEPTOR AND PAYMENT IS NOT MADE
ON THE DAY IT BECOMES PAYABLE OR THE DAY OF
PRESENTMENT, WHICHEVER IS LATER.
(e) IN ANY CASE IN WHICH PRESENTMENT IS
OTHERWISE REQUIRED FOR DISHONOR UNDER THIS SECTION
AND PRESENTMENT IS EXCUSED UNDER SECTION
42a-3-504, DISHONOR OCCURS WITHOUT PRESENTMENT IF
THE INSTRUMENT IS NOT DULY ACCEPTED OR PAID.
(f) IF A DRAFT IS DISHONORED BECAUSE TIMELY
ACCEPTANCE OF THE DRAFT WAS NOT MADE AND THE
PERSON ENTITLED TO DEMAND ACCEPTANCE CONSENTS TO A
LATE ACCEPTANCE, FROM THE TIME OF ACCEPTANCE THE
DRAFT IS TREATED AS NEVER HAVING BEEN DISHONORED.
Sec. 60. Section 42a-3-503 of the general
statutes is repealed and the following is
substituted in lieu thereof:
[(1) Unless a different time is expressed in
the instrument the time for any presentment is
determined as follows: (a) Where an instrument is
payable at or a fixed period after a stated date
any presentment for acceptance must be made on or
before the date it is payable; (b) where an
instrument is payable after sight it must either
be presented for acceptance or negotiated within a
reasonable time after date or issue whichever is
later; (c) where an instrument shows the date on
which it is payable presentment for payment is due
on that date; (d) where an instrument is
accelerated presentment for payment is due within
a reasonable time after the acceleration; (e) with
respect to the liability of any secondary party
presentment for acceptance or payment of any other
instrument is due within a reasonable time after
such party becomes liable thereon.
(2) A reasonable time for presentment is
determined by the nature of the instrument, any
usage of banking or trade and the facts of the
particular case. In the case of an uncertified
check which is drawn and payable within the United
States and which is not a draft drawn by a bank
the following are presumed to be reasonable
periods within which to present for payment or to
initiate bank collection: (a) With respect to the
liability of the drawer, thirty days after date or
issue whichever is later; and (b) with respect to
the liability of an endorser, seven days after his
endorsement.
(3) Where any presentment is due on a day
which is not a full business day for either the
person making presentment or the party to pay or
accept, presentment is due on the next following
day which is a full business day for both parties.
(4) Presentment to be sufficient must be made
at a reasonable hour, and if at a bank during its
banking day.]
(a) THE OBLIGATION OF AN INDORSER STATED IN
SECTION 42a-3-415(a) AND THE OBLIGATION OF A
DRAWER STATED IN SECTION 42a-3-414(d) MAY NOT BE
ENFORCED UNLESS (i) THE INDORSER OR DRAWER IS
GIVEN NOTICE OF DISHONOR OF THE INSTRUMENT
COMPLYING WITH THIS SECTION OR (ii) NOTICE OF
DISHONOR IS EXCUSED UNDER SECTION 42a-3-504(b).
(b) NOTICE OF DISHONOR MAY BE GIVEN BY ANY
PERSON; MAY BE GIVEN BY ANY COMMERCIALLY
REASONABLE MEANS, INCLUDING AN ORAL, WRITTEN, OR
ELECTRONIC COMMUNICATION; AND IS SUFFICIENT IF IT
REASONABLY IDENTIFIES THE INSTRUMENT AND INDICATES
THAT THE INSTRUMENT HAS BEEN DISHONORED OR HAS NOT
BEEN PAID OR ACCEPTED. RETURN OF AN INSTRUMENT
GIVEN TO A BANK FOR COLLECTION IS SUFFICIENT
NOTICE OF DISHONOR.
(c) SUBJECT TO SECTION 42a-3-504(c), WITH
RESPECT TO AN INSTRUMENT TAKEN FOR COLLECTION BY A
COLLECTING BANK, NOTICE OF DISHONOR MUST BE GIVEN
(i) BY THE BANK BEFORE MIDNIGHT OF THE NEXT
BANKING DAY FOLLOWING THE BANKING DAY ON WHICH THE
BANK RECEIVES NOTICE OF DISHONOR OF THE
INSTRUMENT, OR (ii) BY ANY OTHER PERSON WITHIN
THIRTY DAYS FOLLOWING THE DAY ON WHICH THE PERSON
RECEIVES NOTICE OF DISHONOR. WITH RESPECT TO ANY
OTHER INSTRUMENT, NOTICE OF DISHONOR MUST BE GIVEN
WITHIN THIRTY DAYS FOLLOWING THE DAY ON WHICH
DISHONOR OCCURS.
Sec. 61. Section 42a-3-504 of the general
statutes is repealed and the following is
substituted in lieu thereof:
[(1) Presentment is a demand for acceptance or
payment made upon the maker, acceptor, drawee or
other payor by or on behalf of the holder.
(2) Presentment may be made (a) by mail, in
which event the time of presentment is determined
by the time of receipt of the mail; or (b) through
a clearing house; or (c) at the place of
acceptance or payment specified in the instrument
or if there be none at the place of business or
residence of the party to accept or pay. If
neither the party to accept or pay nor anyone
authorized to act for him is present or accessible
at such place presentment is excused.
(3) It may be made (a) to any one of two or
more makers, acceptors, drawees or other payors;
or (b) to any person who has authority to make or
refuse the acceptance or payment.
(4) A draft accepted or a note made payable at
a bank in the United States must be presented at
such bank.
(5) In the cases described in section
42a-4-210 presentment may be made in the manner
and with the result stated in that section.]
(a) PRESENTMENT FOR PAYMENT OR ACCEPTANCE OF
AN INSTRUMENT IS EXCUSED IF (i) THE PERSON
ENTITLED TO PRESENT THE INSTRUMENT CANNOT WITH
REASONABLE DILIGENCE MAKE PRESENTMENT, (ii) THE
MAKER OR ACCEPTOR HAS REPUDIATED AN OBLIGATION TO
PAY THE INSTRUMENT OR IS DEAD OR IN INSOLVENCY
PROCEEDINGS, (iii) BY THE TERMS OF THE INSTRUMENT
PRESENTMENT IS NOT NECESSARY TO ENFORCE THE
OBLIGATION OF INDORSERS OR THE DRAWER, (iv) THE
DRAWER OR INDORSER WHOSE OBLIGATION IS BEING
ENFORCED HAS WAIVED PRESENTMENT OR OTHERWISE HAS
NO REASON TO EXPECT OR RIGHT TO REQUIRE THAT THE
INSTRUMENT BE PAID OR ACCEPTED, OR (v) THE DRAWER
INSTRUCTED THE DRAWEE NOT TO PAY OR ACCEPT THE
DRAFT OR THE DRAWEE WAS NOT OBLIGATED TO THE
DRAWER TO PAY THE DRAFT.
(b) NOTICE OF DISHONOR IS EXCUSED IF (i) BY
THE TERMS OF THE INSTRUMENT NOTICE OF DISHONOR IS
NOT NECESSARY TO ENFORCE THE OBLIGATION OF A PARTY
TO PAY THE INSTRUMENT, OR (ii) THE PARTY WHOSE
OBLIGATION IS BEING ENFORCED WAIVED NOTICE OF
DISHONOR. A WAIVER OF PRESENTMENT IS ALSO A WAIVER
OF NOTICE OF DISHONOR.
(c) DELAY IN GIVING NOTICE OF DISHONOR IS
EXCUSED IF THE DELAY WAS CAUSED BY CIRCUMSTANCES
BEYOND THE CONTROL OF THE PERSON GIVING THE NOTICE
AND THE PERSON GIVING THE NOTICE EXERCISED
REASONABLE DILIGENCE AFTER THE CAUSE OF THE DELAY
CEASED TO OPERATE.
Sec. 62. Section 42a-3-505 of the general
statutes is repealed and the following is
substituted in lieu thereof:
[(1) The party to whom presentment is made may
without dishonor require (a) exhibition of the
instrument; and (b) reasonable identification of
the person making presentment and evidence of his
authority to make it if made for another; and (c)
that the instrument be produced for acceptance or
payment at a place specified in it, or if there be
none at any place reasonable in the circumstances;
and (d) a signed receipt on the instrument for any
partial or full payment and its surrender upon
full payment.
(2) Failure to comply with any such
requirement invalidates the presentment but the
person presenting has a reasonable time in which
to comply and the time for acceptance or payment
runs from the time of compliance.]
(a) THE FOLLOWING ARE ADMISSIBLE AS EVIDENCE
AND CREATE A PRESUMPTION OF DISHONOR AND OF ANY
NOTICE OF DISHONOR STATED: (1) A DOCUMENT REGULAR
IN FORM AS PROVIDED IN SUBSECTION (b) WHICH
PURPORTS TO BE A PROTEST; (2) A PURPORTED STAMP OR
WRITING OF THE DRAWEE, PAYOR BANK, OR PRESENTING
BANK ON OR ACCOMPANYING THE INSTRUMENT STATING
THAT ACCEPTANCE OR PAYMENT HAS BEEN REFUSED UNLESS
REASONS FOR THE REFUSAL ARE STATED AND THE REASONS
ARE NOT CONSISTENT WITH DISHONOR; (3) A BOOK OR
RECORD OF THE DRAWEE, PAYOR BANK, OR COLLECTING
BANK, KEPT IN THE USUAL COURSE OF BUSINESS WHICH
SHOWS DISHONOR, EVEN IF THERE IS NO EVIDENCE OF
WHO MADE THE ENTRY.
(b) A PROTEST IS A CERTIFICATE OF DISHONOR
MADE BY A UNITED STATES CONSUL OR VICE CONSUL, OR
A NOTARY PUBLIC OR OTHER PERSON AUTHORIZED TO
ADMINISTER OATHS BY THE LAW OF THE PLACE WHERE
DISHONOR OCCURS. IT MAY BE MADE UPON INFORMATION
SATISFACTORY TO THAT PERSON. THE PROTEST MUST
IDENTIFY THE INSTRUMENT AND CERTIFY EITHER THAT
PRESENTMENT HAS BEEN MADE OR, IF NOT MADE, THE
REASON WHY IT WAS NOT MADE, AND THAT THE
INSTRUMENT HAS BEEN DISHONORED BY NONACCEPTANCE OR
NONPAYMENT. THE PROTEST MAY ALSO CERTIFY THAT
NOTICE OF DISHONOR HAS BEEN GIVEN TO SOME OR ALL
PARTIES.
Sec. 63. Section 42a-3-601 of the general
statutes is repealed and the following is
substituted in lieu thereof:
[(1) The extent of the discharge of any party
from liability on an instrument is governed by the
sections on (a) payment or satisfaction as
provided in section 42a-3-603; or (b) tender of
payment as provided in section 42a-3-604; or (c)
cancellation or renunciation as provided in
section 42a-3-605; or (d) impairment of right of
recourse or of collateral as provided in section
42a-3-606; or (e) reacquisition of the instrument
by a prior party as provided in section 42a-3-208;
or (f) fraudulent and material alteration as
provided in section 42a-3-407; or (g)
certification of a check as provided in section
42a-3-411; or (h) acceptance varying a draft as
provided in section 42a-3-412; or (i) unexcused
delay in presentment or notice of dishonor or
protest as provided in section 42a-3-502.
(2) Any party is also discharged from his
liability on an instrument to another party by any
other act or agreement with such party which would
discharge his simple contract for the payment of
money.
(3) The liability of all parties is discharged
when any party who has himself no right of action
or recourse on the instrument (a) reacquires the
instrument in his own right; or (b) is discharged
under any provision of this article, except as
otherwise provided by section 42a-3-606 with
respect to discharge for impairment of recourse or
of collateral.]
(a) THE OBLIGATION OF A PARTY TO PAY THE
INSTRUMENT IS DISCHARGED AS STATED IN THIS ARTICLE
OR BY AN ACT OR AGREEMENT WITH THE PARTY WHICH
WOULD DISCHARGE AN OBLIGATION TO PAY MONEY UNDER A
SIMPLE CONTRACT.
(b) DISCHARGE OF THE OBLIGATION OF A PARTY IS
NOT EFFECTIVE AGAINST A PERSON ACQUIRING RIGHTS OF
A HOLDER IN DUE COURSE OF THE INSTRUMENT WITHOUT
NOTICE OF THE DISCHARGE.
Sec. 64. Section 42a-3-602 of the general
statutes is repealed and the following is
substituted in lieu thereof:
[No discharge of any party provided by this
article is effective against a subsequent holder
in due course unless he has notice thereof when he
takes the instrument.]
(a) SUBJECT TO SUBSECTION (b), AN INSTRUMENT
IS PAID TO THE EXTENT PAYMENT IS MADE (i) BY OR ON
BEHALF OF A PARTY OBLIGED TO PAY THE INSTRUMENT,
AND (ii) TO A PERSON ENTITLED TO ENFORCE THE
INSTRUMENT. TO THE EXTENT OF THE PAYMENT, THE
OBLIGATION OF THE PARTY OBLIGED TO PAY THE
INSTRUMENT IS DISCHARGED EVEN THOUGH PAYMENT IS
MADE WITH KNOWLEDGE OF A CLAIM TO THE INSTRUMENT
UNDER SECTION 42a-3-306 BY ANOTHER PERSON.
(b) THE OBLIGATION OF A PARTY TO PAY THE
INSTRUMENT IS NOT DISCHARGED UNDER SUBSECTION (a)
IF: (1) A CLAIM TO THE INSTRUMENT UNDER SECTION
42a-3-306 IS ENFORCEABLE AGAINST THE PARTY
RECEIVING PAYMENT AND (i) PAYMENT IS MADE WITH
KNOWLEDGE BY THE PAYOR THAT PAYMENT IS PROHIBITED
BY INJUNCTION OR SIMILAR PROCESS OF A COURT OF
COMPETENT JURISDICTION, OR (ii) IN THE CASE OF AN
INSTRUMENT OTHER THAN A CASHIER'S CHECK, TELLER'S
CHECK, OR CERTIFIED CHECK, THE PARTY MAKING
PAYMENT ACCEPTED, FROM THE PERSON HAVING A CLAIM
TO THE INSTRUMENT, INDEMNITY AGAINST LOSS
RESULTING FROM REFUSAL TO PAY THE PERSON ENTITLED
TO ENFORCE THE INSTRUMENT; OR (2) THE PERSON
MAKING PAYMENT KNOWS THAT THE INSTRUMENT IS A
STOLEN INSTRUMENT AND PAYS A PERSON IT KNOWS IS IN
WRONGFUL POSSESSION OF THE INSTRUMENT.
Sec. 65. Section 42a-3-603 of the general
statutes is repealed and the following is
substituted in lieu thereof:
[(1) The liability of any party is discharged
to the extent of his payment or satisfaction to
the holder even though it is made with knowledge
of a claim of another person to the instrument
unless prior to such payment or satisfaction the
person making the claim either supplies indemnity
deemed adequate by the party seeking the discharge
or enjoins payment or satisfaction by order of a
court of competent jurisdiction in an action in
which the adverse claimant and the holder are
parties. This subsection does not, however, result
in the discharge of the liability (a) of a party
who in bad faith pays or satisfies a holder who
acquired the instrument by theft or who, unless
having the rights of a holder in due course, holds
through one who so acquired it; or (b) of a party,
other than an intermediary bank or a payor bank
which is not a depositary bank, who pays or
satisfies the holder of an instrument which has
been restrictively endorsed in a manner not
consistent with the terms of such restrictive
endorsement.
(2) Payment or satisfaction may be made with
the consent of the holder by any person including
a stranger to the instrument. Surrender of the
instrument to such a person gives him the rights
of a transferee as provided in section 42a-3-201.]
(a) IF TENDER OF PAYMENT OF AN OBLIGATION TO
PAY AN INSTRUMENT IS MADE TO A PERSON ENTITLED TO
ENFORCE THE INSTRUMENT, THE EFFECT OF TENDER IS
GOVERNED BY PRINCIPLES OF LAW APPLICABLE TO TENDER
OF PAYMENT UNDER A SIMPLE CONTRACT.
(b) IF TENDER OF PAYMENT OF AN OBLIGATION TO
PAY AN INSTRUMENT IS MADE TO A PERSON ENTITLED TO
ENFORCE THE INSTRUMENT AND THE TENDER IS REFUSED,
THERE IS DISCHARGE, TO THE EXTENT OF THE AMOUNT OF
THE TENDER, OF THE OBLIGATION OF AN INDORSER OR
ACCOMMODATION PARTY HAVING A RIGHT OF RECOURSE
WITH RESPECT TO THE OBLIGATION TO WHICH THE TENDER
RELATES.
(c) IF TENDER OF PAYMENT OF AN AMOUNT DUE ON
AN INSTRUMENT IS MADE TO A PERSON ENTITLED TO
ENFORCE THE INSTRUMENT, THE OBLIGATION OF THE
OBLIGOR TO PAY INTEREST AFTER THE DUE DATE ON THE
AMOUNT TENDERED IS DISCHARGED. IF PRESENTMENT IS
REQUIRED WITH RESPECT TO AN INSTRUMENT AND THE
OBLIGOR IS ABLE AND READY TO PAY ON THE DUE DATE
AT EVERY PLACE OF PAYMENT STATED IN THE
INSTRUMENT, THE OBLIGOR IS DEEMED TO HAVE MADE
TENDER OF PAYMENT ON THE DUE DATE TO THE PERSON
ENTITLED TO ENFORCE THE INSTRUMENT.
Sec. 66. Section 42a-3-604 of the general
statutes is repealed and the following is
substituted in lieu thereof:
[(1) Any party making tender of full payment
to a holder when or after it is due is discharged
to the extent of all subsequent liability for
interest, costs and attorney's fees.
(2) The holder's refusal of such tender wholly
discharges any party who has a right of recourse
against the party making the tender.
(3) Where the maker or acceptor of an
instrument payable otherwise than on demand is
able and ready to pay at every place of payment
specified in the instrument when it is due, it is
equivalent to tender.]
(a) A PERSON ENTITLED TO ENFORCE AN
INSTRUMENT, WITH OR WITHOUT CONSIDERATION, MAY
DISCHARGE THE OBLIGATION OF A PARTY TO PAY THE
INSTRUMENT (i) BY AN INTENTIONAL VOLUNTARY ACT,
SUCH AS SURRENDER OF THE INSTRUMENT TO THE PARTY,
DESTRUCTION, MUTILATION, OR CANCELLATION OF THE
INSTRUMENT, CANCELLATION OR STRIKING OUT OF THE
PARTY'S SIGNATURE, OR THE ADDITION OF WORDS TO THE
INSTRUMENT INDICATING DISCHARGE, OR (ii) BY
AGREEING NOT TO SUE OR OTHERWISE RENOUNCING RIGHTS
AGAINST THE PARTY BY A SIGNED WRITING.
(b) CANCELLATION OR STRIKING OUT OF AN
INDORSEMENT PURSUANT TO SUBSECTION (a) DOES NOT
AFFECT THE STATUS AND RIGHTS OF A PARTY DERIVED
FROM THE INDORSEMENT.
Sec. 67. Section 42a-3-605 of the general
statutes is repealed and the following is
substituted in lieu thereof:
[(1) The holder of an instrument may even
without consideration discharge any party (a) in
any manner apparent on the face of the instrument
or the endorsement, as by intentionally cancelling
the instrument or the party's signature by
destruction or mutilation, or by striking out the
party's signature; or (b) by renouncing his rights
by a writing signed and delivered or by surrender
of the instrument to the party to be discharged.
(2) Neither cancellation nor renunciation
without surrender of the instrument affects the
title thereto.]
(a) IN THIS SECTION, THE TERM "INDORSER"
INCLUDES A DRAWER HAVING THE OBLIGATION DESCRIBED
IN SECTION 42a-3-414(d).
(b) DISCHARGE, UNDER SECTION 42a-3-604, OF
THE OBLIGATION OF A PARTY TO PAY AN INSTRUMENT
DOES NOT DISCHARGE THE OBLIGATION OF AN INDORSER
OR ACCOMMODATION PARTY HAVING A RIGHT OF RECOURSE
AGAINST THE DISCHARGED PARTY.
(c) IF A PERSON ENTITLED TO ENFORCE AN
INSTRUMENT AGREES, WITH OR WITHOUT CONSIDERATION,
TO AN EXTENSION OF THE DUE DATE OF THE OBLIGATION
OF A PARTY TO PAY THE INSTRUMENT, THE EXTENSION
DISCHARGES AN INDORSER OR ACCOMMODATION PARTY
HAVING A RIGHT OF RECOURSE AGAINST THE PARTY WHOSE
OBLIGATION IS EXTENDED TO THE EXTENT THE INDORSER
OR ACCOMMODATION PARTY PROVES THAT THE EXTENSION
CAUSED LOSS TO THE INDORSER OR ACCOMMODATION PARTY
WITH RESPECT TO THE RIGHT OF RECOURSE.
(d) IF A PERSON ENTITLED TO ENFORCE AN
INSTRUMENT AGREES, WITH OR WITHOUT CONSIDERATION,
TO A MATERIAL MODIFICATION OF THE OBLIGATION OF A
PARTY OTHER THAN AN EXTENSION OF THE DUE DATE, THE
MODIFICATION DISCHARGES THE OBLIGATION OF AN
INDORSER OR ACCOMMODATION PARTY HAVING A RIGHT OF
RECOURSE AGAINST THE PERSON WHOSE OBLIGATION IS
MODIFIED TO THE EXTENT THE MODIFICATION CAUSES
LOSS TO THE INDORSER OR ACCOMMODATION PARTY WITH
RESPECT TO THE RIGHT OF RECOURSE. THE LOSS
SUFFERED BY THE INDORSER OR ACCOMMODATION PARTY AS
A RESULT OF THE MODIFICATION IS EQUAL TO THE
AMOUNT OF THE RIGHT OF RECOURSE UNLESS THE PERSON
ENFORCING THE INSTRUMENT PROVES THAT NO LOSS WAS
CAUSED BY THE MODIFICATION OR THAT THE LOSS CAUSED
BY THE MODIFICATION WAS AN AMOUNT LESS THAN THE
AMOUNT OF THE RIGHT OF RECOURSE.
(e) IF THE OBLIGATION OF A PARTY TO PAY AN
INSTRUMENT IS SECURED BY AN INTEREST IN COLLATERAL
AND A PERSON ENTITLED TO ENFORCE THE INSTRUMENT
IMPAIRS THE VALUE OF THE INTEREST IN COLLATERAL,
THE OBLIGATION OF AN INDORSER OR ACCOMMODATION
PARTY HAVING A RIGHT OF RECOURSE AGAINST THE
OBLIGOR IS DISCHARGED TO THE EXTENT OF THE
IMPAIRMENT. THE VALUE OF AN INTEREST IN COLLATERAL
IS IMPAIRED TO THE EXTENT (i) THE VALUE OF THE
INTEREST IS REDUCED TO AN AMOUNT LESS THAN THE
AMOUNT OF THE RIGHT OF RECOURSE OF THE PARTY
ASSERTING DISCHARGE, OR (ii) THE REDUCTION IN
VALUE OF THE INTEREST CAUSES AN INCREASE IN THE
AMOUNT BY WHICH THE AMOUNT OF THE RIGHT OF
RECOURSE EXCEEDS THE VALUE OF THE INTEREST. THE
BURDEN OF PROVING IMPAIRMENT IS ON THE PARTY
ASSERTING DISCHARGE.
(f) IF THE OBLIGATION OF A PARTY IS SECURED BY
AN INTEREST IN COLLATERAL NOT PROVIDED BY AN
ACCOMMODATION PARTY AND A PERSON ENTITLED TO
ENFORCE THE INSTRUMENT IMPAIRS THE VALUE OF THE
INTEREST IN COLLATERAL, THE OBLIGATION OF ANY
PARTY WHO IS JOINTLY AND SEVERALLY LIABLE WITH
RESPECT TO THE SECURED OBLIGATION IS DISCHARGED TO
THE EXTENT THE IMPAIRMENT CAUSES THE PARTY
ASSERTING DISCHARGE TO PAY MORE THAN THAT PARTY
WOULD HAVE BEEN OBLIGED TO PAY, TAKING INTO
ACCOUNT RIGHTS OF CONTRIBUTION, IF IMPAIRMENT HAD
NOT OCCURRED. IF THE PARTY ASSERTING DISCHARGE IS
AN ACCOMMODATION PARTY NOT ENTITLED TO DISCHARGE
UNDER SUBSECTION (e), THE PARTY IS DEEMED TO HAVE
A RIGHT TO CONTRIBUTION BASED ON JOINT AND SEVERAL
LIABILITY RATHER THAN A RIGHT TO REIMBURSEMENT.
THE BURDEN OF PROVING IMPAIRMENT IS ON THE PARTY
ASSERTING DISCHARGE.
(g) UNDER SUBSECTION (e) OR (f), IMPAIRING
VALUE OF AN INTEREST IN COLLATERAL INCLUDES (i)
FAILURE TO OBTAIN OR MAINTAIN PERFECTION OR
RECORDATION OF THE INTEREST IN COLLATERAL, (ii)
RELEASE OF COLLATERAL WITHOUT SUBSTITUTION OF
COLLATERAL OF EQUAL VALUE, (iii) FAILURE TO
PERFORM A DUTY TO PRESERVE THE VALUE OF COLLATERAL
OWED, UNDER ARTICLE 9 OR OTHER LAW, TO A DEBTOR OR
SURETY OR OTHER PERSON SECONDARILY LIABLE, OR (iv)
FAILURE TO COMPLY WITH APPLICABLE LAW IN DISPOSING
OF COLLATERAL.
(h) AN ACCOMMODATION PARTY IS NOT DISCHARGED
UNDER SUBSECTION (c), (d) OR (e) UNLESS THE PERSON
ENTITLED TO ENFORCE THE INSTRUMENT KNOWS OF THE
ACCOMMODATION OR HAS NOTICE UNDER SECTION
42a-3-419(c) THAT THE INSTRUMENT WAS SIGNED FOR
ACCOMMODATION.
(i) A PARTY IS NOT DISCHARGED UNDER THIS
SECTION IF (i) THE PARTY ASSERTING DISCHARGE
CONSENTS TO THE EVENT OR CONDUCT THAT IS THE BASIS
OF THE DISCHARGE, OR (ii) THE INSTRUMENT OR A
SEPARATE AGREEMENT OF THE PARTY PROVIDES FOR
WAIVER OF DISCHARGE UNDER THIS SECTION EITHER
SPECIFICALLY OR BY GENERAL LANGUAGE INDICATING
THAT PARTIES WAIVE DEFENSES BASED ON SURETYSHIP OR
IMPAIRMENT OF COLLATERAL.
Sec. 68. Section 42a-4-101 of the general
statutes is repealed and the following is
substituted in lieu thereof:
This article [shall be known and] may be cited
as Uniform Commercial Code--Bank Deposits and
Collections.
Sec. 69. Section 42a-4-102 of the general
statutes is repealed and the following is
substituted in lieu thereof:
[(1)] (a) To the extent that items within this
article are also within [the scope of] articles 3
and 8, they are subject to [the provisions of]
those articles. [In the event of] IF THERE IS
conflict, [the provisions of] this article
[govern those of] GOVERNS article 3, but [the
provisions of] article 8 [govern those of] GOVERNS
this article.
[(2)] (b) The liability of a bank for action
or nonaction with respect to [any] AN item handled
by it for purposes of presentment, payment, or
collection is governed by the law of the place
where the bank is located. In the case of action
or nonaction by or at a branch or separate office
of a bank, its liability is governed by the law of
the place where the branch or separate office is
located.
Sec. 70. Section 42a-4-103 of the general
statutes is repealed and the following is
substituted in lieu thereof:
[(1)] (a) The effect of the provisions of this
article may be varied by agreement, [except that
no agreement can] BUT THE PARTIES TO THE AGREEMENT
CANNOT disclaim a bank's responsibility for its
[own] lack of good faith or failure to exercise
ordinary care or [can] limit the measure of
damages for [such] THE lack or failure. [; but]
HOWEVER, the parties may DETERMINE by agreement
[determine] the standards by which [such] THE
BANK'S responsibility is to be measured if [such]
THOSE standards are not manifestly unreasonable.
[(2)] (b) Federal reserve regulations and
operating [letters, clearing house] CIRCULARS,
CLEARING-HOUSE rules, and the like [,] have the
effect of agreements under subsection [(1)] (a),
whether or not specifically assented to by all
parties interested in items handled.
[(3)] (c) Action or nonaction approved by this
article or pursuant to federal reserve regulations
or operating [letters constitutes] CIRCULARS IS
the exercise of ordinary care and, in the absence
of special instructions, action or nonaction
consistent with [clearing house] CLEARING-HOUSE
rules and the like or with a general banking usage
not disapproved by this article, IS prima facie
[constitutes] the exercise of ordinary care.
[(4)] (d) The specification or approval of
certain procedures by this article [does not
constitute] IS NOT disapproval of other procedures
[which] THAT may be reasonable under the
circumstances.
[(5)] (e) The measure of damages for failure
to exercise ordinary care in handling an item is
the amount of the item reduced by an amount
[which] THAT could not have been realized by the
[use] EXERCISE of ordinary care. [, and where] IF
there is ALSO bad faith it includes ANY other
damages [, if any, suffered by] the party SUFFERED
as a proximate consequence.
Sec. 71. Section 42a-4-104 of the general
statutes is repealed and the following is
substituted in lieu thereof:
[(1)] (a) In this article, unless the context
otherwise requires: [(a)] (1) "Account" means any
DEPOSIT OR CREDIT account with a bank, [and
includes a checking, time, interest or savings
account] INCLUDING A DEMAND, TIME, SAVINGS,
PASSBOOK, SHARE DRAFT, OR LIKE ACCOUNT, OTHER THAN
AN ACCOUNT EVIDENCED BY A CERTIFICATE OF DEPOSIT;
[(b)] (2) "afternoon" means the period of a day
between noon and midnight; [(c)] (3) "banking day"
means [that] THE part of [any] A day on which a
bank is open to the public for carrying on
substantially all of its banking functions, but
for the purpose of determining a bank's midnight
deadline, as defined in [subsection (h) of this
section] SUBDIVISION (10) OF THIS SUBSECTION,
shall not include Saturday; [(d)] (4) "clearing
house" means [any] AN association of banks or
other payors regularly clearing items; [(e)] (5)
"customer" means [any] A person having an account
with a bank or for whom a bank has agreed to
collect items, [and includes] INCLUDING a bank
[carrying] THAT MAINTAINS an account [with] AT
another bank; [(f)] (6) "documentary draft" means
[any negotiable or nonnegotiable draft with
accompanying documents, securities or other papers
to be delivered against honor of the draft] A
DRAFT TO BE PRESENTED FOR ACCEPTANCE OR PAYMENT IF
SPECIFIED DOCUMENTS, CERTIFICATED SECURITIES
(SECTION 42a-8-102) OR INSTRUCTIONS FOR
UNCERTIFICATED SECURITIES (SECTION 42a-8-309), OR
OTHER CERTIFICATES, STATEMENTS, OR THE LIKE ARE TO
BE RECEIVED BY THE DRAWEE OR OTHER PAYOR BEFORE
ACCEPTANCE OR PAYMENT OF THE DRAFT; (7) "DRAFT"
MEANS A DRAFT AS DEFINED IN SECTION 42a-3-104 OR
AN ITEM, OTHER THAN AN INSTRUMENT, THAT IS AN
ORDER; (8) "DRAWEE" MEANS A PERSON ORDERED IN A
DRAFT TO MAKE PAYMENT; [(g)] (9) "item" means [any
instrument for the payment of money even though it
is not negotiable but does not include money] AN
INSTRUMENT OR A PROMISE OR ORDER TO PAY MONEY
HANDLED BY A BANK FOR COLLECTION OR PAYMENT. THE
TERM DOES NOT INCLUDE A PAYMENT ORDER GOVERNED BY
ARTICLE 4A OR A CREDIT OR DEBIT CARD SLIP; [(h)]
(10) "midnight deadline" with respect to a bank is
midnight on its next banking day following the
banking day on which it receives the relevant item
or notice or from which the time for taking action
commences to run, whichever is later; [(i)
"properly payable" includes the availability of
funds for payment at the time of decision to pay
or dishonor; (j)] (11) "settle" means to pay in
cash, by [clearing house] CLEARING-HOUSE
settlement, in a charge or credit or by
remittance, or otherwise as [instructed] AGREED. A
settlement may be either provisional or final;
[(k)] (12) "suspends payments" with respect to a
bank means that it has been closed by order of the
supervisory authorities, that a public officer has
been appointed to take it over, or that it ceases
or refuses to make payments in the ordinary course
of business.
[(2)] (b) Other definitions applying to this
article and the sections in which they appear are:
"AGREEMENT FOR ELECTRONIC PRESENTMENT". SECTION 77.
"BANK". SECTION 42a-4-105.
"Collecting bank". Section 42a-4-105.
"Depositary bank". Section 42a-4-105.
"Intermediary bank". Section 42a-4-105.
"Payor bank". Section 42a-4-105.
"Presenting bank". Section 42a-4-105.
"PRESENTMENT NOTICE". SECTION 77 OF THIS ACT.
["Remitting bank". Section 42a-4-105.]
[(3)] (c) The following definitions in other
articles apply to this article:
"Acceptance". Section [42a-3-410] 42a-3-409.
"ALTERATION". SECTION 42a-3-407.
"CASHIER'S CHECK". SECTION 42a-3-104.
"Certificate of deposit". Section 42a-3-104.
["Certification". Section 42a-3-411.]
"CERTIFIED CHECK". SECTION 42a-3-409.
"Check". Section 42a-3-104.
["Draft. Section 42a-3-104.]
"GOOD FAITH". SECTION 42a-3-103.
"Holder in due course". Section 42a-3-302.
"INSTRUMENT". SECTION 42a-3-104.
"Notice of dishonor". Section [42a-3-508] 42a-3-503.
"ORDER". SECTION 42a-3-103.
"ORDINARY CARE". SECTION 42a-3-103.
"PERSON ENTITLED TO ENFORCE". SECTION 42a-3-301.
"Presentment". Section [42a-3-504] 42a-3-501.
"PROMISE". SECTION 42a-3-103.
["Protest". Section 42a-3-509.]
"PROVE". SECTION 42a-3-103.
["Secondary party". Section 42a-3-102.]
"TELLER'S CHECK". SECTION 42a-3-104.
"UNAUTHORIZED SIGNATURE". SECTION 42a-3-403.
[(4)] (d) In addition, article 1 contains
general definitions and principles of construction
and interpretation applicable throughout this
article.
Sec. 72. Section 42a-4-105 of the general
statutes is repealed and the following is
substituted in lieu thereof:
In this article: [unless the context
otherwise requires:]
(1) "BANK" MEANS A PERSON ENGAGED IN THE
BUSINESS OF BANKING, INCLUDING A SAVINGS BANK,
SAVINGS AND LOAN ASSOCIATION, CREDIT UNION, OR
TRUST COMPANY;
[(a)] (2) "Depositary bank" means the first
bank to [which] TAKE an item [is transferred for
collection] even though it is also the payor bank,
UNLESS THE ITEM IS PRESENTED FOR IMMEDIATE PAYMENT
OVER THE COUNTER;
[(b)] (3) "Payor bank" means a bank [by which
an item is payable as drawn or accepted] THAT IS
THE DRAWEE OF A DRAFT;
[(c)] (4) "Intermediary bank" means [any] A
bank to which an item is transferred in course of
collection except the depositary or payor bank;
[(d)] (5) "Collecting bank" means [any] A bank
handling [the] AN item for collection except the
payor bank;
[(e)] (6) "Presenting bank" means [any] A bank
presenting an item except a payor bank. [;]
[(f) "Remitting bank" means any payor or
intermediary bank remitting for an item.]
Sec. 73. Section 42a-4-106 of the general
statutes is repealed and the following is
substituted in lieu thereof:
[A branch or separate office of a bank is a
separate bank for the purpose of computing the
time within which and determining the place at or
to which action may be taken or notice or orders
shall be given under this article and under
article 3, except that service on the bank as
garnishee shall be made pursuant to section
52-337.]
(a) IF AN ITEM STATES THAT IT IS "PAYABLE
THROUGH" A BANK IDENTIFIED IN THE ITEM, (i) THE
ITEM DESIGNATES THE BANK AS A COLLECTING BANK AND
DOES NOT BY ITSELF AUTHORIZE THE BANK TO PAY THE
ITEM, AND (ii) THE ITEM MAY BE PRESENTED FOR
PAYMENT ONLY BY OR THROUGH THE BANK.
(b) IF AN ITEM STATES THAT IT IS "PAYABLE AT"
A BANK IDENTIFIED IN THE ITEM, THE ITEM IS
EQUIVALENT TO A DRAFT DRAWN ON THE BANK.
(c) IF A DRAFT NAMES A NONBANK DRAWEE AND IT
IS UNCLEAR WHETHER A BANK NAMED IN THE DRAFT IS A
CO-DRAWEE OR A COLLECTING BANK, THE BANK IS A
COLLECTING BANK.
Sec. 74. Section 42a-4-107 of the general
statutes is repealed and the following is
substituted in lieu thereof:
[(1) For the purpose of allowing time to
process items, prove balances and make the
necessary entries on its books to determine its
position for the day, a bank may fix an afternoon
hour of two p.m. or later as a cutoff hour for the
handling of money and items and the making of
entries on its books.
(2) Any item or deposit of money received on
any day after a cutoff hour so fixed or after the
close of the banking day or on any day which is
not a banking day may be treated as being received
at the opening of the next banking day.]
A BRANCH OR SEPARATE OFFICE OF A BANK IS A
SEPARATE BANK FOR THE PURPOSE OF COMPUTING THE
TIME WITHIN WHICH AND DETERMINING THE PLACE AT OR
TO WHICH ACTION MAY BE TAKEN OR NOTICE OR ORDERS
MUST BE GIVEN UNDER THIS ARTICLE AND UNDER ARTICLE
3.
Sec. 75. Section 42a-4-108 of the general
statutes is repealed and the following is
substituted in lieu thereof:
[(1) Unless otherwise instructed, a
collecting bank in a good faith effort to secure
payment may, in the case of specific items and
with or without the approval of any person
involved, waive, modify or extend time limits
imposed or permitted by this title for a period
not in excess of an additional banking day without
discharge of secondary parties and without
liability to its transferor or any prior party.
(2) Delay by a collecting bank or payor bank
beyond time limits prescribed or permitted by this
title or by instructions is excused if caused by
interruption of communication facilities,
suspension of payments by another bank, war
emergency conditions or other circumstances beyond
the control of the bank provided it exercises such
diligence as the circumstances require.]
(a) FOR THE PURPOSE OF ALLOWING TIME TO
PROCESS ITEMS, PROVE BALANCES, AND MAKE THE
NECESSARY ENTRIES ON ITS BOOKS TO DETERMINE ITS
POSITION FOR THE DAY, A BANK MAY FIX AN AFTERNOON
HOUR OF TWO O'CLOCK P.M. OR LATER AS A CUTOFF HOUR
FOR THE HANDLING OF MONEY AND ITEMS AND THE MAKING
OF ENTRIES ON ITS BOOKS.
(b) AN ITEM OR DEPOSIT OF MONEY RECEIVED ON
ANY DAY AFTER A CUTOFF HOUR SO FIXED OR AFTER THE
CLOSE OF THE BANKING DAY MAY BE TREATED AS BEING
RECEIVED AT THE OPENING OF THE NEXT BANKING DAY.
Sec. 76. Section 42a-4-109 of the general
statutes is repealed and the following is
substituted in lieu thereof:
[The "process of posting" means the usual
procedure followed by a payor bank in determining
to pay an item and in recording the payment
including one or more of the following or other
steps as determined by the bank: (a) Verification
of any signature; (b) ascertaining that sufficient
funds are available; (c) affixing a "paid" or
other stamp; (d) entering a charge or entry to a
customer's account; (e) correcting or reversing an
entry or erroneous action with respect to the
item.]
(a) UNLESS OTHERWISE INSTRUCTED, A COLLECTING
BANK IN A GOOD FAITH EFFORT TO SECURE PAYMENT OF A
SPECIFIC ITEM DRAWN ON A PAYOR OTHER THAN A BANK,
AND WITH OR WITHOUT THE APPROVAL OF ANY PERSON
INVOLVED, MAY WAIVE, MODIFY, OR EXTEND TIME LIMITS
IMPOSED OR PERMITTED BY THIS TITLE FOR A PERIOD
NOT EXCEEDING TWO ADDITIONAL BANKING DAYS WITHOUT
DISCHARGE OF DRAWERS OR INDORSERS OR LIABILITY TO
ITS TRANSFEROR OR A PRIOR PARTY.
(b) DELAY BY A COLLECTING BANK OR PAYOR BANK
BEYOND TIME LIMITS PRESCRIBED OR PERMITTED BY THIS
TITLE OR BY INSTRUCTIONS IS EXCUSED IF (i) THE
DELAY IS CAUSED BY INTERRUPTION OF COMMUNICATION
OR COMPUTER FACILITIES, SUSPENSION OF PAYMENTS BY
ANOTHER BANK, WAR, EMERGENCY CONDITIONS, FAILURE
OF EQUIPMENT, OR OTHER CIRCUMSTANCES BEYOND THE
CONTROL OF THE BANK, AND (ii) THE BANK EXERCISES
SUCH DILIGENCE AS THE CIRCUMSTANCES REQUIRE.
Sec. 77. (NEW) (a) "Agreement for electronic
presentment" means an agreement, clearing-house
rule, or Federal Reserve regulation or operating
circular, providing that presentment of an item
may be made by transmission of an image of an item
or information describing the item ("presentment
notice") rather than delivery of the item itself.
The agreement may provide for procedures governing
retention, presentment, payment, dishonor, and
other matters concerning items subject to the
agreement.
(b) Presentment of an item pursuant to an
agreement for presentment is made when the
presentment notice is received.
(c) If presentment is made by presentment
notice, a reference to "item" or "check" in this
article means the presentment notice unless the
context otherwise indicates.
Sec. 78. (NEW) An action to enforce an
obligation, duty, or right arising under this
article must be commenced within three years after
the cause of action accrues.
Sec. 79. Section 42a-4-201 of the general
statutes is repealed and the following is
substituted in lieu thereof:
[(1)] (a) Unless a contrary intent clearly
appears and [prior to] BEFORE the time that a
settlement given by a collecting bank for an item
is or becomes final, [as provided in subsection
(3) of section 42a-4-211 and sections 42a-4-212
and 42a-4-213] the bank, WITH RESPECT TO THE ITEM,
is an agent or subagent of the owner of the item
and any settlement given for the item is
provisional. This provision applies regardless of
the form of endorsement or lack of endorsement and
even though credit given for the item is subject
to immediate withdrawal as of right or is in fact
withdrawn; but the continuance of ownership of an
item by its owner and any rights of the owner to
proceeds of the item are subject to rights of a
collecting bank such as those resulting from
outstanding advances on the item and valid rights
of RECOUPMENT OR set-off. [When] IF an item is
handled by banks for purposes of presentment,
payment, [and] collection, OR RETURN, the relevant
provisions of this article apply even though
action of THE parties clearly establishes that a
particular bank has purchased the item and is the
owner of it.
[(2)] (b) After an item has been endorsed with
the words "pay any bank" or the like, only a bank
may acquire the rights of a holder UNTIL THE ITEM
HAS BEEN: [(a) until the item has been returned]
(1) RETURNED to the customer initiating
collection; or [(b) until the item has been
specially] (2) SPECIALLY endorsed by a bank to a
person who is not a bank.
Sec. 80. Section 42a-4-202 of the general
statutes is repealed and the following is
substituted in lieu thereof:
[(1)] (a) A collecting bank must [use]
exercise ordinary care in: [(a) presenting] (1)
PRESENTING an item or sending it for presentment;
[and (b)] (2) sending notice of dishonor or
nonpayment or returning an item other than a
documentary draft to the bank's transferor [or
directly to the depositary bank under subsection
(2) of section 42a-4-212] after learning that the
item has not been paid or accepted, as the case
may be; [and (c)] (3) settling for an item when
the bank receives final settlement; and [(d)
making or providing for any necessary protest; and
(e)] (4) notifying its transferor of any loss or
delay in transit within a reasonable time after
discovery thereof.
[(2) A collecting bank taking proper action
before its midnight deadline following receipt of
an item, notice or payment acts seasonably; taking
proper action within a reasonably longer time may
be seasonable but the bank has the burden of so
establishing.]
(b) A COLLECTING BANK EXERCISES ORDINARY CARE
UNDER SUBSECTION (a) BY TAKING PROPER ACTION
BEFORE ITS MIDNIGHT DEADLINE FOLLOWING RECEIPT OF
AN ITEM, NOTICE, OR SETTLEMENT. TAKING PROPER
ACTION WITHIN A REASONABLY LONGER TIME MAY
CONSTITUTE THE EXERCISE OF ORDINARY CARE, BUT THE
BANK HAS THE BURDEN OF ESTABLISHING TIMELINESS.
[(3)] (c) Subject to subsection [(1) (a)] (a)
(1), a bank is not liable for the insolvency,
neglect, misconduct, mistake, or default of
another bank or person or for loss or destruction
of an item IN THE POSSESSION OF OTHERS OR in
transit. [or in the possession of others.]
Sec. 81. Section 42a-4-203 of the general
statutes is repealed and the following is
substituted in lieu thereof:
Subject to [the provisions of section
42a-3-419] SECTION 57 OF THIS ACT concerning
conversion of instruments and [the provisions of
both article 3 and this article concerning]
restrictive endorsements (SECTION 42a-3-206), only
a collecting bank's transferor can give
instructions [which] THAT affect the bank or
constitute notice to it, and a collecting bank is
not liable to prior parties for any action taken
pursuant to [such] THE instructions or in
accordance with any agreement with its transferor.
Sec. 82. Section 42a-4-204 of the general
statutes is repealed and the following is
substituted in lieu thereof:
[(1)] (a) A collecting bank [must] SHALL send
items by A reasonably prompt method, taking into
consideration [any] relevant instructions, the
nature of the item, the number of [such] THOSE
items on hand, [and] the cost of collection
involved, and the method generally used by it or
others to present [such] THOSE items.
[(2)] (b) A collecting bank may send: [(a)
any] (1) AN item [direct] DIRECTLY to the payor
bank; [(b) any] (2) AN item to [any] A nonbank
payor if authorized by its transferor; and [(c)
any] (3) AN item other than documentary drafts to
[any] A nonbank payor, if authorized by federal
reserve regulation or operating [letter, clearing
house] CIRCULAR, CLEARING-HOUSE rule, or the like.
[(3)] (c) Presentment may be made by a
presenting bank at a place where the payor bank OR
OTHER PAYOR has requested that presentment be
made.
Sec. 83. Section 42a-4-205 of the general
statutes is repealed and the following is
substituted in lieu thereof:
[(1) A depositary bank which has taken an item
for collection may supply any endorsement of the
customer which is necessary to title unless the
item contains the words "payee's endorsement
required" or the like. In the absence of such a
requirement a statement placed on the item by the
depositary bank to the effect that the item was
deposited by a customer or credited to his account
is effective as the customer's endorsement.
(2) An intermediary bank, or payor bank which
is not a depositary bank, is neither given notice
nor otherwise affected by a restrictive
endorsement of any person except the bank's
immediate transferor.]
IF A CUSTOMER DELIVERS AN ITEM TO A DEPOSITARY
BANK FOR COLLECTION: (1) THE DEPOSITARY BANK
BECOMES A HOLDER OF THE ITEM AT THE TIME IT
RECEIVES THE ITEM FOR COLLECTION IF THE CUSTOMER
AT THE TIME OF DELIVERY WAS A HOLDER OF THE ITEM,
WHETHER OR NOT THE CUSTOMER INDORSES THE ITEM,
AND, IF THE BANK SATISFIES THE OTHER REQUIREMENTS
OF SECTION 42a-3-302, IT IS A HOLDER IN DUE
COURSE; AND (2) THE DEPOSITARY BANK WARRANTS TO
COLLECTING BANKS, THE PAYOR BANK OR OTHER PAYOR,
AND THE DRAWER THAT THE AMOUNT OF THE ITEM WAS
PAID TO THE CUSTOMER OR DEPOSITED TO THE
CUSTOMER'S ACCOUNT.
Sec. 84. Section 42a-4-206 of the general
statutes is repealed and the following is
substituted in lieu thereof:
Any agreed method [which] THAT identifies the
transferor bank is sufficient for the item's
further transfer to another bank.
Sec. 85. Section 42a-4-207 of the general
statutes is repealed and the following is
substituted in lieu thereof:
[(1) Each customer or collecting bank who
obtains payment or acceptance of an item and each
prior customer and collecting bank warrants to the
payor bank or other payor who in good faith pays
or accepts the item that (a) he has a good title
to the item or is authorized to obtain payment or
acceptance on behalf of one who has a good title;
and (b) he has no knowledge that the signature of
the maker or drawer is unauthorized, except that
this warranty is not given by any customer or
collecting bank that is a holder in due course and
acts in good faith (i) to a maker with respect to
the maker's own signature; or (ii) to a drawer
with respect to the drawer's own signature,
whether or not the drawer is also the drawee; or
(iii) to an acceptor of an item if the holder in
due course took the item after the acceptance or
obtained the acceptance without knowledge that the
drawer's signature was unauthorized; and (c) the
item has not been materially altered, except that
this warranty is not given by any customer or
collecting bank that is a holder in due course and
acts in good faith (i) to the maker of a note; or
(ii) to the drawer of a draft whether or not the
drawer is also the drawee; or (iii) to the
acceptor of an item with respect to an alteration
made prior to the acceptance if the holder in due
course took the item after the acceptance, even
though the acceptance provided "payable as
originally drawn" or equivalent terms; or (iv) to
the acceptor of an item with respect to an
alteration made after the acceptance.
(2) Each customer and collecting bank who
transfers an item and receives a settlement or
other consideration for it warrants to his
transferee and to any subsequent collecting bank
who takes the item in good faith that (a) he has a
good title to the item or is authorized to obtain
payment or acceptance on behalf of one who has a
good title and the transfer is otherwise rightful;
and (b) all signatures are genuine or authorized;
and (c) the item has not been materially altered;
and (d) no defense of any party is good against
him; and (e) he has no knowledge of any insolvency
proceeding instituted with respect to the maker or
acceptor or the drawer of an unaccepted item. In
addition each customer and collecting bank so
transferring an item and receiving a settlement or
other consideration engages that upon dishonor and
any necessary notice of dishonor and protest he
will take up the item.
(3) The warranties and the engagement to honor
set forth in the two preceding subsections arise
notwithstanding the absence of endorsement or
words of guaranty or warranty in the transfer or
presentment and a collecting bank remains liable
for their breach despite remittance to its
transferor. Damages for breach of such warranties
or engagement to honor shall not exceed the
consideration received by the customer or
collecting bank responsible plus finance charges
and expenses related to the item, if any.
(4) Unless a claim for breach of warranty
under this section is made within a reasonable
time after the person claiming learns of the
breach, the person liable is discharged to the
extent of any loss caused by the delay in making
claim.]
(a) A CUSTOMER OR COLLECTING BANK THAT
TRANSFERS AN ITEM AND RECEIVES A SETTLEMENT OR
OTHER CONSIDERATION WARRANTS TO THE TRANSFEREE AND
TO ANY SUBSEQUENT COLLECTING BANK THAT: (1) THE
WARRANTOR IS A PERSON ENTITLED TO ENFORCE THE
ITEM; (2) ALL SIGNATURES ON THE ITEM ARE AUTHENTIC
AND AUTHORIZED; (3) THE ITEM HAS NOT BEEN ALTERED;
(4) THE ITEM IS NOT SUBJECT TO A DEFENSE OR CLAIM
IN RECOUPMENT (SECTION 42a-3-305(a)) OF ANY PARTY
THAT CAN BE ASSERTED AGAINST THE WARRANTOR; AND
(5) THE WARRANTOR HAS NO KNOWLEDGE OF ANY
INSOLVENCY PROCEEDING COMMENCED WITH RESPECT TO
THE MAKER OR ACCEPTOR OR, IN THE CASE OF AN
UNACCEPTED DRAFT, THE DRAWER.
(b) IF AN ITEM IS DISHONORED, A CUSTOMER OR
COLLECTING BANK TRANSFERRING THE ITEM AND
RECEIVING SETTLEMENT OR OTHER CONSIDERATION IS
OBLIGED TO PAY THE AMOUNT DUE ON THE ITEM (i)
ACCORDING TO THE TERMS OF THE ITEM AT THE TIME IT
WAS TRANSFERRED, OR (ii) IF THE TRANSFER WAS OF AN
INCOMPLETE ITEM, ACCORDING TO ITS TERMS WHEN
COMPLETED AS STATED IN SECTIONS 42a-3-115 AND
42a-3-407. THE OBLIGATION OF A TRANSFEROR IS OWED
TO THE TRANSFEREE AND TO ANY SUBSEQUENT COLLECTING
BANK THAT TAKES THE ITEM IN GOOD FAITH. A
TRANSFEROR CANNOT DISCLAIM ITS OBLIGATION UNDER
THIS SUBSECTION BY AN INDORSEMENT STATING THAT IT
IS MADE "WITHOUT RECOURSE" OR OTHERWISE
DISCLAIMING LIABILITY.
(c) A PERSON TO WHOM THE WARRANTIES UNDER
SUBSECTION (a) ARE MADE AND WHO TOOK THE ITEM IN
GOOD FAITH MAY RECOVER FROM THE WARRANTOR AS
DAMAGES FOR BREACH OF WARRANTY AN AMOUNT EQUAL TO
THE LOSS SUFFERED AS A RESULT OF THE BREACH, BUT
NOT MORE THAN THE AMOUNT OF THE ITEM PLUS EXPENSES
AND LOSS OF INTEREST INCURRED AS A RESULT OF THE
BREACH.
(d) THE WARRANTIES STATED IN SUBSECTION (a)
CANNOT BE DISCLAIMED WITH RESPECT TO CHECKS.
UNLESS NOTICE OF A CLAIM FOR BREACH OF WARRANTY IS
GIVEN TO THE WARRANTOR WITHIN THIRTY DAYS AFTER
THE CLAIMANT HAS REASON TO KNOW OF THE BREACH AND
THE IDENTITY OF THE WARRANTOR, THE WARRANTOR IS
DISCHARGED TO THE EXTENT OF ANY LOSS CAUSED BY THE
DELAY IN GIVING NOTICE OF THE CLAIM.
(e) A CAUSE OF ACTION FOR BREACH OF WARRANTY
UNDER THIS SECTION ACCRUES WHEN THE CLAIMANT HAS
REASON TO KNOW OF THE BREACH.
Sec. 86. Section 42a-4-208 of the general
statutes is repealed and the following is
substituted in lieu thereof:
[(1) A bank has a security interest in an item
and any accompanying documents or the proceeds of
either (a) in case of an item deposited in an
account to the extent to which credit given for
the item has been withdrawn or applied; (b) in
case of an item for which it has given credit
available for withdrawal as of right, to the
extent of the credit given whether or not the
credit is drawn upon and whether or not there is a
right of charge-back; or (c) if it makes an
advance on or against the item.
(2) When credit which has been given for
several items received at one time or pursuant to
a single agreement is withdrawn or applied in part
the security interest remains upon all the items,
any accompanying documents or the proceeds of
either. For the purpose of this section, credits
first given are first withdrawn.
(3) Receipt by a collecting bank of a final
settlement for an item is a realization on its
security interest in the item, accompanying
documents and proceeds. To the extent and so long
as the bank does not receive final settlement for
the item or give up possession of the item or
accompanying documents for purposes other than
collection, the security interest continues and is
subject to the provisions of article 9 except that
(a) no security agreement is necessary to make the
security interest enforceable; and (b) no filing
is required to perfect the security interest; and
(c) the security interest has priority over
conflicting perfected security interests in the
item, accompanying documents or proceeds.]
(a) IF AN UNACCEPTED DRAFT IS PRESENTED TO THE
DRAWEE FOR PAYMENT OR ACCEPTANCE AND THE DRAWEE
PAYS OR ACCEPTS THE DRAFT, (i) THE PERSON
OBTAINING PAYMENT OR ACCEPTANCE, AT THE TIME OF
PRESENTMENT, AND (ii) A PREVIOUS TRANSFEROR OF THE
DRAFT, AT THE TIME OF TRANSFER, WARRANT TO THE
DRAWEE THAT PAYS OR ACCEPTS THE DRAFT IN GOOD
FAITH THAT: (1) THE WARRANTOR IS, OR WAS, AT THE
TIME THE WARRANTOR TRANSFERRED THE DRAFT, A PERSON
ENTITLED TO ENFORCE THE DRAFT OR AUTHORIZED TO
OBTAIN PAYMENT OR ACCEPTANCE OF THE DRAFT ON
BEHALF OF A PERSON ENTITLED TO ENFORCE THE DRAFT;
(2) THE DRAFT HAS NOT BEEN ALTERED; AND (3) THE
WARRANTOR HAS NO KNOWLEDGE THAT THE SIGNATURE OF
THE PURPORTED DRAWER OF THE DRAFT IS UNAUTHORIZED.
(b) A DRAWEE MAKING PAYMENT MAY RECOVER FROM A
WARRANTOR DAMAGES FOR BREACH OF WARRANTY EQUAL TO
THE AMOUNT PAID BY THE DRAWEE LESS THE AMOUNT THE
DRAWEE RECEIVED OR IS ENTITLED TO RECEIVE FROM THE
DRAWER BECAUSE OF THE PAYMENT. IN ADDITION, THE
DRAWEE IS ENTITLED TO COMPENSATION FOR EXPENSES
AND LOSS OF INTEREST RESULTING FROM THE BREACH.
THE RIGHT OF THE DRAWEE TO RECOVER DAMAGES UNDER
THIS SUBSECTION IS NOT AFFECTED BY ANY FAILURE OF
THE DRAWEE TO EXERCISE ORDINARY CARE IN MAKING
PAYMENT. IF THE DRAWEE ACCEPTS THE DRAFT (i)
BREACH OF WARRANTY IS A DEFENSE TO THE OBLIGATION
OF THE ACCEPTOR, AND (ii) IF THE ACCEPTOR MAKES
PAYMENT WITH RESPECT TO THE DRAFT, THE ACCEPTOR IS
ENTITLED TO RECOVER FROM A WARRANTOR FOR BREACH OF
WARRANTY THE AMOUNTS STATED IN THIS SUBSECTION.
(c) IF A DRAWEE ASSERTS A CLAIM FOR BREACH OF
WARRANTY UNDER SUBSECTION (a) BASED ON AN
UNAUTHORIZED INDORSEMENT OF THE DRAFT OR AN
ALTERATION OF THE DRAFT, THE WARRANTOR MAY DEFEND
BY PROVING THAT THE INDORSEMENT IS EFFECTIVE UNDER
SECTION 42a-3-404 OR 42a-3-405 OR THE DRAWER IS
PRECLUDED UNDER SECTION 42a-3-406 OR 42a-4-406
FROM ASSERTING AGAINST THE DRAWEE THE UNAUTHORIZED
INDORSEMENT OR ALTERATION.
(d) IF (i) A DISHONORED DRAFT IS PRESENTED FOR
PAYMENT TO THE DRAWER OR AN INDORSER OR (ii) ANY
OTHER ITEM IS PRESENTED FOR PAYMENT TO A PARTY
OBLIGED TO PAY THE ITEM, AND THE ITEM IS PAID, THE
PERSON OBTAINING PAYMENT AND A PRIOR TRANSFEROR OF
THE ITEM WARRANT TO THE PERSON MAKING PAYMENT IN
GOOD FAITH THAT THE WARRANTOR IS, OR WAS, AT THE
TIME THE WARRANTOR TRANSFERRED THE ITEM, A PERSON
ENTITLED TO ENFORCE THE ITEM OR AUTHORIZED TO
OBTAIN PAYMENT ON BEHALF OF A PERSON ENTITLED TO
ENFORCE THE ITEM. THE PERSON MAKING PAYMENT MAY
RECOVER FROM ANY WARRANTOR FOR BREACH OF WARRANTY
AN AMOUNT EQUAL TO THE AMOUNT PAID PLUS EXPENSES
AND LOSS OF INTEREST RESULTING FROM THE BREACH.
(e) THE WARRANTIES STATED IN SUBSECTIONS (a)
AND (d) CANNOT BE DISCLAIMED WITH RESPECT TO
CHECKS. UNLESS NOTICE OF A CLAIM FOR BREACH OF
WARRANTY IS GIVEN TO THE WARRANTOR WITHIN THIRTY
DAYS AFTER THE CLAIMANT HAS REASON TO KNOW OF THE
BREACH AND THE IDENTITY OF THE WARRANTOR, THE
WARRANTOR IS DISCHARGED TO THE EXTENT OF ANY LOSS
CAUSED BY THE DELAY IN GIVING NOTICE OF THE CLAIM.
(f) A CAUSE OF ACTION FOR BREACH OF WARRANTY
UNDER THIS SECTION ACCRUES WHEN THE CLAIMANT HAS
REASON TO KNOW OF THE BREACH.
Sec. 87. Section 42a-4-209 of the general
statutes is repealed and the following is
substituted in lieu thereof:
[For purposes of determining its status as a
holder in due course, the bank has given value to
the extent that it has a security interest in an
item provided that the bank otherwise complies
with the requirements of section 42a-3-302 on what
constitutes a holder in due course.]
(a) A PERSON WHO ENCODES INFORMATION ON OR
WITH RESPECT TO AN ITEM AFTER ISSUE WARRANTS TO
ANY SUBSEQUENT COLLECTING BANK AND TO THE PAYOR
BANK OR OTHER PAYOR THAT THE INFORMATION IS
CORRECTLY ENCODED. IF THE CUSTOMER OF A DEPOSITARY
BANK ENCODES, THAT BANK ALSO MAKES THE WARRANTY.
(b) A PERSON WHO UNDERTAKES TO RETAIN AN ITEM
PURSUANT TO AN AGREEMENT FOR ELECTRONIC
PRESENTMENT WARRANTS TO ANY SUBSEQUENT COLLECTING
BANK AND TO THE PAYOR BANK OR OTHER PAYOR THAT
RETENTION AND PRESENTMENT OF THE ITEM COMPLY WITH
THE AGREEMENT. IF A CUSTOMER OF A DEPOSITARY BANK
UNDERTAKES TO RETAIN AN ITEM, THAT BANK ALSO MAKES
THIS WARRANTY.
(c) A PERSON TO WHOM WARRANTIES ARE MADE UNDER
THIS SECTION AND WHO TOOK THE ITEM IN GOOD FAITH
MAY RECOVER FROM THE WARRANTOR AS DAMAGES FOR
BREACH OF WARRANTY AN AMOUNT EQUAL TO THE LOSS
SUFFERED AS A RESULT OF THE BREACH, PLUS EXPENSES
AND LOSS OF INTEREST INCURRED AS A RESULT OF THE
BREACH.
Sec. 88. Section 42a-4-210 of the general
statutes is repealed and the following is
substituted in lieu thereof:
[(1) Unless otherwise instructed, a
collecting bank may present an item not payable
by, through or at a bank by sending to the party
to accept or pay a written notice that the bank
holds the item for acceptance or payment. The
notice must be sent in time to be received on or
before the day when presentment is due and the
bank must meet any requirement of the party to
accept or pay under section 42a-3-505 by the close
of the bank's next banking day after it knows of
the requirement.
(2) Where presentment is made by notice and
neither honor nor request for compliance with a
requirement under section 42a-3-505 is received by
the close of business on the day after maturity or
in the case of demand items by the close of
business on the third banking day after notice was
sent, the presenting bank may treat the item as
dishonored and charge any secondary party by
sending him notice of the facts.]
(a) A COLLECTING BANK HAS A SECURITY INTEREST
IN AN ITEM AND ANY ACCOMPANYING DOCUMENTS OR THE
PROCEEDS OF EITHER: (1) IN CASE OF AN ITEM
DEPOSITED IN AN ACCOUNT, TO THE EXTENT TO WHICH
CREDIT GIVEN FOR THE ITEM HAS BEEN WITHDRAWN OR
APPLIED; (2) IN CASE OF AN ITEM FOR WHICH IT HAS
GIVEN CREDIT AVAILABLE FOR WITHDRAWAL AS OF RIGHT,
TO THE EXTENT OF THE CREDIT GIVEN, WHETHER OR NOT
THE CREDIT IS DRAWN UPON OR THERE IS A RIGHT OF
CHARGE-BACK; OR (3) IF IT MAKES AN ADVANCE ON OR
AGAINST THE ITEM.
(b) IF CREDIT GIVEN FOR SEVERAL ITEMS RECEIVED
AT ONE TIME OR PURSUANT TO A SINGLE AGREEMENT IS
WITHDRAWN OR APPLIED IN PART, THE SECURITY
INTEREST REMAINS UPON ALL THE ITEMS, AND
ACCOMPANYING DOCUMENTS OR THE PROCEEDS OF EITHER.
FOR THE PURPOSE OF THIS SECTION, CREDITS FIRST
GIVEN ARE FIRST WITHDRAWN.
(c) RECEIPT BY A COLLECTING BANK OF A FINAL
SETTLEMENT FOR AN ITEM IS A REALIZATION ON ITS
SECURITY INTEREST IN THE ITEM, ACCOMPANYING
DOCUMENTS, AND PROCEEDS. SO LONG AS THE BANK DOES
NOT RECEIVE FINAL SETTLEMENT FOR THE ITEM OR GIVE
UP POSSESSION OF THE ITEM OR ACCOMPANYING
DOCUMENTS FOR PURPOSES OTHER THAN COLLECTION, THE
SECURITY INTEREST CONTINUES TO THAT EXTENT AND IS
SUBJECT TO ARTICLE 9, BUT: (1) NO SECURITY
AGREEMENT IS NECESSARY TO MAKE THE SECURITY
INTEREST ENFORCEABLE (SECTION 42a-9-203(1) (a));
(2) NO FILING IS REQUIRED TO PERFECT THE SECURITY
INTEREST; AND (3) THE SECURITY INTEREST HAS
PRIORITY OVER CONFLICTING PERFECTED SECURITY
INTERESTS IN THE ITEM, ACCOMPANYING DOCUMENTS, OR
PROCEEDS.
Sec. 89. Section 42a-4-211 of the general
statutes is repealed and the following is
substituted in lieu thereof:
[(1) A collecting bank may take in settlement
of an item (a) a check of the remitting bank or of
another bank on any bank except the remitting
bank; or (b) a cashier's check or similar primary
obligation of a remitting bank which is a member
of or clears through a member of the same clearing
house or group as the collecting bank; or (c)
appropriate authority to charge an account of the
remitting bank or of another bank with the
collecting bank; or (d) if the item is drawn upon
or payable by a person other than a bank, a
cashier's check, certified check or other bank
check or obligation.
(2) If before its midnight deadline the
collecting bank properly dishonors a remittance
check or authorization to charge on itself or
presents or forwards for collection a remittance
instrument of or on another bank which is of a
kind approved by subsection (1) or has not been
authorized by it, the collecting bank is not
liable to prior parties in the event of the
dishonor of such check, instrument or
authorization.
(3) A settlement for an item by means of a
remittance instrument or authorization to charge
is or becomes a final settlement as to both the
person making and the person receiving the
settlement (a) if the remittance instrument or
authorization to charge is of a kind approved by
subsection (1) or has not been authorized by the
person receiving the settlement and in either case
the person receiving the settlement acts
seasonably before its midnight deadline in
presenting, forwarding for collection or paying
the instrument or authorization, at the time the
remittance instrument or authorization is finally
paid by the payor by which it is payable; (b) if
the person receiving the settlement has authorized
remittance by a nonbank check or obligation or by
a cashier's check or similar primary obligation of
or a check upon the payor or other remitting bank
which is not of a kind approved by subsection (1)
(b), at the time of the receipt of such remittance
check or obligation; or (c) if in a case not
covered by subparagraph (a) or (b) the person
receiving the settlement fails to seasonably
present, forward for collection, pay or return a
remittance instrument or authorization to it to
charge before its midnight deadline, at such
midnight deadline.]
FOR PURPOSES OF DETERMINING ITS STATUS AS A
HOLDER IN DUE COURSE, A BANK HAS GIVEN VALUE TO
THE EXTENT IT HAS A SECURITY INTEREST IN AN ITEM,
IF THE BANK OTHERWISE COMPLIES WITH THE
REQUIREMENTS OF SECTION 42a-3-302 ON WHAT
CONSTITUTES A HOLDER IN DUE COURSE.
Sec. 90. Section 42a-4-212 of the general
statutes is repealed and the following is
substituted in lieu thereof:
[(1) If a collecting bank has made provisional
settlement with its customer for an item and
itself fails by reason of dishonor, suspension of
payments by a bank or otherwise to receive a
settlement for the item which is or becomes final,
the bank may revoke the settlement given by it,
charge back the amount of any credit given for the
item to its customer's account or obtain refund
from its customer whether or not it is able to
return the items if by its midnight deadline or
within a longer reasonable time after it learns
the facts it returns the item or sends
notification of the facts. These rights to revoke,
charge back and obtain refund terminate if and
when a settlement for the item received by the
bank is or becomes final as provided in subsection
(3) of section 42a-4-211 and subsections (2) and
(3) of section 42a-4-213.
(2) Within the time and manner prescribed by
this section and section 42a-4-301 an intermediary
or payor bank, as the case may be, may return an
unpaid item directly to the depositary bank and
may send for collection a draft on the depositary
bank and obtain reimbursement. In such case, if
the depositary bank has received provisional
settlement for the item, it must reimburse the
bank drawing the draft and any provisional credits
for the item between banks shall become and remain
final.
(3) A depositary bank which is also the payor
may charge back the amount of an item to its
customer's account or obtain refund in accordance
with section 42a-4-301 governing return of an item
received by a payor bank for credit on its books.
(4) The right to charge back is not affected
by (a) prior use of the credit given for the item;
or (b) failure by any bank to exercise ordinary
care with respect to the item but any bank so
failing remains liable.
(5) A failure to charge back or claim refund
does not affect other rights of the bank against
the customer or any other party.
(6) If credit is given in dollars as the
equivalent of the value of an item payable in a
foreign currency the dollar amount of any
charge-back or refund shall be calculated on the
basis of the buying sight rate for the foreign
currency prevailing on the day when the person
entitled to the charge-back or refund learns that
it will not receive payment in ordinary course.]
(a) UNLESS OTHERWISE INSTRUCTED, A COLLECTING
BANK MAY PRESENT AN ITEM NOT PAYABLE BY, THROUGH,
OR AT A BANK BY SENDING TO THE PARTY TO ACCEPT OR
PAY A WRITTEN NOTICE THAT THE BANK HOLDS THE ITEM
FOR ACCEPTANCE OR PAYMENT. THE NOTICE MUST BE SENT
IN TIME TO BE RECEIVED ON OR BEFORE THE DAY WHEN
PRESENTMENT IS DUE AND THE BANK MUST MEET ANY
REQUIREMENT OF THE PARTY TO ACCEPT OR PAY UNDER
SECTION 42a-3-501 BY THE CLOSE OF THE BANK'S NEXT
BANKING DAY AFTER IT KNOWS OF THE REQUIREMENT.
(b) IF PRESENTMENT IS MADE BY NOTICE AND
PAYMENT, ACCEPTANCE, OR REQUEST FOR COMPLIANCE
WITH A REQUIREMENT UNDER SECTION 42a-3-501 IS NOT
RECEIVED BY THE CLOSE OF BUSINESS ON THE DAY AFTER
MATURITY OR, IN THE CASE OF DEMAND ITEMS, BY THE
CLOSE OF BUSINESS ON THE THIRD BANKING DAY AFTER
NOTICE WAS SENT, THE PRESENTING BANK MAY TREAT THE
ITEM AS DISHONORED AND CHARGE ANY DRAWER OR
INDORSER BY SENDING IT NOTICE OF THE FACTS.
Sec. 91. Section 42a-4-213 of the general
statutes is repealed and the following is
substituted in lieu thereof:
[(1) An item is finally paid by a payor bank
when the bank has done any of the following,
whichever happens first: (a) Paid the item in
cash; or (b) settled for the item without
reserving a right to revoke the settlement and
without having such right under statute, clearing
house rule or agreement; or (c) completed the
process of posting the item to the indicated
account of the drawer, maker or other person to be
charged therewith; or (d) made a provisional
settlement for the item and failed to revoke the
settlement in the time and manner permitted by
statute, clearing house rule or agreement. Upon a
final payment under subparagraph (b), (c) or (d)
the payor bank shall be accountable for the amount
of the item.
(2) If provisional settlement for an item
between the presenting and payor banks is made
through a clearing house or by debits or credits
in an account between them, then to the extent
that provisional debits or credits for the item
are entered in accounts between the presenting and
payor banks or between the presenting and
successive prior collecting banks seriatim, they
become final upon final payment of the item by the
payor bank.
(3) If a collecting bank receives a settlement
for an item which is or becomes final, as provided
in subsection (3) of section 42a-4-211 or
subsection (2) of this section, the bank is
accountable to its customer for the amount of the
item and any provisional credit given for the item
in an account with its customer becomes final.
(4) Subject to any right of the bank to apply
the credit to an obligation of the customer,
credit given by a bank for an item in an account
with its customer becomes available for withdrawal
as of right (a) in any case where the bank has
received a provisional settlement for the item,
when such settlement becomes final and the bank
has had a reasonable time to learn that the
settlement is final; (b) in any case where the
bank is both a depositary bank and a payor bank
and the item is finally paid, at the opening of
the bank's second banking day following receipt of
the item.
(5) A deposit of money in a bank is final when
made but, subject to any right of the bank to
apply the deposit to an obligation of the
customer, the deposit becomes available for
withdrawal as of right at the opening of the
bank's next banking day following receipt of the
deposit.]
(a) WITH RESPECT TO SETTLEMENT BY A BANK, THE
MEDIUM AND TIME OF SETTLEMENT MAY BE PRESCRIBED BY
FEDERAL RESERVE REGULATIONS OR CIRCULARS,
CLEARING-HOUSE RULES, AND THE LIKE, OR AGREEMENT.
IN THE ABSENCE OF SUCH PRESCRIPTION: (1) THE
MEDIUM OF SETTLEMENT IS CASH OR CREDIT TO AN
ACCOUNT IN A FEDERAL RESERVE BANK OF OR SPECIFIED
BY THE PERSON TO RECEIVE SETTLEMENT; AND (2) THE
TIME OF SETTLEMENT, IS: (i) WITH RESPECT TO TENDER
OF SETTLEMENT BY CASH, A CASHIER'S CHECK, OR
TELLER'S CHECK, WHEN THE CASH OR CHECK IS SENT OR
DELIVERED; (ii) WITH RESPECT TO TENDER OF
SETTLEMENT BY CREDIT IN AN ACCOUNT IN A FEDERAL
RESERVE BANK, WHEN THE CREDIT IS MADE; (iii) WITH
RESPECT TO TENDER OF SETTLEMENT BY A CREDIT OR
DEBIT TO AN ACCOUNT IN A BANK, WHEN THE CREDIT OR
DEBIT IS MADE OR, IN THE CASE OF TENDER OF
SETTLEMENT BY AUTHORITY TO CHARGE AN ACCOUNT, WHEN
THE AUTHORITY IS SENT OR DELIVERED; OR (iv) WITH
RESPECT TO TENDER OF SETTLEMENT BY A FUNDS
TRANSFER, WHEN PAYMENT IS MADE PURSUANT TO SECTION
42a-4A-406(a) TO THE PERSON RECEIVING SETTLEMENT.
(b) IF THE TENDER OF SETTLEMENT IS NOT BY A
MEDIUM AUTHORIZED BY SUBSECTION (a) OR THE TIME OF
SETTLEMENT IS NOT FIXED BY SUBSECTION (a), NO
SETTLEMENT OCCURS UNTIL THE TENDER OF SETTLEMENT
IS ACCEPTED BY THE PERSON RECEIVING SETTLEMENT.
(c) IF SETTLEMENT FOR AN ITEM IS MADE BY
CASHIER'S CHECK OR TELLER'S CHECK AND THE PERSON
RECEIVING SETTLEMENT, BEFORE ITS MIDNIGHT
DEADLINE: (1) PRESENTS OR FORWARDS THE CHECK FOR
COLLECTION, SETTLEMENT IS FINAL WHEN THE CHECK IS
FINALLY PAID; OR (2) FAILS TO PRESENT OR FORWARD
THE CHECK FOR COLLECTION, SETTLEMENT IS FINAL AT
THE MIDNIGHT DEADLINE OF THE PERSON RECEIVING
SETTLEMENT.
(d) IF SETTLEMENT FOR AN ITEM IS MADE BY
GIVING AUTHORITY TO CHARGE THE ACCOUNT OF THE BANK
GIVING SETTLEMENT IN THE BANK RECEIVING
SETTLEMENT, SETTLEMENT IS FINAL WHEN THE CHARGE IS
MADE BY THE BANK RECEIVING SETTLEMENT IF THERE ARE
FUNDS AVAILABLE IN THE ACCOUNT FOR THE AMOUNT OF
THE ITEM.
Sec. 92. Section 42a-4-214 of the general
statutes is repealed and the following is
substituted in lieu thereof:
[(1) Any item in or coming into the possession
of a payor or collecting bank which suspends
payment and which item is not finally paid shall
be returned by the receiver, trustee or agent in
charge of the closed bank to the presenting bank
or the closed bank's customer.
(2) If a payor bank finally pays an item and
suspends payments without making a settlement for
the item with its customer or the presenting bank
which settlement is or becomes final, the owner of
the item has a preferred claim against the payor
bank.
(3) If a payor bank gives or a collecting bank
gives or receives a provisional settlement for an
item and thereafter suspends payments, the
suspension does not prevent or interfere with the
settlement becoming final if such finality occurs
automatically upon the lapse of certain time or
the happening of certain events as provided in
subsection (3) of section 42a-4-211 and
subsections (1) (d), (2) and (3) of section
42a-4-213.
(4) If a collecting bank receives from
subsequent parties settlement for an item which
settlement is or becomes final and suspends
payments without making a settlement for the item
with its customer which is or becomes final, the
owner of the item has a preferred claim against
such collecting bank.]
(a) IF A COLLECTING BANK HAS MADE PROVISIONAL
SETTLEMENT WITH ITS CUSTOMER FOR AN ITEM AND FAILS
BY REASON OF DISHONOR, SUSPENSION OF PAYMENTS BY A
BANK, OR OTHERWISE TO RECEIVE A SETTLEMENT FOR THE
ITEM WHICH IS OR BECOMES FINAL, THE BANK MAY
REVOKE THE SETTLEMENT GIVEN BY IT, CHARGE BACK THE
AMOUNT OF ANY CREDIT GIVEN FOR THE ITEM TO ITS
CUSTOMER'S ACCOUNT, OR OBTAIN REFUND FROM ITS
CUSTOMER, WHETHER OR NOT IT IS ABLE TO RETURN THE
ITEM, IF BY ITS MIDNIGHT DEADLINE OR WITHIN A
LONGER REASONABLE TIME AFTER IT LEARNS THE FACTS
IT RETURNS THE ITEM OR SENDS NOTIFICATION OF THE
FACTS. IF THE RETURN OR NOTICE IS DELAYED BEYOND
THE BANK'S MIDNIGHT DEADLINE OR A LONGER
REASONABLE TIME AFTER IT LEARNS THE FACTS, THE
BANK MAY REVOKE THE SETTLEMENT, CHARGE BACK THE
CREDIT, OR OBTAIN REFUND FROM ITS CUSTOMER, BUT IT
IS LIABLE FOR ANY LOSS RESULTING FROM THE DELAY.
THESE RIGHTS TO REVOKE, CHARGE BACK, AND OBTAIN
REFUND TERMINATE IF AND WHEN A SETTLEMENT FOR THE
ITEM RECEIVED BY THE BANK IS OR BECOMES FINAL.
(b) A COLLECTING BANK RETURNS AN ITEM WHEN IT
IS SENT OR DELIVERED TO THE BANK'S CUSTOMER OR
TRANSFEROR OR PURSUANT TO ITS INSTRUCTIONS.
(c) A DEPOSITARY BANK THAT IS ALSO THE PAYOR
MAY CHARGE BACK THE AMOUNT OF AN ITEM TO ITS
CUSTOMER'S ACCOUNT OR OBTAIN REFUND IN ACCORDANCE
WITH THE SECTION GOVERNING RETURN OF AN ITEM
RECEIVED BY A PAYOR BANK FOR CREDIT ON ITS BOOKS
(SECTION 42a-4-301).
(d) THE RIGHT TO CHARGE BACK IS NOT AFFECTED
BY: (1) PREVIOUS USE OF A CREDIT GIVEN FOR THE
ITEM; OR (2) FAILURE BY ANY BANK TO EXERCISE
ORDINARY CARE WITH RESPECT TO THE ITEM, BUT A BANK
SO FAILING REMAINS LIABLE.
(e) A FAILURE TO CHARGE BACK OR CLAIM REFUND
DOES NOT AFFECT OTHER RIGHTS OF THE BANK AGAINST
THE CUSTOMER OR ANY OTHER PARTY.
(f) IF CREDIT IS GIVEN IN DOLLARS AS THE
EQUIVALENT OF THE VALUE OF AN ITEM PAYABLE IN
FOREIGN MONEY, THE DOLLAR AMOUNT OF ANY
CHARGE-BACK OR REFUND MUST BE CALCULATED ON THE
BASIS OF THE BANK-OFFERED SPOT RATE FOR THE
FOREIGN MONEY PREVAILING ON THE DAY WHEN THE
PERSON ENTITLED TO THE CHARGE-BACK OR REFUND
LEARNS THAT IT WILL NOT RECEIVE PAYMENT IN
ORDINARY COURSE.
Sec. 93. (NEW) (a) An item is finally paid by
a payor bank when the bank has first done any of
the following: (1) Paid the item in cash; (2)
settled for the item without having a right to
revoke the settlement under statute,
clearing-house rule, or agreement; or (3) made a
provisional settlement for the item and failed to
revoke the settlement in the time and manner
permitted by statute, clearing-house rule, or
agreement.
(b) If provisional settlement for an item does
not become final, the item is not finally paid.
(c) If provisional settlement for an item
between the presenting and payor banks is made
through a clearing-house or by debits or credits
in an account between them, then to the extent
that provisional debits or credits for the item
are entered in accounts between the presenting and
payor banks or between the presenting and
successive prior collecting banks seriatim, they
become final upon final payment of the items by
the payor bank.
(d) If a collecting bank receives a settlement
for an item which is or becomes final, the bank is
accountable to its customer for the amount of the
item and any provisional credit given for the item
in an account with its customer becomes final.
(e) Subject to (i) applicable law stating a
time for availability of funds and (ii) any right
of the bank to apply the credit to an obligation
of the customer, credit given by a bank for an
item in a customer's account becomes available for
withdrawal as of right: (1) If the bank has
received a provisional settlement for the item,
when the settlement becomes final and the bank has
had a reasonable time to receive return of the
item and the item has not been received within
that time; (2) if the bank is both the depositary
bank and the payor bank, and the item is finally
paid, at the opening of the bank's second banking
day following receipt of the item.
(f) Subject to applicable law stating a time
for availability of funds and any right of a bank
to apply a deposit to an obligation of the
depositor, a deposit of money becomes available
for withdrawal as of right at the opening of the
bank's next banking day after receipt of the
deposit.
Sec. 94. (NEW) (a) If an item is in or comes
into the possession of a payor or collecting bank
that suspends payment and the item has not been
finally paid, the item must be returned by the
receiver, trustee, or agent in charge of the
closed bank to the presenting bank or the closed
bank's customer.
(b) If a payor bank finally pays an item and
suspends payments without making a settlement for
the item with its customer or the presenting bank
which settlement is or becomes final, the owner of
the item has a preferred claim against the payor
bank.
(c) If a payor bank gives or a collecting bank
gives or receives a provisional settlement for an
item and thereafter suspends payments, the
suspension does not prevent or interfere with the
settlement's becoming final if the finality occurs
automatically upon the lapse of certain time or
the happening of certain events.
(d) If a collecting bank receives from
subsequent parties settlement for an item, which
settlement is or becomes final and the bank
suspends payments without making a settlement for
the item with its customer which settlement is or
becomes final, the owner of the item has a
preferred claim against the collecting bank.
Sec. 95. Section 42a-4-301 of the general
statutes is repealed and the following is
substituted in lieu thereof:
[(1) Where an authorized settlement for a
demand item, other than a documentary draft,
received by a payor bank otherwise than for
immediate payment over the counter has been made
before midnight of the banking day of receipt the
payor bank may revoke the settlement and recover
any payment if before it has made final payment as
provided in subsection (1) of section 42a-4-213
and before its midnight deadline it (a) returns
the item; or (b) sends written notice of dishonor
or nonpayment if the item is held for protest or
is otherwise unavailable for return.
(2) If a demand item is received by a payor
bank for credit on its books it may return such
item or send notice of dishonor and may revoke any
credit given or recover the amount thereof
withdrawn by its customer, if it acts within the
time limit and in the manner specified in the
preceding subsection.
(3) Unless previous notice of dishonor has
been sent an item is dishonored at the time when
for purposes of dishonor it is returned or notice
sent in accordance with this section.
(4) An item is returned: (a) As to an item
received through a clearing house, when it is
delivered to the presenting or last collecting
bank or to the clearing house or is sent or
delivered in accordance with its rules; or (b) in
all other cases, when it is sent or delivered to
the bank's customer or transferor or pursuant to
his instructions.]
(a) IF A PAYOR BANK SETTLES FOR A DEMAND ITEM
OTHER THAN A DOCUMENTARY DRAFT PRESENTED OTHERWISE
THAN FOR IMMEDIATE PAYMENT OVER THE COUNTER BEFORE
MIDNIGHT OF THE BANKING DAY OF RECEIPT, THE PAYOR
BANK MAY REVOKE THE SETTLEMENT AND RECOVER THE
SETTLEMENT IF, BEFORE IT HAS MADE FINAL PAYMENT
AND BEFORE ITS MIDNIGHT DEADLINE, IT (1) RETURNS
THE ITEM; OR (2) SENDS WRITTEN NOTICE OF DISHONOR
OR NONPAYMENT IF THE ITEM IS UNAVAILABLE FOR
RETURN.
(b) IF A DEMAND ITEM IS RECEIVED BY A PAYOR
BANK FOR CREDIT ON ITS BOOKS, IT MAY RETURN THE
ITEM OR SEND NOTICE OF DISHONOR AND MAY REVOKE ANY
CREDIT GIVEN OR RECOVER THE AMOUNT THEREOF
WITHDRAWN BY ITS CUSTOMER, IF IT ACTS WITHIN THE
TIME LIMIT AND IN THE MANNER SPECIFIED IN
SUBSECTION (a).
(c) UNLESS PREVIOUS NOTICE OF DISHONOR HAS
BEEN SENT, AN ITEM IS DISHONORED AT THE TIME WHEN
FOR PURPOSES OF DISHONOR IT IS RETURNED OR NOTICE
SENT IN ACCORDANCE WITH THIS SECTION.
(d) AN ITEM IS RETURNED: (1) AS TO AN ITEM
PRESENTED THROUGH A CLEARING-HOUSE, WHEN IT IS
DELIVERED TO THE PRESENTING OR LAST COLLECTING
BANK OR TO THE CLEARING-HOUSE OR IS SENT OR
DELIVERED IN ACCORDANCE WITH CLEARING-HOUSE RULES;
OR (2) IN ALL OTHER CASES, WHEN IT IS SENT OR
DELIVERED TO THE BANK'S CUSTOMER OR TRANSFEROR OR
PURSUANT TO INSTRUCTIONS.
Sec. 96. Section 42a-4-302 of the general
statutes is repealed and the following is
substituted in lieu thereof:
[In the absence of a valid defense such as
breach of a presentment warranty, settlement
effected or the like, if an item is presented on
and received by a payor bank the bank is
accountable for the amount of (a) a demand item
other than a documentary draft whether properly
payable or not if the bank, in any case where it
is not also the depositary bank, retains the item
beyond midnight of the banking day of receipt
without settling for it or, regardless of whether
it is also the depositary bank, does not pay or
return the item or send notice of dishonor until
after its midnight deadline; or (b) any other
properly payable item unless within the time
allowed for acceptance or payment of that item the
bank either accepts or pays the item or returns it
and accompanying documents.]
(a) IF AN ITEM IS PRESENTED TO AND RECEIVED BY
A PAYOR BANK, THE BANK IS ACCOUNTABLE FOR THE
AMOUNT OF: (1) A DEMAND ITEM, OTHER THAN A
DOCUMENTARY DRAFT, WHETHER PROPERLY PAYABLE OR
NOT, IF THE BANK, IN ANY CASE IN WHICH IT IS NOT
ALSO THE DEPOSITARY BANK, RETAINS THE ITEM BEYOND
MIDNIGHT OF THE BANKING DAY OF RECEIPT WITHOUT
SETTLING FOR IT OR, WHETHER OR NOT IT IS ALSO THE
DEPOSITARY BANK, DOES NOT PAY OR RETURN THE ITEM
OR SEND NOTICE OF DISHONOR UNTIL AFTER ITS
MIDNIGHT DEADLINE; OR (2) ANY OTHER PROPERLY
PAYABLE ITEM UNLESS, WITHIN THE TIME ALLOWED FOR
ACCEPTANCE OR PAYMENT OF THAT ITEM, THE BANK
EITHER ACCEPTS OR PAYS THE ITEM OR RETURNS IT AND
ACCOMPANYING DOCUMENTS.
(b) THE LIABILITY OF A PAYOR BANK TO PAY AN
ITEM PURSUANT TO SUBSECTION (a) IS SUBJECT TO
DEFENSES BASED ON BREACH OF A PRESENTMENT WARRANTY
(SECTION 42a-4-208) OR PROOF THAT THE PERSON
SEEKING ENFORCEMENT OF THE LIABILITY PRESENTED OR
TRANSFERRED THE ITEM FOR THE PURPOSE OF DEFRAUDING
THE PAYOR BANK.
Sec. 97. Section 42a-4-303 of the general
statutes is repealed and the following is
substituted in lieu thereof:
[(1) Any knowledge, notice or stop-order
received by, legal process served upon or set-off
exercised by a payor bank, whether or not
effective under other rules of law to terminate,
suspend or modify the bank's right or duty to pay
an item or to charge its customer's account for
the item, comes too late to so terminate, suspend
or modify such right or duty if the knowledge,
notice, stop-order or legal process is received or
served and a reasonable time for the bank to act
thereon expires or the set-off is exercised after
the bank has done any of the following: (a)
Accepted or certified the item; (b) paid the item
in cash; (c) settled for the item without
reserving a right to revoke the settlement and
without having such right under statute, clearing
house rule or agreement; (d) completed the process
of posting the item to the indicated account of
the drawer, maker or other person to be charged
therewith or otherwise has evidenced by
examination of such indicated account and by
action its decision to pay the item; or (e) become
accountable for the amount of the item under
subsection (1) (d) of section 42a-4-213 and
section 42a-4-302 dealing with the payor bank's
responsibility for late return of items.
(2) Subject to the provisions of subsection
(1) items may be accepted, paid, certified or
charged to the indicated account of its customer
in any order convenient to the bank.]
(a) ANY KNOWLEDGE, NOTICE, OR STOP-PAYMENT
ORDER RECEIVED BY, LEGAL PROCESS SERVED UPON, OR
SET-OFF EXERCISED BY A PAYOR BANK COMES TOO LATE
TO TERMINATE, SUSPEND, OR MODIFY THE BANK'S RIGHT
OR DUTY TO PAY AN ITEM OR TO CHARGE ITS CUSTOMER'S
ACCOUNT FOR THE ITEM IF THE KNOWLEDGE, NOTICE,
STOP-PAYMENT ORDER, OR LEGAL PROCESS IS RECEIVED
OR SERVED AND A REASONABLE TIME FOR THE BANK TO
ACT THEREON EXPIRES OR THE SET-OFF IS EXERCISED
AFTER THE EARLIEST OF THE FOLLOWING: (1) THE BANK
ACCEPTS OR CERTIFIES THE ITEM; (2) THE BANK PAYS
THE ITEM IN CASH; (3) THE BANK SETTLES FOR THE
ITEM WITHOUT HAVING A RIGHT TO REVOKE THE
SETTLEMENT UNDER STATUTE, CLEARING-HOUSE RULE, OR
AGREEMENT; (4) THE BANK BECOMES ACCOUNTABLE FOR
THE AMOUNT OF THE ITEM UNDER SECTION 42a-4-302
DEALING WITH THE PAYOR BANK'S RESPONSIBILITY FOR
LATE RETURN OF ITEMS; OR (5) WITH RESPECT TO
CHECKS, A CUT-OFF HOUR NO EARLIER THAN ONE HOUR
AFTER THE OPENING OF THE NEXT BANKING DAY AFTER
THE BANKING DAY ON WHICH THE BANK RECEIVED THE
CHECK AND NO LATER THAN THE CLOSE OF THAT NEXT
BANKING DAY OR, IF NO CUT-OFF HOUR IS FIXED, THE
CLOSE OF THE NEXT BANKING DAY AFTER THE BANKING
DAY ON WHICH THE BANK RECEIVED THE CHECK.
(b) SUBJECT TO SUBSECTION (a), ITEMS MAY BE
ACCEPTED, PAID, CERTIFIED, OR CHARGED TO THE
INDICATED ACCOUNT OF ITS CUSTOMER IN ANY ORDER.
Sec. 98. Section 42a-4-401 of the general
statutes is repealed and the following is
substituted in lieu thereof:
[(1) As against its customer, a bank may
charge against his account any item which is
otherwise properly payable from that account even
though the charge creates an overdraft.
(2) A bank which in good faith makes payment
to a holder may charge the indicated account of
its customer according to (a) the original tenor
of his altered item; or (b) the tenor of his
completed item, even though the bank knows the
item has been completed unless the bank has notice
that the completion was improper.]
(a) A BANK MAY CHARGE AGAINST THE ACCOUNT OF A
CUSTOMER AN ITEM THAT IS PROPERLY PAYABLE FROM
THAT ACCOUNT EVEN THOUGH THE CHARGE CREATES AN
OVERDRAFT. AN ITEM IS PROPERLY PAYABLE IF IT IS
AUTHORIZED BY THE CUSTOMER AND IS IN ACCORDANCE
WITH ANY AGREEMENT BETWEEN THE CUSTOMER AND BANK.
(b) A CUSTOMER IS NOT LIABLE FOR THE AMOUNT OF
AN OVERDRAFT IF THE CUSTOMER NEITHER SIGNED THE
ITEM NOT BENEFITTED FROM THE PROCEEDS OF THE ITEM.
(c) A BANK MAY CHARGE AGAINST THE ACCOUNT OF A
CUSTOMER A CHECK THAT IS OTHERWISE PROPERLY
PAYABLE FROM THE ACCOUNT, EVEN THOUGH PAYMENT WAS
MADE BEFORE THE DATE OF THE CHECK, UNLESS THE
CUSTOMER HAS GIVEN NOTICE TO THE BANK OF THE
POSTDATING DESCRIBING THE CHECK WITH REASONABLE
CERTAINTY. THE NOTICE IS EFFECTIVE FOR THE PERIOD
STATED IN SECTION 42a-4-403(b) FOR STOP-PAYMENT
ORDERS, AND MUST BE RECEIVED AT SUCH TIME AND IN
SUCH MANNER AS TO AFFORD THE BANK A REASONABLE
OPPORTUNITY TO ACT ON IT BEFORE THE BANK TAKES ANY
ACTION WITH RESPECT TO THE CHECK DESCRIBED IN
SECTION 42a-4-303. IF A BANK CHARGES AGAINST THE
ACCOUNT OF A CUSTOMER A CHECK BEFORE THE DATE
STATED IN THE NOTICE OF POSTDATING, THE BANK IS
LIABLE FOR DAMAGES FOR THE LOSS RESULTING FROM ITS
ACT. THE LOSS MAY INCLUDE DAMAGES FOR DISHONOR OF
SUBSEQUENT ITEMS UNDER SECTION 42a-4-402.
(d) A BANK THAT IN GOOD FAITH MAKES PAYMENT TO
A HOLDER MAY CHARGE THE INDICATED ACCOUNT OF ITS
CUSTOMER ACCORDING TO: (1) THE ORIGINAL TERMS OF
THE ALTERED ITEM; OR (2) THE TERMS OF THE
COMPLETED ITEM, EVEN THOUGH THE BANK KNOWS THE
ITEM HAS BEEN COMPLETED UNLESS THE BANK HAS NOTICE
THAT THE COMPLETION WAS IMPROPER.
Sec. 99. Section 42a-4-402 of the general
statutes is repealed and the following is
substituted in lieu thereof:
[A payor bank is liable to its customer for
damages proximately caused by the wrongful
dishonor of an item. When the dishonor occurs
through mistake liability is limited to actual
damages proved. If so proximately caused and
proved damages may include damages for an arrest
or prosecution of the customer or other
consequential damages. Whether any consequential
damages are proximately caused by the wrongful
dishonor is a question of fact to be determined in
each case.]
(a) EXCEPT AS OTHERWISE PROVIDED IN THIS
ARTICLE, A PAYOR BANK WRONGFULLY DISHONORS AN ITEM
IF IT DISHONORS AN ITEM THAT IS PROPERLY PAYABLE,
BUT A BANK MAY DISHONOR AN ITEM THAT WOULD CREATE
AN OVERDRAFT UNLESS IT HAS AGREED TO PAY THE
OVERDRAFT.
(b) A PAYOR BANK IS LIABLE TO ITS CUSTOMER FOR
DAMAGES PROXIMATELY CAUSED BY THE WRONGFUL
DISHONOR OF AN ITEM. LIABILITY IS LIMITED TO
ACTUAL DAMAGES PROVED AND MAY INCLUDE DAMAGES FOR
AN ARREST OR PROSECUTION OF THE CUSTOMER OR OTHER
CONSEQUENTIAL DAMAGES. WHETHER ANY CONSEQUENTIAL
DAMAGES ARE PROXIMATELY CAUSED BY THE WRONGFUL
DISHONOR IS A QUESTION OF FACT TO BE DETERMINED IN
EACH CASE.
(c) A PAYOR BANK'S DETERMINATION OF THE
CUSTOMER'S ACCOUNT BALANCE ON WHICH A DECISION TO
DISHONOR FOR INSUFFICIENCY OF AVAILABLE FUNDS IS
BASED MAY BE MADE AT ANY TIME BETWEEN THE TIME THE
ITEM IS RECEIVED BY THE PAYOR BANK AND THE TIME
THAT THE PAYOR BANK RETURNS THE ITEM OR GIVES
NOTICE IN LIEU OF RETURN, AND NO MORE THAN ONE
DETERMINATION NEED BE MADE. IF, AT THE ELECTION OF
THE PAYOR BANK, A SUBSEQUENT BALANCE DETERMINATION
IS MADE FOR THE PURPOSE OF REEVALUATING THE BANK'S
DECISION TO DISHONOR THE ITEM, THE ACCOUNT BALANCE
AT THAT TIME IS DETERMINATIVE OF WHETHER A
DISHONOR FOR INSUFFICIENCY OF AVAILABLE FUNDS IS
WRONGFUL.
Sec. 100. Section 42a-4-403 of the general
statutes is repealed and the following is
substituted in lieu thereof:
[(1) A customer may by order to his bank stop
payment of any item payable for his account but
the order must be received at such time and in
such manner as to afford the bank a reasonable
opportunity to act on it prior to any action by
the bank with respect to the item described in
section 42a-4-303.
(2) An oral order is binding upon the bank
only for fourteen calendar days unless confirmed
in writing within that period. A written order is
effective for only six months unless renewed in
writing.
(3) The burden of establishing the fact and
amount of loss resulting from the payment of an
item contrary to a binding stop payment order is
on the customer.]
(a) A CUSTOMER OR ANY PERSON AUTHORIZED TO
DRAW ON THE ACCOUNT IF THERE IS MORE THAN ONE
PERSON MAY STOP PAYMENT OF ANY ITEM DRAWN ON THE
CUSTOMER'S ACCOUNT OR CLOSE THE ACCOUNT BY AN
ORDER TO THE BANK DESCRIBING THE ITEM OR ACCOUNT
WITH REASONABLE CERTAINTY RECEIVED AT A TIME AND
IN A MANNER THAT AFFORDS THE BANK A REASONABLE
OPPORTUNITY TO ACT ON IT BEFORE ANY ACTION BY THE
BANK WITH RESPECT TO THE ITEM DESCRIBED IN SECTION
42a-4-303. IF THE SIGNATURE OF MORE THAN ONE
PERSON IS REQUIRED TO DRAW ON AN ACCOUNT, ANY OF
THESE PERSONS MAY STOP PAYMENT OR CLOSE THE
ACCOUNT.
(b) A STOP-PAYMENT ORDER IS EFFECTIVE FOR SIX
MONTHS, BUT IT LAPSES AFTER FOURTEEN CALENDAR DAYS
IF THE ORIGINAL ORDER WAS ORAL AND WAS NOT
CONFIRMED IN WRITING WITHIN THAT PERIOD. A
STOP-PAYMENT ORDER MAY BE RENEWED FOR ADDITIONAL
SIX-MONTH PERIODS BY A WRITING GIVEN TO THE BANK
WITHIN A PERIOD DURING WHICH THE STOP-PAYMENT
ORDER IS EFFECTIVE.
(c) THE BURDEN OF ESTABLISHING THE FACT AND
AMOUNT OF LOSS RESULTING FROM THE PAYMENT OF AN
ITEM CONTRARY TO A STOP-PAYMENT ORDER OR ORDER TO
CLOSE AN ACCOUNT IS ON THE CUSTOMER. THE LOSS FROM
PAYMENT OF AN ITEM CONTRARY TO A STOP-PAYMENT
ORDER MAY INCLUDE DAMAGES FOR DISHONOR OF
SUBSEQUENT ITEMS UNDER SECTION 42a-4-402.
Sec. 101. Section 42a-4-405 of the general
statutes is repealed and the following is
substituted in lieu thereof:
[(1) A payor or collecting bank's authority to
accept, pay or collect an item or to account for
proceeds of its collection if otherwise effective
is not rendered ineffective by incompetence of a
customer of either bank existing at the time the
item is issued or its collection is undertaken if
the bank does not know of an adjudication of
incompetence. Neither death nor incompetence of a
customer revokes such authority to accept, pay,
collect or account until the bank knows of the
fact of death or of an adjudication of
incompetence and has reasonable opportunity to act
on it.
(2) Even with knowledge a bank may for ten
days after the date of death pay or certify checks
drawn on or prior to that date unless ordered to
stop payment by a person claiming an interest in
the account.]
(a) A PAYOR OR COLLECTING BANK'S AUTHORITY TO
ACCEPT, PAY, OR COLLECT AN ITEM OR TO ACCOUNT FOR
PROCEEDS OF ITS COLLECTION, IF OTHERWISE
EFFECTIVE, IS NOT RENDERED INEFFECTIVE BY
INCOMPETENCE OF A CUSTOMER OF EITHER BANK EXISTING
AT THE TIME THE ITEM IS ISSUED OR ITS COLLECTION
IS UNDERTAKEN IF THE BANK DOES NOT KNOW OF AN
ADJUDICATION OF INCOMPETENCE. NEITHER DEATH NOR
INCOMPETENCE OF A CUSTOMER REVOKES THE AUTHORITY
TO ACCEPT, PAY, COLLECT, OR ACCOUNT UNTIL THE BANK
KNOWS OF THE FACT OF DEATH OR OF AN ADJUDICATION
OF INCOMPETENCE AND HAS REASONABLE OPPORTUNITY TO
ACT ON IT.
(b) EVEN WITH KNOWLEDGE, A BANK MAY FOR TEN
DAYS AFTER THE DATE OF DEATH PAY OR CERTIFY CHECKS
DRAWN ON OR BEFORE THAT DATE UNLESS ORDERED TO
STOP PAYMENT BY A PERSON CLAIMING AN INTEREST IN
THE ACCOUNT.
Sec. 102. Section 42a-4-406 of the general
statutes is repealed and the following is
substituted in lieu thereof:
[(1) When a bank sends to its customer a
statement of account accompanied by items paid in
good faith in support of the debit entries or
holds the statement and items pursuant to a
request or instructions of its customer or
otherwise in a reasonable manner makes the
statement and items available to the customer, the
customer must exercise reasonable care and
promptness to examine the statement and items to
discover his unauthorized signature or any
alteration on an item and must notify the bank
promptly after discovery thereof.
(2) If the bank establishes that the customer
failed with respect to an item to comply with the
duties imposed on the customer by subsection (1)
the customer is precluded from asserting against
the bank (a) his unauthorized signature or any
alteration on the item if the bank also
establishes that it suffered a loss by reason of
such failure; and (b) an unauthorized signature or
alteration by the same wrongdoer on any other item
paid in good faith by the bank after the first
item and statement was available to the customer
for a reasonable period not exceeding fourteen
calendar days and before the bank receives
notification from the customer of any such
unauthorized signature or alteration.
(3) The preclusion under subsection (2) does
not apply if the customer establishes lack of
ordinary care on the part of the bank in paying
the item.
(4) Without regard to care or lack of care of
either the customer or the bank a customer who
does not within one year from the time the
statement and items are made available to the
customer as provided in subsection (1) discover
and report his unauthorized signature or any
alteration on the face or back of the item or does
not within three years from that time discover and
report any unauthorized endorsement is precluded
from asserting against the bank such unauthorized
signature or endorsement or such alteration.
(5) If under this section a payor bank has a
valid defense against a claim of a customer upon
or resulting from payment of an item and waives or
fails upon request to assert the defense the bank
may not assert against any collecting bank or
other prior party presenting or transferring the
item a claim based upon the unauthorized signature
or alteration giving rise to the customer's
claim.]
(a) A BANK THAT SENDS OR MAKES AVAILABLE TO A
CUSTOMER A STATEMENT OF ACCOUNT SHOWING PAYMENT OF
ITEMS FOR THE ACCOUNT SHALL EITHER RETURN OR MAKE
AVAILABLE TO THE CUSTOMER THE ITEMS PAID OR
PROVIDE INFORMATION IN THE STATEMENT OF ACCOUNT
SUFFICIENT TO ALLOW THE CUSTOMER REASONABLY TO
IDENTIFY THE ITEMS PAID. THE STATEMENT OF ACCOUNT
PROVIDES SUFFICIENT INFORMATION IF THE ITEM IS
DESCRIBED BY ITEM NUMBER, AMOUNT, AND DATE OF
PAYMENT.
(b) IF THE ITEMS ARE NOT RETURNED TO THE
CUSTOMER, THE PERSON RETAINING THE ITEMS SHALL
EITHER RETAIN THE ITEMS OR, IF THE ITEMS ARE
DESTROYED, MAINTAIN THE CAPACITY TO FURNISH
LEGIBLE COPIES OF THE ITEMS UNTIL THE EXPIRATION
OF SEVEN YEARS AFTER RECEIPT OF THE ITEMS. A
CUSTOMER MAY REQUEST AN ITEM FROM THE BANK THAT
PAID THE ITEM, AND THAT BANK MUST PROVIDE IN A
REASONABLE TIME EITHER THE ITEM OR, IF THE ITEM
HAS BEEN DESTROYED OR IS NOT OTHERWISE OBTAINABLE,
A LEGIBLE COPY OF THE ITEM.
(c) IF A BANK SENDS OR MAKES AVAILABLE A
STATEMENT OF ACCOUNT OR ITEMS PURSUANT TO
SUBSECTION (a), THE CUSTOMER MUST EXERCISE
REASONABLE PROMPTNESS IN EXAMINING THE STATEMENT
OR THE ITEMS TO DETERMINE WHETHER ANY PAYMENT WAS
NOT AUTHORIZED BECAUSE OF AN ALTERATION OF AN ITEM
OR BECAUSE A PURPORTED SIGNATURE BY OR ON BEHALF
OF THE CUSTOMER WAS NOT AUTHORIZED. IF, BASED ON
THE STATEMENT OR ITEMS PROVIDED, THE CUSTOMER
SHOULD REASONABLY HAVE DISCOVERED THE UNAUTHORIZED
PAYMENT, THE CUSTOMER MUST PROMPTLY NOTIFY THE
BANK OF THE RELEVANT FACTS.
(d) IF THE BANK PROVES THAT THE CUSTOMER
FAILED, WITH RESPECT TO AN ITEM, TO COMPLY WITH
THE DUTIES IMPOSED ON THE CUSTOMER BY SUBSECTION
(c), THE CUSTOMER IS PRECLUDED FROM ASSERTING
AGAINST THE BANK: (1) THE CUSTOMER'S UNAUTHORIZED
SIGNATURE OR ANY ALTERATION ON THE ITEM, IF THE
BANK ALSO PROVES THAT IT SUFFERED A LOSS BY REASON
OF THE FAILURE; AND (2) THE CUSTOMER'S
UNAUTHORIZED SIGNATURE OR ALTERATION BY THE SAME
WRONGDOER ON ANY OTHER ITEM PAID IN GOOD FAITH BY
THE BANK IF THE PAYMENT WAS MADE BEFORE THE BANK
RECEIVED NOTICE FROM THE CUSTOMER OF THE
UNAUTHORIZED SIGNATURE OR ALTERATION AND AFTER THE
CUSTOMER HAD BEEN AFFORDED A REASONABLE PERIOD OF
TIME, NOT EXCEEDING THIRTY DAYS, IN WHICH TO
EXAMINE THE ITEM OR STATEMENT OF ACCOUNT AND
NOTIFY THE BANK.
(e) IF SUBSECTION (d) APPLIES AND THE CUSTOMER
PROVES THAT THE BANK FAILED TO EXERCISE ORDINARY
CARE IN PAYING THE ITEM AND THAT THE FAILURE
SUBSTANTIALLY CONTRIBUTED TO LOSS, THE LOSS IS
ALLOCATED BETWEEN THE CUSTOMER PRECLUDED AND THE
BANK ASSERTING THE PRECLUSION ACCORDING TO THE
EXTENT TO WHICH THE FAILURE OF THE CUSTOMER TO
COMPLY WITH SUBSECTION (c) AND THE FAILURE OF THE
BANK TO EXERCISE ORDINARY CARE CONTRIBUTED TO THE
LOSS. IF THE CUSTOMER PROVES THAT THE BANK DID NOT
PAY THE ITEM IN GOOD FAITH, THE PRECLUSION UNDER
SUBSECTION (d) DOES NOT APPLY.
(f) WITHOUT REGARD TO CARE OR LACK OF CARE OF
EITHER THE CUSTOMER OR THE BANK, A CUSTOMER WHO
DOES NOT WITHIN ONE YEAR AFTER THE STATEMENT OR
ITEMS ARE MADE AVAILABLE TO THE CUSTOMER
(SUBSECTION (a)) DISCOVER AND REPORT THE
CUSTOMER'S UNAUTHORIZED SIGNATURE ON OR ANY
ALTERATION ON THE ITEM IS PRECLUDED FROM ASSERTING
AGAINST THE BANK THE UNAUTHORIZED SIGNATURE OR
ALTERATION. IF THERE IS A PRECLUSION UNDER THIS
SUBSECTION, THE PAYOR BANK MAY NOT RECOVER FOR
BREACH OF WARRANTY UNDER SECTION 42a-4-208 WITH
RESPECT TO THE UNAUTHORIZED SIGNATURE OR
ALTERATION TO WHICH THE PRECLUSION APPLIES.
Sec. 103. Section 42a-4-407 of the general
statutes is repealed and the following is
substituted in lieu thereof:
[If a payor bank has paid an item over the
stop payment order of the drawer or maker or
otherwise under circumstances giving a basis for
objection by the drawer or maker, to prevent
unjust enrichment and only to the extent necessary
to prevent loss to the bank by reason of its
payment of the item, the payor bank shall be
subrogated to the rights (a) of any holder in due
course on the item against the drawer or maker;
and (b) of the payee or any other holder of the
item against the drawer or maker either on the
item or under the transaction out of which the
item arose; and (c) of the drawer or maker against
the payee or any other holder of the item with
respect to the transaction out of which the item
arose.]
IF A PAYOR BANK HAS PAID AN ITEM OVER THE
ORDER OF THE DRAWER OR MAKER TO STOP PAYMENT, OR
AFTER AN ACCOUNT HAS BEEN CLOSED, OR OTHERWISE
UNDER CIRCUMSTANCES GIVING A BASIS FOR OBJECTION
BY THE DRAWER OR MAKER, TO PREVENT UNJUST
ENRICHMENT AND ONLY TO THE EXTENT NECESSARY TO
PREVENT LOSS TO THE BANK BY REASON OF ITS PAYMENT
OF THE ITEM, THE PAYOR BANK IS SUBROGATED TO THE
RIGHTS: (1) OF ANY HOLDER IN DUE COURSE ON THE
ITEM AGAINST THE DRAWER OR MAKER; (2) OF THE PAYEE
OR ANY OTHER HOLDER OF THE ITEM AGAINST THE DRAWER
OR MAKER EITHER ON THE ITEM OR UNDER THE
TRANSACTION OUT OF WHICH THE ITEM AROSE; AND (3)
OF THE DRAWER OR MAKER AGAINST THE PAYEE OR ANY
OTHER HOLDER OF THE ITEM WITH RESPECT TO THE
TRANSACTION OUT OF WHICH THE ITEM AROSE.
Sec. 104. Section 42a-4-501 of the general
statutes is repealed and the following is
substituted in lieu thereof:
[A bank which takes a documentary draft for
collection must present or send the draft and
accompanying documents for presentment and upon
learning that the draft has not been paid or
accepted in due course must seasonably notify its
customer of such fact even though it may have
discounted or bought the draft or extended credit
available for withdrawal as of right.]
A BANK THAT TAKES A DOCUMENTARY DRAFT FOR
COLLECTION SHALL PRESENT OR SEND THE DRAFT AND
ACCOMPANYING DOCUMENTS FOR PRESENTMENT AND, UPON
LEARNING THAT THE DRAFT HAS NOT BEEN PAID OR
ACCEPTED IN DUE COURSE, SHALL SEASONABLY NOTIFY
ITS CUSTOMER OF THE FACT EVEN THOUGH IT MAY HAVE
DISCOUNTED OR BOUGHT THE DRAFT OR EXTENDED CREDIT
AVAILABLE FOR WITHDRAWAL AS OF RIGHT.
Sec. 105. Section 42a-4-502 of the general
statutes is repealed and the following is
substituted in lieu thereof:
[When a draft or the relevant instructions
require presentment "on arrival", "when goods
arrive" or the like, the collecting bank need not
present until in its judgment a reasonable time
for arrival of the goods has expired. Refusal to
pay or accept because the goods have not arrived
is not dishonor; the bank must notify its
transferor of such refusal but need not present
the draft again until it is instructed to do so or
learns of the arrival of the goods.]
IF A DRAFT OR THE RELEVANT INSTRUCTIONS
REQUIRE PRESENTMENT "ON ARRIVAL", "WHEN GOODS
ARRIVE" OR THE LIKE, THE COLLECTING BANK NEED NOT
PRESENT UNTIL IN ITS JUDGMENT A REASONABLE TIME
FOR ARRIVAL OF THE GOODS HAS EXPIRED. REFUSAL TO
PAY OR ACCEPT BECAUSE THE GOODS HAVE NOT ARRIVED
IS NOT DISHONOR; THE BANK MUST NOTIFY ITS
TRANSFEROR OF THE REFUSAL BUT NEED NOT PRESENT THE
DRAFT AGAIN UNTIL IT IS INSTRUCTED TO DO SO OR
LEARNS OF THE ARRIVAL OF THE GOODS.
Sec. 106. Section 42a-4-503 of the general
statutes is repealed and the following is
substituted in lieu thereof:
[Unless otherwise instructed and except as
provided in article 5 a bank presenting a
documentary draft (a) must deliver the documents
to the drawee on acceptance of the draft if it is
payable more than three days after presentment;
otherwise, only on payment; and (b) upon dishonor,
either in the case of presentment for acceptance
or presentment for payment, may seek and follow
instructions from any referee in case of need
designated in the draft or if the presenting bank
does not choose to utilize his services it must
use diligence and good faith to ascertain the
reason for dishonor, must notify its transferor of
the dishonor and of the results of its effort to
ascertain the reasons therefor and must request
instructions. But the presenting bank is under no
obligation with respect to goods represented by
the documents except to follow any reasonable
instructions seasonably received; it has a right
to reimbursement for any expense incurred in
following instructions and to prepayment of or
indemnity for such expenses.]
UNLESS OTHERWISE INSTRUCTED AND EXCEPT AS
PROVIDED IN ARTICLE 5, A BANK PRESENTING A
DOCUMENTARY DRAFT: (1) MUST DELIVER THE DOCUMENTS
TO THE DRAWEE ON ACCEPTANCE OF THE DRAFT IF IT IS
PAYABLE MORE THAN THREE DAYS AFTER PRESENTMENT;
OTHERWISE, ONLY ON PAYMENT; AND (2) UPON DISHONOR,
EITHER IN THE CASE OF PRESENTMENT FOR ACCEPTANCE
OR PRESENTMENT FOR PAYMENT, MAY SEEK AND FOLLOW
INSTRUCTIONS FROM ANY REFEREE IN CASE OF NEED
DESIGNATED IN THE DRAFT OR, IF THE PRESENTING BANK
DOES NOT CHOOSE TO UTILIZE THE REFEREE'S SERVICES,
IT MUST USE DILIGENCE AND GOOD FAITH TO ASCERTAIN
THE REASON FOR DISHONOR, MUST NOTIFY ITS
TRANSFEROR OF THE DISHONOR AND OF THE RESULTS OF
ITS EFFORT TO ASCERTAIN THE REASONS THEREFOR, AND
MUST REQUEST INSTRUCTIONS. HOWEVER THE PRESENTING
BANK IS UNDER NO OBLIGATION WITH RESPECT TO GOODS
REPRESENTED BY THE DOCUMENTS EXCEPT TO FOLLOW ANY
REASONABLE INSTRUCTIONS SEASONABLY RECEIVED; IT
HAS A RIGHT TO REIMBURSEMENT FOR ANY EXPENSE
INCURRED IN FOLLOWING INSTRUCTIONS AND TO
PREPAYMENT OF OR INDEMNITY FOR THOSE EXPENSES.
Sec. 107. Section 42a-4-504 of the general
statutes is repealed and the following is
substituted in lieu thereof:
[(1) A presenting bank which, following the
dishonor of a documentary draft, has seasonably
requested instructions but does not receive them
within a reasonable time may store, sell, or
otherwise deal with the goods in any reasonable
manner.
(2) For its reasonable expenses incurred by
action under subsection (1) the presenting bank
has a lien upon the goods or their proceeds, which
may be foreclosed in the same manner as an unpaid
seller's lien.]
(a) A PRESENTING BANK THAT, FOLLOWING THE
DISHONOR OF A DOCUMENTARY DRAFT, HAS SEASONABLY
REQUESTED INSTRUCTIONS BUT DOES NOT RECEIVE THEM
WITHIN A REASONABLE TIME MAY STORE, SELL, OR
OTHERWISE DEAL WITH THE GOODS IN ANY REASONABLE
MANNER.
(b) FOR ITS REASONABLE EXPENSES INCURRED BY
ACTION UNDER SUBSECTION (a), THE PRESENTING BANK
HAS A LIEN UPON THE GOODS OR THEIR PROCEEDS, WHICH
MAY BE FORECLOSED IN THE SAME MANNER AS AN UNPAID
SELLER'S LIEN.
Sec. 108. Subdivision (20) of section
42a-1-201 of the general statutes is repealed and
the following is substituted in lieu thereof:
(20) "Holder", [means a person who is in
possession of a document of title or an instrument
or a certificated investment security drawn,
issued, or indorsed to him or his order or to
bearer or in blank] WITH RESPECT TO A NEGOTIABLE
INSTRUMENT, MEANS THE PERSON IN POSSESSION IF THE
INSTRUMENT IS PAYABLE TO BEARER OR, IN THE CASE OF
AN INSTRUMENT PAYABLE TO AN IDENTIFIED PERSON, IF
THE IDENTIFIED PERSON IS IN POSSESSION. "HOLDER"
WITH RESPECT TO A DOCUMENT OF TITLE MEANS THE
PERSON IN POSSESSION IF THE GOODS ARE DELIVERABLE
TO BEARER OR TO THE ORDER OF THE PERSON IN
POSSESSION.
Sec. 109. Subdivision (24) of section
42a-1-201 of the general statutes is repealed and
the following is substituted in lieu thereof:
(24) "Money" means a medium of exchange
authorized or adopted by a domestic or foreign
government [as a part of its currency] AND
INCLUDES A MONETARY UNIT OF ACCOUNT ESTABLISHED BY
AN INTERGOVERNMENTAL ORGANIZATION OR BY AGREEMENT
BETWEEN TWO OR MORE NATIONS.
Sec. 110. Subdivision (43) of section
42a-1-201 of the general statutes is repealed and
the following is substituted in lieu thereof:
(43) "Unauthorized" signature [or indorsement]
means one made without actual, implied, or
apparent authority and includes a forgery.
Sec. 111. Section 42a-1-207 of the general
statutes is repealed and the following is
substituted in lieu thereof:
[A party who with explicit reservation of
rights performs or promises performance or assents
to performance in a manner demanded or offered by
the other party does not thereby prejudice the
rights reserved. Such words as "without
prejudice", "under protest" or the like are
sufficient.]
(1) A PARTY WHO, WITH EXPLICIT RESERVATION OF
RIGHTS, PERFORMS OR PROMISES PERFORMANCE OR
ASSENTS TO PERFORMANCE IN A MANNER DEMANDED OR
OFFERED BY THE OTHER PARTY DOES NOT THEREBY
PREJUDICE THE RIGHTS RESERVED. SUCH WORDS AS
"WITHOUT PREJUDICE", "UNDER PROTEST" OR THE LIKE
ARE SUFFICIENT.
(2) SUBSECTION (1) DOES NOT APPLY TO AN ACCORD
AND SATISFACTION.
Sec. 112. Sections 42a-3-120 to 42a-3-122,
inclusive, 42a-3-208, 42a-3-506 to 42a-3-511,
inclusive, 42a-3-606, 42a-3-701 and 42a-3-801 to
42a-3-805, inclusive, of the general statutes are
repealed.