§ 4-3-310 — Effect of instrument on obligation for which taken

Colorado § 4-3-310

• Jurisdiction: Colorado
• Title 04: Uniform
• Art.: Negotiable Instruments

Text

(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) of this
section, 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) of this subsection (b), 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) of this
section is taken for an obligation, the effect is (i) that stated in subsection (a) of this
section if the instrument is one on which a bank is liable as maker or acceptor, or (ii)
that stated in subsection (b) of this section in any other case.

Legislative History

Source: L. 94: Entire article R&RE, p. 859, � 1, effective January 1, 1995.