§ 41-03-36 — (3-310) Effect of instrument on obligation for which taken

1. 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 endorser of the instrument.
2. Unless otherwise agreed and except as provided in subsection 1, 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.
a. 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.
b. 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.
c. Except as provided in subdivision d, 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.
d. 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.
3. If an instrument other than one described in subsection 1 or 2 is taken for an
obligation, the effect is that stated in subsection 1 if the instrument is one on which a
bank is liable as maker or acceptor or that stated in subsection 2 in any other case.