§ 34.1-3-310 — Effect of instrument on obligation for which taken

(a) Unless otherwise agreed, if a certified check,
cashier's check, or teller's check is taken for an obligation,
the obligation is discharged to the same extent discharge would
result if an amount of money equal to the amount of the
instrument were taken in payment of the obligation. Discharge of
the obligation does not affect any liability that the obligor
may have as an indorser of the instrument.
(b) Unless otherwise agreed and except as provided in
subsection (a), if a note or an uncertified check is taken for
an obligation, the obligation is suspended to the same extent
the obligation would be discharged if an amount of money equal
to the amount of the instrument were taken, and the following
rules apply:
(i) 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;
(ii) 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;
(iii) Except as provided in paragraph (iv), 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;
(iv) 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
(1) that stated in subsection (a) if the instrument is one on
which a bank is liable as maker or acceptor, or (2) that stated
in subsection (b) in any other case.