Chapter 73 — Negotiable
Instruments
2011 EDITION
NEGOTIABLE INSTRUMENTS
COMMERCIAL TRANSACTIONS
GENERAL PROVISIONS
73.0101 Short
title
73.0102 Application
of chapter
73.0103 Definitions
73.0104 Negotiable
instrument; other definitions
73.0105 Issue
of instrument
73.0106 Unconditional
promise or order
73.0107 Instrument
payable in foreign money
73.0108 Payable
on demand or at definite time
73.0109 Payable
to bearer or to order
73.0110 Identification
of person to whom instrument is payable
73.0111 Place
of payment
73.0112 Interest
73.0113 Date
of instrument
73.0114 Contradictory
terms of instrument
73.0115 Incomplete
instrument
73.0116 Joint
and several liability; contribution
73.0117 Other
agreements affecting instrument
73.0118 Statute
of limitations
73.0119 Notice
of right to defend action
NEGOTIATION, TRANSFER AND INDORSEMENT
73.0201 Negotiation
73.0202 Negotiation
subject to rescission
73.0203 Transfer
of instrument; rights acquired by transfer
73.0204 Indorsement
73.0205 Special
indorsement; blank indorsement;
anomalous indorsement
73.0206 Restrictive
indorsement
73.0207 Reacquisition
ENFORCEMENT OF INSTRUMENTS
73.0301 Person
entitled to enforce instrument
73.0302 Holder
in due course
73.0303 Value
and consideration
73.0304 Overdue
instrument
73.0305 Defenses
and claims in recoupment
73.0306 Claims
to an instrument
73.0307 Notice
of breach of fiduciary duty
73.0308 Proof
of signatures and status as holder in due course
73.0309 Enforcement
of lost, destroyed or stolen instrument
73.0310 Effect
of instrument on obligation for which taken
73.0311 Accord
and satisfaction
73.0312 Lost,
destroyed or stolen cashier’s check, teller’s check or certified check
LIABILITY OF PARTIES
73.0401 Signature
73.0402 Signature
by representative
73.0403 Unauthorized
signature
73.0404 Impostors;
fictitious payees
73.0405 Employer’s
responsibility for fraudulent indorsement by employee
73.0406 Negligence
contributing to forged signature or alteration of instrument
73.0407 Alteration
73.0408 Drawee not liable on unaccepted draft
73.0409 Acceptance
of draft; certified check
73.0410 Acceptance
varying draft
73.0411 Refusal
to pay cashier’s checks, teller’s checks and certified checks
73.0412 Obligation
of issuer of note or cashier’s check
73.0413 Obligation
of acceptor
73.0414 Obligation
of drawer
73.0415 Obligation
of indorser
73.0416 Transfer
warranties
73.0417 Presentment
warranties
73.0418 Payment
or acceptance by mistake
73.0419 Instruments
signed for accommodation
73.0420 Conversion
of instrument
DISHONOR
73.0501 Presentment
73.0502 Dishonor
73.0503 Notice
of dishonor
73.0504 Excused
presentment and notice of dishonor
73.0505 Evidence
of dishonor
DISCHARGE AND PAYMENT
73.0601 Discharge
and effect of discharge
73.0602 Payment
73.0603 Tender
of payment
73.0604 Discharge
by cancellation or renunciation
73.0605 Discharge
of indorsers and accommodation parties
73.010, 73.020, 73.030, 73.040, 73.050,
73.060, 73.080, 73.090, 73.100, 73.110, 73.120, 73.130, 73.140, 73.150, 73.160,
73.170, 73.180, 73.190, 73.200 [Repealed by
1961 c.726 §427]
GENERAL
PROVISIONS
73.0101 Short title.
This chapter may be cited as Uniform Commercial Code–Negotiable Instruments. [1993
c.545 §4]
73.0102 Application of chapter.
(1) This chapter applies to negotiable instruments. This chapter does not apply
to money, to payment orders governed by ORS chapter 74, or to securities
governed by ORS chapter 78.
(2)
If there is conflict between this chapter and ORS chapter 74 or 79, ORS chapter
74 or 79 shall govern.
(3)
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 chapter to the extent of the inconsistency. [1993 c.545 §5;
1995 c.79 §24]
73.0103 Definitions.
(1) As used in this chapter:
(a)
“Acceptor” means a drawee who has accepted a draft.
(b)
“Drawee” means a person ordered in a draft to make
payment.
(c)
“Drawer” means a person who signs or is identified in a draft as a person
ordering payment.
(d)
“Maker” means a person who signs or is identified in a note as a person
undertaking to pay.
(e)
“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.
(f)
“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 under this chapter or ORS chapter
74.
(g)
“Party” means a party to an instrument.
(h)
“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.
(i) “Prove” with respect to a fact means to meet the burden
of establishing the fact as defined in ORS 71.2010 (2)(h).
(j)
“Remitter” means a person who purchases an instrument from the issuer if the
instrument is payable to an identified person other than the purchaser.
(2)
Other definitions applying to this chapter and the sections in which they
appear are:
“Acceptance” ORS
73.0409
“Accommodated party” ORS
73.0419
“Accommodation party” ORS
73.0419
“Alteration” ORS
73.0407
“Anomalous indorsement” ORS
73.0205
“Blank indorsement” ORS
73.0205
“Cashier’s check” ORS
73.0104
“Certificate of deposit” ORS
73.0104
“Certified check” ORS
73.0409
“Check” ORS
73.0104
“Consideration” ORS
73.0303
“Demand draft” ORS
73.0104
“Draft” ORS
73.0104
“Holder in due course” ORS
73.0302
“Incomplete instrument” ORS
73.0115
“Indorsement” ORS
73.0204
“Indorser” ORS
73.0204
“Instrument” ORS
73.0104
“Issue” ORS
73.0105
“Issuer” ORS
73.0105
“Negotiable instrument” ORS
73.0104
“Negotiation” ORS
73.0201
“Note” ORS
73.0104
“Payable at a definite time” ORS
73.0108
“Payable on demand” ORS
73.0108
“Payable to bearer” ORS
73.0109
“Payable to order” ORS
73.0109
“Payment” ORS
73.0602
“Person entitled to enforce” ORS
73.0301
“Presentment” ORS
73.0501
“Reacquisition” ORS
73.0207
“Special indorsement” ORS
73.0205
“Teller’s check” ORS
73.0104
“Transfer of instrument” ORS
73.0203
“Traveler’s check” ORS
73.0104
“Value” ORS
73.0303
(3) The following definitions in ORS
chapter 74 apply to this chapter:
“Bank” ORS
74.1050
“Banking day” ORS
74.1040
“Clearing house” ORS
74.1040
“Collecting bank” ORS
74.1050
“Depositary bank” ORS
74.1050
“Documentary draft” ORS
74.1040
“Intermediary bank” ORS
74.1050
“Item” ORS
74.1040
“Payor bank” ORS
74.1050
“Suspends payments” ORS
74.1040
(4) In addition, ORS chapter 71 contains
general definitions and principles of construction and interpretation
applicable throughout this chapter. [1993 c.545 §6; 1997 c.822 §1; 2009 c.181 §44]
73.0104
Negotiable instrument; other definitions. (1)
Except as provided in subsections (3) and (4) of this section, “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:
(a) Is payable to bearer or to order at
the time it is issued or first comes into possession of a holder;
(b) Is payable on demand or at a definite
time; and
(c) 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:
(A) An undertaking or power to give,
maintain or protect collateral to secure payment;
(B) An authorization or power to the
holder to confess judgment or realize on or dispose of collateral; or
(C) A waiver of the benefit of any law
intended for the advantage or protection of an obligor.
(2) “Instrument” means a negotiable
instrument.
(3) An order that meets all of the
requirements of subsection (1) of this section, except subsection (1)(a) of
this section, and otherwise falls within the definition of “check” in
subsection (6) of this section, is a negotiable instrument and a check.
(4) 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 chapter.
(5) An instrument is a “note” if it is a
promise. An instrument 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.
(6) “Check” means a draft, other than a
documentary draft, payable on demand and drawn on a bank, or 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 as “money order.”
(7) “Cashier’s check” means a draft with
respect to which the drawer and drawee are the same bank
or branches of the same bank.
(8) “Teller’s check” means a draft drawn
by a bank:
(a) On another bank; or
(b) Payable at or through a bank.
(9) “Traveler’s check” means an instrument
that:
(a) Is payable on demand;
(b) Is drawn on or payable at or through a
bank;
(c) Is designated by the term “traveler’s
check” or by a substantially similar term; and
(d) Requires, as a condition to payment, a
countersignature by a person whose specimen signature appears on the
instrument.
(10) “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.
(11)(a) “Demand draft” means a writing not
signed by a customer that is created by a third party under the purported
authority of the customer for the purpose of charging the customer’s account
with a bank. A demand draft does not include a check drawn by a fiduciary, as
defined in ORS 73.0307. A demand draft may contain any or all of the following:
(A) The customer’s printed or typewritten
name or account number;
(B) A notation that the customer
authorized the draft; and
(C) The statement “No signature required”
or words to that effect.
(b) “Demand draft” shall not include a
check purportedly drawn by and bearing the signature of a fiduciary as defined
in ORS 73.0307. [1993 c.545 §7; 1997 c.822 §2]
73.0105
Issue of instrument. (1) “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.
(2) 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.
(3) “Issuer” applies to issued and
unissued instruments and means a maker or drawer of an instrument. [1993 c.545 §8]
73.0106
Unconditional promise or order. (1) Except as
provided in this section, for the purposes of ORS 73.0104 (1), a promise or
order is unconditional unless it states an express condition to payment, that
the promise or order is subject to or governed by another writing, or 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.
(2) A promise or order is not made
conditional:
(a) By a reference to another writing for
a statement of rights with respect to collateral, prepayment or acceleration;
or
(b) Because payment is limited to resort
to a particular fund or source.
(3) 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 ORS 73.0104 (1). 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.
(4) 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 ORS 73.0104 (1); but if the
promise or order is an instrument, there cannot be a holder in due course of
the instrument. [1993 c.545 §9]
73.0107
Instrument payable in foreign money. 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.
[1993 c.545 §10]
73.0108
Payable on demand or at definite time. (1) A promise
or order is “payable on demand” if it:
(a) States that it is payable on demand or
at sight, or otherwise indicates that it is payable at the will of the holder;
or
(b) Does not state any time of payment.
(2) 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 issued, subject to rights of:
(a) Prepayment;
(b) Acceleration;
(c) Extension at the option of the holder;
or
(d) Extension to a further definite time
at the option of the maker or acceptor or automatically upon or after a
specified act or event.
(3) 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. [1993
c.545 §11]
73.0109
Payable to bearer or to order. (1) A promise
or order is payable to bearer if it:
(a) 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;
(b) Does not state a payee; or
(c) States that it is payable to or to the
order of cash or otherwise indicates that it is not payable to an identified
person.
(2) A promise or order that is not payable
to bearer is payable to order if it is payable to the order of an identified
person or to an identified person or order. A promise order that is payable to
order is payable to the identified person.
(3) An instrument payable to bearer may
become payable to an identified person if it is specially indorsed pursuant to
ORS 73.0205 (1). An instrument payable to an identified person may become
payable to bearer if it is indorsed in blank pursuant to ORS 73.0205 (2). [1993
c.545 §12]
73.0110
Identification of person to whom instrument is payable.
(1) 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.
(2) 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.
(3) 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:
(a) 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 the person, the instrument is
payable to the named person, whether or not that person is the owner of the
account identified by number.
(b) If an instrument is payable to:
(A) A trust, and 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;
(B) A person described as an 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;
(C) 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
(D) 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.
(4) 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. [1993 c.545 §13]
73.0111
Place of payment. Except as otherwise provided for
items in ORS chapter 74, 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. [1993
c.545 §14]
73.0112
Interest. (1) Unless otherwise provided in the
instrument:
(a) An instrument is not payable with
interest; and
(b) Interest on an interest-bearing
instrument is payable from the date of the instrument.
(2) 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.
(3) Nothing in subsection (1)(a) of this
section shall affect any right of a holder of a check, draft or order that has
been dishonored by nonacceptance or nonpayment or on
which the maker or drawer has stopped payment without good cause:
(a) To collect interest on the debt or
obligation for which the check, draft or order was given, pursuant to ORS
82.010; or
(b) To exercise the remedies provided in
ORS 30.701. [1993 c.545 §15; 1999 c.707 §2]
73.0113
Date of instrument. (1) 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 the date. Except as provided in
ORS 74.4010 (3), an instrument payable on demand is not payable before the date
of the instrument.
(2) 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. [1993 c.545 §16]
73.0114
Contradictory terms of instrument. If an
instrument contains contradictory terms, typewritten terms prevail over printed
terms, handwritten terms prevail over both, and words prevail over numbers. [1993
c.545 §17]
73.0115
Incomplete instrument. (1) “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.
(2) Subject to subsection (3) of this
section, if the incomplete instrument is an instrument under ORS 73.0104, 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 ORS 73.0104, but, after completion, the requirements of ORS
73.0104 are met, the instrument may be enforced according to its terms as augmented
by completion.
(3) If words or numbers are added to an
incomplete instrument without authority of the signer, there is an alteration
of the incomplete instrument under ORS 73.0407.
(4) 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. [1993 c.545 §18]
73.0116
Joint and several liability; contribution. (1)
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.
(2) Except as provided in ORS 73.0419 (5)
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.
(3) Discharge of one party having joint
and several liability by a person entitled to enforce the instrument does not
affect the right under subsection (2) of this section of a party having the
same joint and several liability to receive contribution from the party
discharged. [1993 c.545 §19]
73.0117
Other agreements affecting instrument. 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. [1993 c.545 §20]
73.0118
Statute of limitations. (1) Except as provided in
subsection (5) of this section, 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.
(2) Except as provided in subsection (4)
or (5) of this section, 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 10 years.
(3) Except as provided in subsection (4)
of this section, an action to enforce the obligation of a party to an
unaccepted draft to pay the draft must be commenced within six years after
dishonor of the draft or 10 years after the date of the draft, whichever period
expires first.
(4) 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 six years after the demand
for payment is made to the acceptor or issuer.
(5) 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, the six-year period begins when a demand for
payment is in effect and the due date has passed.
(6) An action to enforce the obligation of
a party to pay an accepted draft, other than a certified check, must be
commenced:
(a) 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
(b) Within six years after the date of the
acceptance if the obligation of the acceptor is payable on demand.
(7) Unless governed by other law regarding
claims for indemnity or contribution, an action for any of the following must be
commenced within six years after the claim for relief accrues:
(a) Conversion of an instrument, for money
had and received, or like action based on conversion;
(b) Breach of warranty; or
(c) Enforcement of an obligation, duty or
right arising under this chapter and not governed by this section.
(8) The circumstances under which the
running of a limitation period may be tolled shall be determined by other law. [1993
c.545 §21]
73.0119
Notice of right to defend action. In an action
for breach of an obligation over which a third person is answerable pursuant to
this chapter or ORS chapter 74, 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. If the notice states that the person
notified may come in and defend and that failure to do so will bind the person
notified in an action later brought by the person giving 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. [1993 c.545 §22]
NEGOTIATION,
TRANSFER AND INDORSEMENT
73.0201
Negotiation. (1) “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.
(2) 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. [1993 c.545 §23]
73.0202
Negotiation subject to rescission. (1)
Negotiation is effective even if obtained:
(a) From an infant, a corporation
exceeding its powers or a person without capacity;
(b) By fraud, duress or mistake; or
(c) In breach of duty or as part of an
illegal transaction.
(2) 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. [1993 c.545 §24]
73.0203
Transfer of instrument; rights acquired by transfer.
(1) 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.
(2) 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
has engaged in fraud or illegality affecting the instrument.
(3) 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.
(4) 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 chapter and has only the rights of
a partial assignee. [1993 c.545 §25]
73.0204
Indorsement. (1) “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 negotiating the instrument, restricting
payment of the instrument or incurring indorser’s
liability on the instrument. 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.
(2) “Indorser”
means a person who makes an indorsement.
(3) 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.
(4) 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. [1993 c.545 §26]
73.0205
Special indorsement; blank indorsement;
anomalous indorsement.
(1) 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 ORS 73.0110 apply to special indorsements.
(2) If an indorsement
is made by the holder of an instrument and it 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.
(3) 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.
(4) “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. [1993 c.545
§27]
73.0206
Restrictive indorsement.
(1) 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.
(2) 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.
(3) If an instrument bears an indorsement described in ORS 74.2010 (2), or 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:
(a) 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.
(b) A depositary bank that purchased 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.
(c) 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.
(d) Except as otherwise provided in
paragraph (c) of this subsection, 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.
(4) Except for an indorsement
covered by subsection (3) of this section, 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:
(a) Unless there is notice of breach of
fiduciary duty as provided in ORS 73.0307, 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.
(b) 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.
(5) The presence on 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 (3) of this
section or has notice or knowledge of breach of fiduciary duty as stated in
subsection (4) of this section.
(6) 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. [1993 c.545 §28]
73.0207
Reacquisition. 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 canceled is discharged, and the discharge is
effective against any subsequent holder. [1993 c.545 §29]
ENFORCEMENT
OF INSTRUMENTS
73.0301
Person entitled to enforce instrument. “Person
entitled to enforce” an instrument means the holder of the instrument, a nonholder in possession of the instrument who has the
rights of a holder, or a person not in possession of the instrument who is
entitled to enforce the instrument pursuant to ORS 73.0309 or 73.0418 (4). 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. [1993 c.545 §30]
73.0302
Holder in due course. (1) Subject to ORS 73.0106 (3)
and (4), “holder in due course” means the holder of an instrument if:
(a) 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
(b) The holder took the instrument:
(A) For value;
(B) In good faith;
(C) 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;
(D) Without notice that the instrument
contains an unauthorized signature or has been altered;
(E) Without notice of any claim to the instrument
described in ORS 73.0306; and
(F) Without notice that any party has a
defense or claim in recoupment described in ORS 73.0305.
(2) Notice of discharge of a party, other
than discharge in an insolvency proceeding, is not notice of a defense under
subsection (1) of this section, 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.
(3) 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:
(a) By legal process or by purchase in an execution,
bankruptcy or creditor’s sale or similar proceeding;
(b) By purchase as part of a bulk
transaction not in ordinary course of business of the transferor; or
(c) As the successor in interest to an
estate or other organization.
(4) If, under ORS 73.0303 (1)(a), 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.
(5) If the person entitled to enforce an
instrument has only a security interest in the instrument and 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.
(6) To be effective, notice must be
received at a time and in a manner that gives a reasonable opportunity to act
on it.
(7) This section is subject to any law
limiting status as a holder in due course in particular classes of
transactions. [1993 c.545 §31]
73.0303
Value and consideration. (1) An instrument is issued or
transferred for value if:
(a) The instrument is issued or
transferred for a promise of performance, to the extent the promise has been
performed;
(b) The transferee acquires a security
interest or other lien in the instrument other than a lien obtained by judicial
proceeding;
(c) 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;
(d) The instrument is issued or
transferred in exchange for a negotiable instrument; or
(e) 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.
(2) “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
(1) of this section, the instrument is also issued for consideration. [1993
c.545 §32]
73.0304
Overdue instrument. (1) An instrument payable on
demand becomes overdue at the earliest of the following times:
(a) On the day after the day demand for payment
is duly made;
(b) If the instrument is a check, 90 days
after its date; or
(c) 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.
(2) With respect to an instrument payable
at a definite time, the following rules apply:
(a) If the principal is payable in
installments and a due date has not been accelerated, the instrument becomes
overdue upon default under the instrument for nonpayment of an installment, and
the instrument remains overdue until the default is cured.
(b) If the principal is not payable in
installments and the due date has not been accelerated, the instrument becomes
overdue on the day after the due date.
(c) If a due date with respect to
principal has been accelerated, the instrument becomes overdue on the day after
the accelerated due date.
(3) 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. [1993 c.545 §33]
73.0305
Defenses and claims in recoupment. (1) Except as
stated in subsection (2) of this section, the right to enforce the obligation
of a party to pay an instrument is subject to the following:
(a) A defense of the obligor based on:
(A) Infancy of the obligor to the extent
it is a defense to a simple contract;
(B) Duress, lack of legal capacity or illegality
of the transaction which, under other law, nullifies the obligation of the
obligor;
(C) 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
(D) Discharge of the obligor in insolvency
proceedings;
(b) A defense of the obligor stated in
another section of this chapter 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
(c) 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.
(2) 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 (1)(a) of this section, but is not subject
to defenses of the obligor stated in subsection (1)(b) of this section or
claims in recoupment stated in subsection (1)(c) of this section against a
person other than the holder.
(3) Except as stated in subsection (4) of
this section, 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 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.
(4) In an action to enforce the obligation
of an accommodation party or pay an instrument, the accommodation party may
assert against the person entitled to enforce the instrument any defense or
claim in recoupment under subsection (1) of this section 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. [1993 c.545 §34]
73.0306
Claims to an instrument. 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. [1993 c.545 §35]
73.0307
Notice of breach of fiduciary duty. (1) In this
section:
(a) “Fiduciary” means an agent, trustee,
partner, corporate officer, director or other representative owing a fiduciary
duty with respect to an instrument.
(b) “Represented person” means the
principal, beneficiary, partnership, corporation or other person to whom the
duty stated in paragraph (a) of this subsection is owed.
(2) If an instrument is taken from a
fiduciary for payment or collection or for value, the taker has knowledge of
the fiduciary status of the fiduciary, and the represented person makes 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:
(a) Notice of breach of fiduciary duty by
the fiduciary is notice of the claim of the represented person.
(b) 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:
(A) Taken in payment of or as security for
a debt known by the taker to be the personal debt of the fiduciary;
(B) Taken in a transaction known by the
taker to be for the personal benefit of the fiduciary; or
(C) Deposited to an account other than an
account of the fiduciary, as such, or an account of the represented person.
(c) 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.
(d) 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:
(A) Taken in payment of or as security for
a debt known by the taker to be the personal debt of the fiduciary;
(B) Taken in a transaction known by the
taker to be for the personal benefit of the fiduciary; or
(C) Deposited to an account other than an
account of the fiduciary, as such, or an account of the represented person. [1993
c.545 §36]
73.0308
Proof of signatures and status as holder in due course.
(1) 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 ORS 73.0402
(1).
(2) If the validity of signatures is
admitted or proved and there is compliance with subsection (1) of this section,
a plaintiff producing the instrument is entitled to payment if the plaintiff
proves entitlement to enforce the instrument under ORS 73.0301, 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 that are not subject to the defense or
claim. [1993 c.545 §37]
73.0309
Enforcement of lost, destroyed or stolen instrument.
(1) A person not in possession of an instrument is entitled to enforce the
instrument if:
(a) The person was in possession of the
instrument and entitled to enforce it when loss of possession occurred;
(b) The loss of possession was not the
result of a transfer by the person or a lawful seizure; and
(c) 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.
(2) A person seeking enforcement of an
instrument under subsection (1) of this section must prove the terms of the
instrument and the person’s right to enforce the instrument. If that proof is
made, ORS 73.0205 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. [1993 c.545 §38]
73.0310
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 indorser of the instrument.
(2) Unless otherwise agreed and except as
provided in subsection (1) 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:
(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 paragraph (d) of
this subsection, 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 that 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) of this section is taken for an obligation,
the effect is:
(a) That stated in subsection (1) of this
section, if the instrument is one on which a bank is liable as maker or
acceptor; or
(b) That stated in subsection (2) of this
section in any other case. [1993 c.545 §39]
73.0311
Accord and satisfaction. The negotiation of an instrument
marked “paid in full,” “payment in full,” “full payment of a claim” or words of
similar meaning, or the negotiation of an instrument accompanied by a statement
containing such words or words of similar meaning, does not establish an accord
and satisfaction that binds the payee or prevents the collection of any remaining
amount owed upon the underlying obligation unless the payee personally, or by
an officer or employee with actual authority to settle claims, agrees in
writing to accept the amount stated in the instrument as full payment of the
obligation. [1993 c.545 §40; 1997 c.437 §1]
73.0312
Lost, destroyed or stolen cashier’s check, teller’s check or certified check.
(1) In this section:
(a) “Check” means a cashier’s check,
teller’s check or certified check.
(b) “Claimant” means a person who claims
the right to receive the amount of a cashier’s check, teller’s check or
certified check that was lost, destroyed or stolen.
(c) “Declaration of loss” means a written
statement, made under penalty of perjury, to the effect that:
(A) The declarer lost possession of a
check;
(B) The declarer is the drawer or payee of
the check, in the case of a certified check, or the remitter or payee of the
check, in the case of a cashier’s check or teller’s check;
(C) The loss of possession was not the
result of a transfer by the declarer or a lawful seizure; and
(D) The declarer cannot reasonably obtain
possession of the check because the check 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.
(d) “Obligated bank” means the issuer of a
cashier’s check or teller’s check or the acceptor of a certified check.
(2) A claimant may assert a claim to the
amount of a check by a communication to the obligated bank describing the check
with reasonable certainty and requesting payment of the amount of the check,
if:
(a) The claimant is the drawer or payee of
a certified check or the remitter or payee of a cashier’s check or teller’s
check;
(b) The communication contains or is
accompanied by a declaration of loss of the claimant with respect to the check;
(c) The communication is received at a
time and in a manner affording the bank a reasonable time to act on it before
the check is paid; and
(d) The claimant provides reasonable
identification if requested by the obligated bank.
(3) Delivery of a declaration of loss is a
warranty of the truth of the statement made in the declaration. If a claim is
asserted in compliance with subsection (2) of this section, the following rules
apply:
(a) The claim becomes enforceable at the
later of:
(A) The time the claim is asserted; or
(B) The 90th day following the date of the
check, in the case of a cashier’s check or teller’s check, or the 90th day
following the date of the acceptance, in the case of a certified check.
(b) Until the claim becomes enforceable,
it has no legal effect and the obligated bank may pay the check or, in the case
of a teller’s check, may permit the drawee to pay the
check. Payment to a person entitled to enforce the check discharges all
liability of the obligated bank with respect to the check.
(c) If the claim becomes enforceable
before the check is presented for payment, the obligated bank is not obliged to
pay the check.
(d) When the claim becomes enforceable,
the obligated bank becomes obliged to pay the amount of the check to the
claimant if payment of the check has not been made to a person entitled to
enforce the check. Subject to ORS 74.3020 (1)(a), payment to the claimant
discharges all liability of the obligated bank with respect to the check.
(4) If the obligated bank pays the amount
of a check to a claimant under subsection (2)(d) of this section, and the check
is presented for payment by a person having rights of a holder in due course,
the claimant is obliged to:
(a) Refund the payment to the obligated
bank if the check is paid; or
(b) Pay the amount of the check to the
person having rights of a holder in due course if the check is dishonored.
(5) If a claimant has the right to assert
a claim under subsection (2) of this section and is also a person entitled to
enforce a cashier’s check, teller’s check or certified check that is lost,
destroyed or stolen, the claimant may assert rights with respect to the check
either under this section or ORS 73.0309. [1993 c.545 §41]
LIABILITY
OF PARTIES
73.0401
Signature. (1) A person is not liable on an
instrument unless:
(a) The person signed the instrument; or
(b) The person is represented by an agent
or representative who signed the instrument and the signature is binding on the
represented person under ORS 73.0402.
(2) A signature may be made:
(a) Manually or by means of a device or
machine; and
(b) 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. [1993 c.545 §42]
73.0402
Signature by representative. (1) 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.
(2) 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:
(a) 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.
(b) Subject to subsection (3) of this
section, if the form of the signature does not show unambiguously that the
signature is made in a representative capacity or 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.
(3) 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. [1993 c.545 §43]
73.0403
Unauthorized signature. (1) Unless otherwise provided in
this chapter or ORS chapter 74, 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 or for collection. An
unauthorized signature may be ratified for all purposes of this chapter.
(2) 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.
(3) The civil or criminal liability of a
person who makes an unauthorized signature is not affected by any provision of
this chapter that makes the unauthorized signature effective for the purposes
of this chapter. [1993 c.545 §44]
73.0404
Impostors; fictitious payees. (1) If an
impostor, by use of the mails or otherwise, induces the issuer of an instrument
to issue the instrument to the impostor, or to a person acting in concert with the
impostor, 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.
(2) If a person whose intent determines to
whom an instrument is payable under ORS 73.0110 (1) or (2) does not intend the
person identified as payee to have any interest in the instrument or the person
identified as payee of an instrument is a fictitious person, the following
rules apply until the instrument is negotiated by special indorsement:
(a) Any person in possession of the
instrument is its holder.
(b) 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.
(3) Under subsection (1) or (2) of this
section, an indorsement is made in the name of a
payee if:
(a) It is made in a name substantially
similar to that of the payee; or
(b) The instrument, whether or not
indorsed, is deposited in a depositary bank to an account in a name
substantially similar to that of the payee.
(4) With respect to an instrument to which
subsection (1) or (2) of this section 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. [1993
c.545 §45]
73.0405
Employer’s responsibility for fraudulent indorsement
by employee. (1) In this section:
(a) “Employee” includes an independent
contractor and employee of an independent contractor retained by the employer.
(b) “Fraudulent indorsement”
means:
(A) In the case of an instrument payable
to the employer, a forged indorsement purporting to
be that of the employer; or
(B) 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.
(c) “Responsibility” with respect to
instruments means authority to sign or indorse instruments on behalf of the
employer, to process instruments received by the employer for bookkeeping
purposes, for deposit to an account, or for other disposition, to prepare or
process instruments for issue in the name of the employer, to supply
information determining the names or addresses of payees of instruments to be
issued in the name of the employer, to control the disposition of instruments
to be issued in the name of the employer, or 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.
(2) 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.
(3) Under subsection (1) of this section,
an indorsement is made in the name of the person to
whom an instrument is payable if:
(a) It is made in a name substantially
similar to the name of that person; or
(b) 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. [1993 c.545 §46]
73.0406
Negligence contributing to forged signature or alteration of instrument.
(1) 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.
(2) Under subsection (1) of this section,
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.
(3) Under subsection (1) of this section,
the burden of proving failure to exercise ordinary care is on the person
asserting the preclusion. Under subsection (2) of this section, the burden of
proving failure to exercise ordinary care is on the person precluded. [1993
c.545 §47]
73.0407
Alteration. (1) “Alteration” means:
(a) An unauthorized change in an
instrument that purports to modify in any respect the obligation of a party; or
(b) An unauthorized addition of words or
numbers or other change to an incomplete instrument relating to the obligation
of a party.
(2) Except as provided in subsection (3)
of this section, 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.
(3) A payor bank
or drawee paying a fraudulently altered instrument or
a person taking it for value or for collection, in good faith and without
notice of the alteration, may enforce rights with respect to the instrument:
(a) According to its original terms; or
(b) In the case of an incomplete
instrument altered by unauthorized completion, according to its terms as
completed. [1993 c.545 §48]
73.0408
Drawee not liable on unaccepted draft.
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. [1993 c.545 §49]
73.0409
Acceptance of draft; certified check. (1) “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.
(2) A draft may be accepted although it
has not been signed by the drawer, is otherwise incomplete or has been
dishonored.
(3) 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.
(4) “Certified check” means a check
accepted by the bank on which it is drawn. Acceptance may be made as stated in
subsection (1) of this section or by a writing on the check that 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. [1993 c.545 §50]
73.0410
Acceptance varying draft. (1) 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.
(2) 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.
(3) 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. [1993 c.545 §51]
73.0411
Refusal to pay cashier’s checks, teller’s checks and certified checks.
(1) 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.
(2) If the obligated bank wrongfully
refuses to pay a cashier’s check or certified check, stops payment of a teller’s
check, or 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.
(3) Expenses or consequential damages
under subsection (2) of this section are not recoverable if the refusal of the
obligated bank to pay occurs because:
(a) The bank suspends payments;
(b) The obligated bank asserts a claim or
defense of the bank that it has reasonable grounds to believe is available
against the person entitled to enforce the instrument;
(c) The obligated bank has a reasonable
doubt whether the person demanding payment is the person entitled to enforce
the instrument; or
(d) Payment is prohibited by law. [1993
c.545 §52]
73.0412
Obligation of issuer of note or cashier’s check.
The issuer of a note or cashier’s check or other draft drawn on the drawer is
obliged to pay the instrument 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 if
the issuer signed an incomplete instrument, according to its terms when
completed, to the extent stated in ORS 73.0115 and 73.0407. The obligation is
owed to a person entitled to enforce the instrument or to an indorser who paid the instrument under ORS 73.0115. [1993
c.545 §53]
73.0413
Obligation of acceptor. (1) The acceptor of a draft is
obligated to pay the draft:
(a) 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;
(b) If the acceptance varies the terms of
the draft, according to the terms of the draft as varied; or
(c) If the acceptance is of a draft that
is an incomplete instrument, according to its terms when completed, to the
extent stated in ORS 73.0115 and 73.0407.
(2) The obligation to pay is owed to a
person entitled to enforce the draft or to the drawer or an indorser
who paid the draft under ORS 73.0414 or 73.0415.
(3) 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 the certification or acceptance
does not state an amount, the amount of the instrument is subsequently raised,
and 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. [1993 c.545 §54]
73.0414
Obligation of drawer. (1) This section does not apply
to cashier’s checks or other drafts drawn on the drawer.
(2) If an unaccepted draft is dishonored,
the drawer is obliged to pay the draft 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 if the drawer signed an incomplete instrument, according to its
terms when completed, to the extent stated in ORS 73.0115 and 73.0407. The
obligation is owed to a person entitled to enforce the draft or to an indorser who paid the draft under ORS 73.0415.
(3) If a draft is accepted by a bank, the
drawer is discharged, regardless of when or by whom acceptance was obtained.
(4) If a draft is accepted and the
acceptor is not a bank, the obligation of the drawer to pay a draft if the
draft is dishonored by the acceptor is the same as the obligation of an indorser under ORS 73.0415 (1) and (3).
(5) 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 (2) of this section to pay the draft if
the draft is not a check.
(6) If a check is not presented for
payment or given to a depositary bank for collection within 30 days after its
date, the drawee suspends payments after expiration
of the 30-day period without paying the check, and 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. [1993
c.545 §55]
73.0415
Obligation of indorser.
(1) Subject to subsections (2), (3) and (4) of this section and to ORS 73.0419
(4), if an instrument is dishonored, an indorser is
obliged to pay the amount due on the instrument according to the terms of the
instrument at the time it was indorsed, or if the indorser
indorsed an incomplete instrument, according to its terms when completed, to
the extent stated in ORS 73.0115 and 73.0407. 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.
(2) If an indorsement
states that it is made “without recourse” or otherwise disclaims liability of
the indorser, the indorser
is not liable under subsection (1) of this section to pay the instrument.
(3) If notice of dishonor of an instrument
is required by ORS 73.0503 and notice of dishonor complying with that section
is not given to an indorser, the liability of the indorser under subsection (1) of this section is
discharged.
(4) If a draft is accepted by a bank after
an indorsement is made, the liability of the indorser under subsection (1) of this section is
discharged.
(5) If an indorser
of a check is liable under subsection (1) of this section and the check is not
presented for payment or given to a depositary bank for collection within 30
days after the day the indorsement was made, the
liability of the indorser under subsection (1) of
this section is discharged. [1993 c.545 §56]
73.0416
Transfer warranties. (1) A person who transfers an
instrument for consideration warrants to the transferee and, if the transfer is
by indorsement, to any subsequent transferee that:
(a) The warrantor is a person entitled to
enforce the instrument;
(b) All signatures on the instrument are
authentic and authorized;
(c) The instrument has not been altered;
(d) The instrument is not subject to a
defense or claim in recoupment of any party which can be asserted against the
warrantor;
(e) 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; and
(f) If the instrument is a demand draft,
creation of the instrument according to the terms on its face was authorized by
the person identified as drawer.
(2) A person to whom the warranties under
subsection (1) of this section 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.
(3) The warranties stated in subsection
(1) of this section cannot be disclaimed with respect to checks. Unless notice
of a claim for breach of warranty is given to the warrantor within 30 days
after the claimant has reason to know of the breach and the identity of the
warrantor, the liability of the warrantor under subsection (2) of this section
is discharged to the extent of any loss caused by the delay in giving notice of
the claim.
(4) A claim for relief for breach of
warranty under this section accrues when the claimant has reason to know of the
breach.
(5) If the warranty in subsection (1)(f)
of this section is not given by a transferor under applicable conflict of law
rules, then the warranty is not given to that transferor when that transferor
is a transferee. [1993 c.545 §57; 1997 c.822 §3]
73.0417
Presentment warranties. (1) If an unaccepted draft is
presented to the drawee for payment or acceptance and
the drawee pays or accepts the draft, the person
obtaining payment or acceptance, at the time of presentment, and 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:
(a) 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;
(b) The draft has not been altered;
(c) The warrantor has no knowledge that
the signature of the drawer of the draft is unauthorized; and
(d) If the draft is a demand draft,
creation of the draft according to the terms on its face was authorized by the
person identified as drawer.
(2) 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.
(3) If a drawee
asserts a claim for breach of warranty under subsection (1) of this section
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 ORS 73.0404 or 73.0405 or
the drawer is precluded under ORS 73.0405 or 74.4060 from asserting against the
drawee the unauthorized indorsement
or alteration.
(4) If a dishonored draft is presented for
payment to the drawer or an indorser or any other
instrument is presented for payment to a party obliged to pay the instrument,
and payment is received, the following rules apply:
(a) 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 in
the instrument, a person entitled to enforce the instrument or authorized to
obtain payment on behalf of a person entitled to enforce the instrument.
(b) 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.
(5) The warranties stated in subsections
(1) and (4) of this section cannot be disclaimed with respect to checks. Unless
notice of a claim for breach of warranty is given to the warrantor within 30
days after the claimant has reason to know of the breach and the identity of
the warrantor, the liability of the warrantor under subsection (2) or (4) of
this section is discharged to the extent of any loss caused by the delay in
giving notice of the claim.
(6) A claim for relief for breach of
warranty under this section accrues when the claimant has reason to know of the
breach.
(7) A demand draft is a check, as defined
in ORS 73.0104 (6).
(8) If the warranty in subsection (1)(d)
of this section is not given by a transferor under applicable conflict of law
rules, then the warranty is not given to that transferor when that transferor
is a transferee. [1993 c.545 §58; 1997 c.822 §4]
73.0418
Payment or acceptance by mistake. (1) Except as
provided in subsection (3) of this section, if the drawee
of a draft pays or accepts the draft and the drawee
acted on the mistaken belief that payment of the draft had not been stopped pursuant
to ORS 73.0403 or 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.
(2) Except as provided in subsection (3)
of this section, if an instrument has been paid or accepted by mistake and the
case is not covered by subsection (1) of this section, the person paying or
accepting may, to the extent permitted by the law governing mistake and
restitution:
(a) Recover the payment from the person to
whom or for whose benefit payment was made; or
(b) In the case of acceptance, revoke the
acceptance.
(3) The remedies provided by subsection
(1) or (2) of this section may not be asserted against a person who took the
instrument in good faith and for value or for collection or who in good faith
changed position in reliance on the payment or acceptance. This subsection does
not limit remedies provided by ORS 73.0417 or 74.4070.
(4) Notwithstanding ORS 74.2150, if an
instrument is paid or accepted by mistake and the payor
or acceptor recovers payment or revokes acceptance under subsection (1) or (2)
of this section, 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. [1993 c.545 §59]
73.0419
Instruments signed for accommodation. (1) 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.”
(2) An accommodation party may sign the
instrument as maker, drawer, acceptor or indorser
and, subject to subsection (4) of this section, 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.
(3) 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 ORS 73.0605, 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.
(4) 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:
(a) Execution of judgment against the
other party has been returned unsatisfied;
(b) The other party is insolvent or in an
insolvency proceeding;
(c) The other party cannot be served with
process; or
(d) It is otherwise apparent that payment
cannot be obtained from the other party.
(5) 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. [1993 c.545 §60]
73.0420
Conversion of instrument. (1) 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:
(a) The issuer or acceptor of the
instrument; or
(b) A payee or indorsee
who did not receive delivery of the instrument either directly or through
delivery to an agent or a co-payee.
(2) In an action under subsection (1) of
this section, 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.
(3) 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. [1993 c.545 §61]
DISHONOR
73.0501
Presentment. (1) “Presentment” means a demand made
by or on behalf of a person entitled to enforce an instrument 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 to accept a draft made to the drawee.
(2) The following rules are subject to ORS
chapter 74, agreement of the parties, and clearing house rules and the like:
(a) Presentment may be made at the place
of payment of the instrument and shall be made at the place of payment if the
instrument is payable at the 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.
(b) Upon demand of the person to whom
presentment is made, the person making presentment must:
(A) Exhibit the instrument;
(B) Give reasonable identification and, if
presentment is made on behalf of another person, reasonable evidence of
authority to do so; and
(C) Sign a receipt on the instrument for
any payment made or surrender the instrument if full payment is made.
(c) Without dishonoring the instrument,
the party to whom presentment is made may:
(A) Return the instrument for lack of a
necessary indorsement; or
(B) 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.
(d) 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 2 p.m. for the receipt and processing of instruments
presented for payment or acceptance and presentment is made after the cut-off
hour. [1993 c.545 §62]
73.0502
Dishonor. (1) Dishonor of a note is governed by
the following rules:
(a) 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.
(b) If the note is not payable on demand
and is payable at or through a bank or the terms of the note required
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.
(c) If the note is not payable on demand
and paragraph (b) of this subsection does not apply, the note is dishonored if
it is not paid on the day it becomes payable.
(2) Dishonor of an unaccepted draft other
than a documentary draft is governed by the following rules:
(a) 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 ORS 74.3010 or 74.3020, or becomes
accountable for the amount of the check under ORS 74.3020.
(b) If a draft is payable on demand and
paragraph (a) of this subsection 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.
(c) If a draft is payable on a date stated
in the draft, the draft is dishonored if:
(A) 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
(B) Presentment for acceptance is duly
made before the day the draft becomes payable and the draft is not accepted on
the day of presentment.
(d) 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.
(3) Dishonor of an unaccepted documentary draft
occurs according to the rules stated in subsection (2)(b), (c) and (d) of this
section, 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.
(4) Dishonor of an accepted draft is
governed by the following rules:
(a) 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.
(b) 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.
(5) In any case in which presentment is
otherwise required for dishonor under this section and presentment is excused
under ORS 73.0504, dishonor occurs without presentment if the instrument is not
duly accepted or paid.
(6) If a draft is dishonored because
timely acceptance of the draft was not made and the person entitled to demand
acceptance consents to a later acceptance, from the time of acceptance the
draft is treated as never having been dishonored. [1993 c.545 §63]
73.0503
Notice of dishonor. (1) The obligation of an indorser stated in ORS 73.0415 (1) and the obligation of a
drawer stated in ORS 73.0414 (4) may not be enforced unless the indorser or drawer is given notice of dishonor of the
instrument complying with this section or notice of dishonor is excused under
ORS 73.0504 (2).
(2) 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.
(3) Subject to ORS 73.0504 (3), with
respect to an instrument taken for collection by a collecting bank, notice of
dishonor must be given 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 by any other person within 30 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 30 days following the day on which
dishonor occurs. [1993 c.545 §64]
73.0504
Excused presentment and notice of dishonor. (1)
Presentment for payment or acceptance of an instrument is excused if:
(a) The person entitled to present the
instrument cannot with reasonable diligence make presentment;
(b) The maker or acceptor has repudiated
an obligation to pay the instrument or is dead or in insolvency proceedings;
(c) By the terms of the instrument
presentment is not necessary to enforce the obligation of indorsers
or the drawer;
(d) The drawer or indorser
whose obligation is being enforced has waived presentment or otherwise has not reason to expect or right to require that the
instrument be paid or accepted; or
(e) 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.
(2) Notice of dishonor is excused if by
the terms of the instrument notice of dishonor is not necessary to enforce the
obligation of a party to pay the instrument, or the party whose obligation is
being enforced waived notice of dishonor. A waiver of presentment is also a waiver
of notice of dishonor.
(3) 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. [1993 c.545 §65]
73.0505
Evidence of dishonor. (1) The following are admissible
as evidence and create a presumption of dishonor and of any notice of dishonor
stated:
(a) A document regular in form as provided
in subsection (2) of this section which purports to be a protest;
(b) 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; and
(c) 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.
(2) A protest is a certificate of dishonor
made by a United States consul or vice consul, or a notary public described in
ORS 194.070 or other person authorized to administer oaths by the law of the
place where dishonor occurs. The protest may be made upon information satisfactory
to that person. The protest must identify the instrument and certify that
either 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. [1993 c.545 §66; 2009 c.123 §6]
DISCHARGE
AND PAYMENT
73.0601
Discharge and effect of discharge. (1) The
obligation of a party to pay the instrument is discharged as stated in this
chapter or by an act or agreement with the party
which would discharge an obligation to pay money under a simple contract.
(2) 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. [1993 c.545 §67]
73.0602
Payment. (1) Subject to subsection (2) of this
section, an instrument is paid to the extent payment is made by or on behalf of
a party obliged to pay the instrument, and 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 ORS 73.0306 or by another person.
(2) The obligation of a party to pay the
instrument is not discharged under subsection (1) of this section if:
(a) A claim to the instrument under ORS
73.0306 is enforceable against the party receiving payment and:
(A) Payment is made with knowledge of the payor that payment is prohibited by injunction or similar
process or a court of competent jurisdiction; or
(B) In the case 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
(b) 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. [1993 c.545 §68]
73.0603
Tender of payment. (1) 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.
(2) 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.
(3) 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. [1993 c.545 §69]
73.0604
Discharge by cancellation or renunciation. (1) A
person entitled to enforce an instrument, with or without consideration, may
discharge the obligation of a party to pay the instrument:
(a) 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
(b) By agreeing not to sue or otherwise
renouncing rights against the party by a signed writing.
(2) Cancellation or striking out of an indorsement pursuant to subsection (1) of this section does
not affect the status and rights of a party derived from the indorsement. [1993 c.545 §70]
73.0605
Discharge of indorsers and accommodation parties.
(1) In this section, the term “indorser” includes a
drawer having the obligation described in ORS 73.0414.
(2) Discharge, under ORS 73.0604, 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.
(3) 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.
(4) 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.
(5) 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 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 to the extent 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.
(6) 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 (5) of this
section, 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.
(7) Under subsection (5) or (6) of this
section, impairing value of an interest in collateral includes:
(a) Failure to obtain or maintain
perfection or recordation of the interest in collateral;
(b) Release of collateral without
substitution of collateral of equal value;
(c) Failure to perform a duty to preserve
the value of collateral owed, under ORS chapter 79 or other law, to a debtor or
surety or other person secondarily liable; or
(d) Failure to comply with applicable law
in disposing of collateral.
(8) An accommodation party is not
discharged under subsection (3), (4) or (5) of this section unless a person
entitled to enforce the instrument knows of the accommodation or has notice
under ORS 73.0419 (3) that the instrument was signed for accommodation.
(9) A party is not discharged under this
section if:
(a) The party asserting discharge consents
to the event or conduct that is the basis of the discharge; or
(b) 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. [1993
c.545 §71]
73.1010
[1961 c.726 §73.1010; repealed by 1993 c.545 §126]
73.1020
[1961 c.726 §73.1020; repealed by 1993 c.545 §126]
73.1030
[1961 c.726 §73.1030; repealed by 1993 c.545 §126]
73.1040
[1961 c.726 §73.1040; 1983 c.37 §36a; repealed by 1993 c.545 §126]
73.1050
[1961 c.726 §73.1050; repealed by 1993 c.545 §126]
73.1060
[1961 c.726 §73.1060; 1989 c.246 §1; repealed by 1993 c.545 §126]
73.1070
[1961 c.726 §73.1070; 1991 c.202 §19; repealed by 1993 c.545 §126]
73.1080
[1961 c.726 §73.1080; repealed by 1993 c.545 §126]
73.1090
[1961 c.726 §73.1090; repealed by 1993 c.545 §126]
73.1100
[1961 c.726 §73.1100; repealed by 1993 c.545 §126]
73.1110
[1961 c.726 §73.1110; repealed by 1993 c.545 §126]
73.1120
[1961 c.726 §73.1120; repealed by 1993 c.545 §126]
73.1130
[1961 c.726 §73.1130; repealed by 1993 c.545 §126]
73.1140
[1961 c.726 §73.1140; repealed by 1993 c.545 §126]
73.1150
[1961 c.726 §73.1150; repealed by 1993 c.545 §126]
73.1160
[1961 c.726 §73.1160; repealed by 1993 c.545 §126]
73.1170
[1961 c.726 §73.1170; repealed by 1993 c.545 §126]
73.1180
[1961 c.726 §73.1180; repealed by 1993 c.545 §126]
73.1190
[1961 c.726 §73.1190; repealed by 1993 c.545 §126]
73.1200
[1961 c.726 §73.1200; repealed by 1993 c.545 §126]
73.1210
[1961 c.726 §73.1210; repealed by 1993 c.545 §126]
73.1220
[1961 c.726 §73.1220; repealed by 1993 c.545 §126]
73.1230
[1989 c.1060 §2; repealed by 1993 c.545 §126]
73.2010
[1961 c.726 §73.2010; repealed by 1993 c.545 §126]
73.2020
[1961 c.726 §73.2020; repealed by 1993 c.545 §126]
73.2030
[1961 c.726 §73.2030; repealed by 1993 c.545 §126]
73.2040
[1961 c.726 §73.2040; repealed by 1993 c.545 §126]
73.2050
[1961 c.726 §73.2050; repealed by 1993 c.545 §126]
73.2060
[1961 c.726 §73.2060; repealed by 1993 c.545 §126]
73.2070
[1961 c.726 §73.2070; repealed by 1993 c.545 §126]
73.2080
[1961 c.726 §73.2080; repealed by 1993 c.545 §126]
73.3010
[1961 c.726 §73.3010; repealed by 1993 c.545 §126]
73.3020
[1961 c.726 §73.3020; repealed by 1993 c.545 §126]
73.3030
[1961 c.726 §73.3030; repealed by 1993 c.545 §126]
73.3040
[1961 c.726 §73.3040; repealed by 1993 c.545 §126]
73.3050
[1961 c.726 §73.3050; repealed by 1993 c.545 §126]
73.3060
[1961 c.726 §73.3060; repealed by 1993 c.545 §126]
73.3070
[1961 c.726 §73.3070; repealed by 1993 c.545 §126]
73.4010
[1961 c.726 §73.4010; repealed by 1993 c.545 §126]
73.4020
[1961 c.726 §73.4020; repealed by 1993 c.545 §126]
73.4030
[1961 c.726 §73.4030; repealed by 1993 c.545 §126]
73.4040
[1961 c.726 §73.4040; repealed by 1993 c.545 §126]
73.4050
[1961 c.726 §73.4050; repealed by 1993 c.545 §126]
73.4060
[1961 c.726 §73.4060; repealed by 1993 c.545 §126]
73.4070
[1961 c.726 §73.4070; repealed by 1993 c.545 §126]
73.4080
[1961 c.726 §73.4080; repealed by 1993 c.545 §126]
73.4090
[1961 c.726 §73.4090; repealed by 1993 c.545 §126]
73.4100
[1961 c.726 §73.4100; repealed by 1993 c.545 §126]
73.4110
[1961 c.726 §73.4110; repealed by 1993 c.545 §126]
73.4120
[1961 c.726 §73.4120; repealed by 1993 c.545 §126]
73.4130
[1961 c.726 §73.4130; repealed by 1993 c.545 §126]
73.4140
[1961 c.726 §73.4140; repealed by 1993 c.545 §126]
73.4150
[1961 c.726 §73.4150; repealed by 1993 c.545 §126]
73.4160
[1961 c.726 §73.4160; repealed by 1993 c.545 §126]
73.4170
[1961 c.726 §73.4170; repealed by 1993 c.545 §126]
73.4180
[1961 c.726 §73.4180; repealed by 1993 c.545 §126]
73.4190
[1961 c.726 §73.4190; repealed by 1993 c.545 §126]
73.5010
[1961 c.726 §73.5010; repealed by 1993 c.545 §126]
73.5020
[1961 c.726 §73.5020; repealed by 1993 c.545 §126]
73.5030
[1961 c.726 §73.5030; repealed by 1993 c.545 §126]
73.5040
[1961 c.726 §73.5040; 1963 c.402 §1; repealed by 1993 c.545 §126]
73.5050
[1961 c.726 §73.5050; repealed by 1993 c.545 §126]
73.5060
[1961 c.726 §73.5060; repealed by 1993 c.545 §126]
73.5070
[1961 c.726 §73.5070; repealed by 1993 c.545 §126]
73.5080
[1961 c.726 §73.5080; repealed by 1993 c.545 §126]
73.5090
[1961 c.726 §73.5090; repealed by 1993 c.545 §126]
73.5100
[1961 c.726 §73.5100; repealed by 1993 c.545 §126]
73.5110
[1961 c.726 §73.5110; repealed by 1993 c.545 §126]
73.6010
[1961 c.726 §73.6010; repealed by 1993 c.545 §126]
73.6020
[1961 c.726 §73.6020; repealed by 1993 c.545 §126]
73.6030
[1961 c.726 §73.6030; repealed by 1993 c.545 §126]
73.6040
[1961 c.726 §73.6040; repealed by 1993 c.545 §126]
73.6050
[1961 c.726 §73.6050; repealed by 1993 c.545 §126]
73.6060
[1961 c.726 §73.6060; repealed by 1993 c.545 §126]
73.7010
[1961 c.726 §73.7010; repealed by 1993 c.545 §126]
73.8010
[1961 c.726 §73.8010; repealed by 1993 c.545 §126]
73.8020
[1961 c.726 §73.8020; repealed by 1993 c.545 §126]
73.8030
[1961 c.726 §73.8030; repealed by 1993 c.545 §126]
73.8040
[1961 c.726 §73.8040; repealed by 1993 c.545 §126]
73.8050
[1961 c.726 §73.8050; repealed by 1993 c.545 §126]
_______________