§ 554.3310

554.3310 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 ifan amount of money equal to the amount of the instrument were taken in payment of theobligation. Discharge of the obligation does not affect any liability that the obligor may haveas an endorser of the instrument. 2. Unless otherwise agreed and except as provided in subsection 1, if a note or an uncertified check is taken for an obligation, the obligation is suspended to the same extentthe obligation would be discharged if an amount of money equal to the amount of theinstrument 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 checkresults 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.

checkresults 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 ofthe payment. c. Except as provided in paragraph 'd', if the check or note is dishonored and the obligee of the obligation for which the instrument was taken is the person entitled to enforce theinstrument, the obligee may enforce either the instrument or the obligation. In the case of aninstrument of a third person which is negotiated to the obligee by the obligor, discharge ofthe 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 issuspended. If the obligee is the person entitled to enforce the instrument but no longer haspossession of it because it was lost, stolen, or destroyed, the obligation may not be enforcedto the extent of the amount payable on the instrument, and to that extent the obligee’s rightsagainst the

possession of it because it was lost, stolen, or destroyed, the obligation may not be enforcedto the extent of the amount payable on the instrument, and to that extent the obligee’s rightsagainst the obligor are limited to enforcement of the instrument. 3. If an instrument other than one described in subsection 1 or 2 is taken for an obligation, the effect is that stated in subsection 1 if the instrument is one on which a bank is liable asmaker or acceptor, or that stated in subsection 2 in any other case. 94 Acts, ch 1167, §45, 122; 2013 Acts, ch 30, §261Referred to in §554.2511 Sat Dec 23 01:56:51 2023 Iowa Code 2024, Section 554.3310 (26, 0)