Okla. Stat. tit. 12A § 3-414

Current through Laws 2024, c. 453.

Section 3-414 - Obligation of Drawer

(a) This section does not apply to cashier's checks or other drafts drawn on the drawer.

(b) If an unaccepted draft is dishonored, the drawer is obliged to pay the draft (i) 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 (ii) if the drawer signed an incomplete instrument, according to its terms when completed, to the extent stated in Sections 3-115 and 3-407 of this title. The obligation is owed to a person entitled to enforce the draft or to an indorser who paid the draft under Section 3-415 of this title.

(c) If a draft is accepted by a bank, the drawer is discharged, regardless of when or by whom acceptance was obtained.

(d) If a draft is accepted and the acceptor is not a bank, the obligation of the drawer to pay the draft if the draft is dishonored by the acceptor is the same as the obligation of an indorser under subsections (a) and (c) of Section 3-415 of this title.

(e) 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 (b) of this section to pay the draft if the draft is not a check. A disclaimer of the liability stated in subsection (b) of this section is not effective if the draft is a check.

(f) If (i) a check is not presented for payment or given to a depositary bank for collection within thirty (30) days after its date, (ii) the drawee suspends payments after expiration of the thirty-day period without paying the check, and (iii) 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.

Okla. Stat. tit. 12A, § 3-414

Laws 1961, p. 112, § 3-414; Amended by Laws 1991, SB 25, c. 117, § 77, eff. 1/1/1992.

Oklahoma Code Comment

1. The drawer of an unaccepted draft is secondarily liable, in the sense that this liability is contingent on presentment to and dishonor by the drawee. See UCC §§ 3-414(b), 3-501, 3-502(b). If the draft has been accepted by a bank, then the drawer is discharged from liability on the instrument and the underlying obligation under sub sections 3-310(a) and 3-414(c) . If the acceptor is not a bank, then the drawer remains secondarily liable and is treated as an indorser under sub sections 3-415(a) and (c) . See UCC § 3-414(d). Dishonor of an accepted draft is governed by sub section 3-502(c) .

2. If (a) a check is not presented for payment or deposited for collection within 30 days after its date, (b) after that 30-day period, the drawee becomes insolvent or otherwise suspends payments, and (c) as a result, the drawer is deprived of funds to pay the check, then the drawer is discharged from liability to the extent of such loss if the drawer assigns to the owner of the check the drawer's claim against the drawee. See UCC § 3-414(f).

3. In addition to presentment and dishonor there is a third prerequisite to the drawer's liability on the instrument; i.e., the drawer must receive notice of the dishonor. Notice by a nonbank must be given within 30 days of the time the person required to give notice receives such notice. A bank handling the instrument generalIy must give such notice before its midnight deadline, under Sections 4-202 or 4-301 . For other instruments not taken for collection, such notice must be given within 30 days after dishonor. See UCC § 3-503(c).

4. See generally F. MILLER & A. HARRELL, THE LAW OF MODERN PAYMENT SYSTEMS AND NOTES 14.03 (2d ed. 1992).