(a) Unless otherwise agreed, if a certified check, cashier's check, or teller's check is taken for an obligation, the obligation is discharged to the same extent discharge would result if an amount of money equal to the amount of the instrument were taken in payment of the obligation. Discharge of the obligation does not affect any liability that the obligor may have as an indorser of the instrument.

(b) Unless otherwise agreed and except as provided in subsection (a), if a note or an uncertified check is taken for an obligation, the obligation is suspended to the same extent the obligation would be discharged if an amount of money equal to the amount of the instrument were taken, and the following rules apply:

(1) 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.

(2) 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.

(3) Except as provided in paragraph (4), if the check or note is dishonored and the obligee of the obligation for which the instrument was taken is the person entitled to enforce the instrument, the obligee may enforce either the instrument or the obligation. In the case of an instrument of a third person which is negotiated to the obligee by the obligor, discharge of the obligor on the instrument also discharges the obligation.

(4) If the person entitled to enforce the instrument taken for an obligation is a person other than the obligee, the obligee may not enforce the obligation to the extent the obligation is suspended. If the obligee is the person entitled to enforce the instrument but no longer has possession of it because it was lost, stolen, or destroyed, the obligation may not be enforced to the extent of the amount payable on the instrument, and to that extent the obligee's rights against the obligor are limited to enforcement of the instrument.

(c) If an instrument other than one described in subsection (a) or (b) is taken for an obligation, the effect is (i) that stated in subsection (a) if the instrument is one on which a bank is liable as maker or acceptor, or (ii) that stated in subsection (b) in any other case.

Annotations

Under subsection (1) of former section 3-802, the acceptance of a check by the secured party precludes such party from enforcing any rights under the security agreement until the check has been dishonored. Rose v. United States Nat. Bank, 218 Neb. 97, 352 N.W.2d 594 (1984).

Under former section 3-802, unless otherwise agreed, where personal check is taken for an underlying obligation, the obligation is suspended pro tanto until presentment of the check. If the check is dishonored, an action may be maintained on either the check or the obligation. Westland Homes Corp. v. Hall, 193 Neb. 237, 226 N.W.2d 622 (1975).

Under former section 3-802, the taking of a check or other negotiable instrument on an obligation is a surrender of the right to sue thereon only until the instrument is due. Kirby v. Bergfield, 186 Neb. 242, 182 N.W.2d 205 (1970).