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Discharge of Liability

Learn about the basic rules governing whether an instrument is discharged and discharge’s legal effect in Article 3.

Transcript

In several other lessons, we mentioned the discharge of a party’s obligations on an instrument. In this lesson, we will expand on the concept of discharge and its effect under Article 3.

I. Discharge

The term discharge refers to the release or satisfaction of an obligation on a negotiable instrument. Under Article 3, a party’s obligation on an instrument is discharged to the extent specified in Article 3 itself or by any act or agreement that would discharge a monetary obligation under an...

Lessons

    • 1. Welcome
    • Welcome to Payment Systems
    2. Negotiability
    • Introduction to Negotiable Instruments
    • Negotiability Requirements I
    • Negotiability Requirements II
    • Rule against Additional Terms
    3. Key Terms in Article 3
    • Key Terms I
    • Key Terms II
    • Becoming a Holder
    • Negotiation
    • Indorsement
    4. Enforcement of Negotiable Instruments
    • Holder in Due Course: Value and Good Faith
    • Holder in Due Course: Without Notice
    • Close-Connectedness Doctrine and Shelter Rule
    • Defenses against Enforcement
    5. Liability on Negotiable Instruments
    • Obligations of the Parties
    • Instruments Taken for an Obligation
    • Accord and Satisfaction Using a Negotiable Instrument
    • Enforcement of Lost, Stolen, or Destroyed Instruments
    • Warranty Liability
    6. Dishonor, Payment, and Discharge
    • Dishonor of Negotiable Instruments
    • Payment of Negotiable Instruments
    • Discharge of Liability
    7. Misconduct and Mistake
    • Unauthorized Signatures and Alterations
    • The Negligence Rule
    • Imposters and Fictitious or Unintended Payees
    • Conversion of a Negotiable Instrument
    8. Bank Deposits and Collections
    • Introduction to Article 4
    • Collection: Depositary and Collecting Banks
    • Collection: Payor Banks
    • Payor Bank’s Relationship to Its Customers