Imagine a law student agreed to purchase textbooks from a bookstore for $500 and, as payment, issued a $500 check to the bookstore. Generally speaking, there’s a distinction between the law student’s contractual liability to the bookstore and her liability under the draft. However, a negotiable instrument taken as payment for an obligation may affect such an underlying obligation.

Article 3 contains detailed rules addressing such effects, which we’ll discuss in this lesson.

I. Instrument Taken...