2023 Illinois Compiled Statutes › Chapter 810 - COMMERCIAL CODE › 810 ILCS 5/ - Uniform Commercial Code. › Article 3 - Negotiable Instruments

(810 ILCS 5/Art. 3 heading)
ARTICLE 3.  
		NEGOTIABLE INSTRUMENTS
(810 ILCS 5/Art. 3 Pt. 1 heading)
PART 1.  
		GENERAL PROVISIONS AND DEFINITIONS
(810 ILCS 5/3-101) (from Ch. 26, par. 3-101)
Sec. 3-101. 
		Short title. 
		This Article may be cited as Uniform Commercial
Code-Negotiable Instruments.
(Source: P.A. 87-582.)
(810 ILCS 5/3-102) (from Ch. 26, par. 3-102)
Sec. 3-102. 
		Subject matter.
(a) This Article applies to negotiable instruments.  It does not apply
to money, to payment orders governed by Article 4A, or to securities
governed by Article 8.
(b) If there is conflict between this Article and Article 4 or 9, Articles 4
and 9 govern.
(c) Regulations of the Board of Governors of the Federal Reserve System
and operating circulars of the Federal Reserve Banks supersede any
inconsistent provision of this Article to the extent of the inconsistency.
(Source: P.A. 87-582; 87-1135.)
(810 ILCS 5/3-103) (from Ch. 26, par. 3-103)
Sec. 3-103. Definitions.
(a) In this Article:
(1) "Acceptor" means a drawee that has accepted a     draft.
(2) "Drawee" means a person ordered in a draft to     make payment.
(3) "Drawer" means a person who signs or is     identified in a draft as a person ordering payment.
(4) "Good faith" means honesty in fact and the     observance of reasonable commercial standards of fair dealing.
(5) "Maker" means a person who signs or is identified     in a note as a person undertaking to  pay.
(6) "Order" means a written instruction to pay money     signed by the person giving the instruction.  The instruction may be addressed to any person, including the person giving the instruction, or to one or more persons jointly or in the alternative but not in succession.  An authorization to pay is not an order unless the person authorized to pay is also instructed to pay.
(7) "Ordinary care" in the case of a person engaged     in business means observance of reasonable commercial standards, prevailing in the area in which the person is located with respect to the business in which the person is engaged.  In the case of a bank that takes an instrument for processing for collection or payment by automated means, reasonable commercial standards do not require the bank to examine the instrument if the failure to examine does not violate the bank's prescribed procedures and the bank's procedures do not vary unreasonably from general banking usage not disapproved by this Article or Article 4.
(8) "Party" means a party to an instrument.
(9) "Promise" means a written undertaking to pay     money signed by the person undertaking to pay.  An acknowledgment of an obligation by the obligor is not a promise unless the obligor also undertakes to pay the obligation.
(10) "Prove" with respect to a fact means to meet the     burden of establishing the fact (Section 1-201(b)(8)).
(11) "Remitter" means a person that purchases an     instrument from its issuer if the instrument is payable to an identified person other than the purchaser.
(b) Other definitions applying to this Article and the Sections in which
they appear are:
"Acceptance"
Section 3-409
"Accommodated party"
Section 3-419
"Accommodation party"
Section 3-419
"Alteration"
Section 3-407
"Anomalous indorsement"
Section 3-205
"Blank indorsement"
Section 3-205
"Cashier's check"
Section 3-104
"Certificate of deposit"
Section 3-104
"Certified check"
Section 3-409
"Check"
Section 3-104
"Consideration"
Section 3-303
"Draft"
Section 3-104
"Holder in due course"
Section 3-302
"Incomplete instrument"
Section 3-115
"Indorsement"
Section 3-204
"Indorser"
Section 3-204
"Instrument"
Section 3-104
"Issue"
Section 3-105
"Issuer"
Section 3-105
"Negotiable instrument"
Section 3-104
"Negotiation"
Section 3-201
"Note"
Section 3-104
"Payable at a definite time"
Section 3-108
"Payable on demand"
Section 3-108
"Payable to bearer"
Section 3-109
"Payable to order"
Section 3-109
"Payment"
Section 3-602
"Person entitled to enforce"
Section 3-301
"Presentment"
Section 3-501
"Reacquisition"
Section 3-207
"Special indorsement"
Section 3-205
"Teller's check"
Section 3-104
"Transfer of instrument"
Section 3-203
"Traveler's check"
Section 3-104
"Value"
Section 3-303
(c) The following definitions in other Articles apply to this Article:
"Bank"
Section 4-105
"Banking day"
Section 4-104
"Clearing house"
Section 4-104
"Collecting bank"
Section 4-105
"Depositary bank"
Section 4-105
"Documentary draft"
Section 4-104
"Intermediary bank"
Section 4-105
"Item"
Section 4-104
"Payor bank"
Section 4-105
"Suspends payments"
Section 4-104.
(d) In addition, Article 1 contains general definitions and principles
of construction and interpretation applicable throughout this Article.
(Source: P.A. 95-895, eff. 1-1-09.)
(810 ILCS 5/3-104) (from Ch. 26, par. 3-104)
Sec. 3-104. 
		Negotiable instrument.
(a) Except as provided in subsections (c) and (d), "negotiable
instrument" means an unconditional promise or order to pay
a fixed amount of money, with or without interest or other charges
described in the promise or order, if it:
(1) is payable to bearer or to order at the time it     is issued or first comes into possession of a holder;
(2) is payable on demand or at a definite time; and
(3) does not state any other undertaking or     instruction by the person promising or ordering payment to do any act in addition to the payment of money, but the promise or order may contain (i) an undertaking or power to give, maintain, or protect collateral to secure payment, (ii) an authorization or power to the holder to confess judgment or realize on or dispose of collateral, or (iii) a waiver of the benefit of any law intended for the advantage or protection of any obligor.
(b) "Instrument" means a negotiable instrument.
(c) An order that meets all of the requirements of subsection (a), except
paragraph (1), and otherwise falls within the definition of "check" in
subsection (f) is a negotiable instrument and a check.
(d) A promise or order other than a check is not an instrument if, at the
time it is issued or first comes into possession of a holder, it contains a
conspicuous statement, however expressed, to the effect that the promise or
order is not negotiable or is not an instrument governed by this Article.
(e) An instrument is a "note" if it is a promise and is a "draft" if it
is an order.  If an instrument falls within the definition of both "note"
and "draft", a person entitled to enforce the instrument may treat it as
either.
(f) "Check" means (i) a draft, other than a documentary draft, payable
on demand and drawn on a bank or (ii) a cashier's check or teller's check.
An instrument may be a check even though it is described on its face by
another term, such as "money order".
(g) "Cashier's check" means a draft with respect to which the drawer and
drawee are the same bank or branches of the same bank.
(h) "Teller's check" means a draft drawn by a bank (i) on another bank,
or (ii) payable at or through a bank.
(i) "Traveler's check" means an instrument that (i) is payable on
demand, (ii) is drawn on or payable at or through a bank, (iii) is
designated by the term "traveler's check" or by a substantially similar
term, and (iv) requires, as a condition to payment, a countersignature by a
person whose specimen signature appears on the instrument.
(j) "Certificate of deposit" means an instrument containing an
acknowledgment by a bank that a sum of money has been received by the bank
and a promise by the bank to repay the sum of money.  A certificate of
deposit is a note of the bank.
(Source: P.A. 87-582; 87-1135.)
(810 ILCS 5/3-105) (from Ch. 26, par. 3-105)
Sec. 3-105. 
		Issue of instrument.
(a) "Issue" means the first delivery of an instrument by the maker or
drawer, whether to a holder or nonholder, for the purpose of giving rights
on the instrument to any person.
(b) An unissued instrument, or an unissued incomplete instrument that is
completed, is binding on the maker or drawer, but nonissuance is a defense.  An
instrument that is conditionally issued or is issued for a special purpose is
binding on the maker or drawer, but failure of the condition or special purpose
to be fulfilled is a defense.
(c) "Issuer" applies to issued and unissued instruments and means a maker or
drawer of an instrument.
(Source: P.A. 87-582; 87-1135.)
(810 ILCS 5/3-106) (from Ch. 26, par. 3-106)
Sec. 3-106. 
		Unconditional promise or order.
(a) Except as provided in this Section, for the purposes of Section
3-104(a), a promise or order is unconditional unless it states (i) an
express condition to payment, (ii) that the promise or order is subject
to or governed by another writing, or (iii) that rights or obligations with
respect to the promise or order are stated in another writing. A reference to
another writing does not of itself make the promise or order conditional.
(b) A promise or order is not made conditional (i) by a reference to
another writing for a statement of rights with respect to collateral,
prepayment, or acceleration, or (ii) because payment is limited to resort
to a particular fund or source.
(c) If a promise or order requires, as a condition to payment, a
countersignature by a person whose specimen signature appears on the
promise or order, the condition does not make the promise or order
conditional for the purposes of Section 3-104(a).  If the person whose
specimen signature appears on an instrument fails to countersign the
instrument, the failure to countersign is a defense to the obligation of
the issuer, but the failure does not prevent a transferee of the instrument
from becoming a holder of the instrument.
(d) If a promise or order at the time it is issued or first comes into
possession of a holder contains a statement, required by applicable
statutory or administrative law, to the effect that the rights of a holder
or transferee are subject to claims or defenses that the issuer could assert
against the original payee, the promise or order is not thereby made
conditional for the purposes of Section 3-104(a); but if the promise or
order is an instrument, there cannot be a holder in due course of the
instrument.
(Source: P.A. 87-582; 87-1135.)
(810 ILCS 5/3-107) (from Ch. 26, par. 3-107)
Sec. 3-107. 
		Instrument payable in foreign money. 
		Unless the instrument
otherwise provides, an instrument that states the amount payable in foreign
money may be paid in the foreign money or in an equivalent amount in
dollars calculated by using the current bank-offered spot rate at the place
of payment for the purchase of dollars on the day on which the instrument
is paid.
(Source: P.A. 87-582.)
(810 ILCS 5/3-108) (from Ch. 26, par. 3-108)
Sec. 3-108. 
		Payable on demand or at a definite time.
(a) A promise or order is "payable on demand" if it (i) states that it is
payable on demand or at sight, or otherwise indicates that it is payable at
the will of the holder, or (ii) does not state any time of payment.
(b) A promise or order is "payable at a definite time" if it is payable
on elapse of a definite period of time after sight or acceptance or at a
fixed date or dates or at a time or times readily ascertainable at the time
the promise or order is issued, subject to rights of (i) prepayment, (ii)
acceleration, (iii) extension at the option of the holder, or (iv)
extension to a further definite time at the option of the maker or acceptor
or automatically upon or after a specified act or event.
(c) If an instrument, payable at a fixed date, is also payable upon
demand made before the fixed date, the instrument is payable on demand
until the fixed date and, if demand for payment is not made before that
date, becomes payable at a definite time on the fixed date.
(Source: P.A. 87-582; 87-1135.)
(810 ILCS 5/3-109) (from Ch. 26, par. 3-109)
Sec. 3-109. 
		Payable to bearer or to order.
(a) A promise or order is payable to bearer if it:
(1) states that it is payable to bearer or to the     order of bearer or otherwise indicates that the person in possession of the promise or order is entitled to payment;
(2) does not state a payee; or
(3) states that it is payable to or to the order of     cash or otherwise indicates that it is not payable to an identified person.
(b) A promise or order that is not payable to bearer is payable to order
if it is payable (i) to the order of an identified person or (ii) to an
identified person or order.  A promise or order that is payable to order is
payable to the identified person.
(c) An instrument payable to bearer may become payable to an identified
person if it is specially indorsed pursuant to Section 3-205(a).  An
instrument payable to an identified person may become payable to bearer if
it is indorsed in blank pursuant to Section 3-205(b).
(Source: P.A. 87-582; 87-1135.)
(810 ILCS 5/3-110) (from Ch. 26, par. 3-110)
Sec. 3-110. 
		Identification of person to whom instrument is payable.
(a) The person to whom an instrument is initially payable is determined
by the intent of the person, whether or not authorized, signing as, or in
the name or behalf of, the issuer of the instrument.  The instrument is
payable to the person intended by the signer even if that person is
identified in the instrument by a name or other identification that is not
that of the intended person.  If more than one person signs in the name or
behalf of the issuer of an instrument and all the signers do not intend the
same person as payee, the instrument is payable to any person intended by
one or more of the signers.
(b) If the signature of the issuer of an instrument is made by automated
means, such as a checkwriting machine, the payee of the instrument is
determined by the intent of the person who supplied the name or
identification of the payee, whether or not authorized to do so.
(c) A person to whom an instrument is payable may be identified in any
way including by name, identifying number, office, or account number.  For
the purpose of determining the holder of an instrument, the following rules
apply:
(1) If an instrument is payable to an account and the     account is identified only by number, the instrument is payable to the person to whom the account is payable.  If an instrument is payable to an account identified by number and by the name of a person, the instrument is payable to the named person, whether or not that person is the owner of the account identified by number.
(2) If an instrument is payable to:
(i) a trust, an estate, or a person described as         trustee or representative of a trust or estate, the instrument is payable to the trustee, the representative, or a successor of either, whether or not the beneficiary or estate is also named;
(ii) a person described as agent or similar         representative of a named or identified person, the instrument is payable to the represented person, the representative, or a successor of the representative;
(iii) a fund or organization that is not a legal         entity, the instrument is payable to a representative of the members of the fund or organization; or
(iv) an office or to a person described as         holding an office, the instrument is payable to the named person, the incumbent of the office, or a successor to the incumbent.
(d) If an instrument is payable to 2 or more persons alternatively, it
is payable to any of them and may be negotiated, discharged, or enforced by
any or all of them in possession of the instrument.  If an instrument is
payable to 2 or more persons not alternatively, it is payable to all of
them and may be negotiated, discharged, or enforced only by all of them.
If an instrument payable to 2 or more persons is ambiguous as to whether it
is payable to the persons alternatively, the instrument is payable to the
persons alternatively.
(Source: P.A. 87-582; 87-1135.)
(810 ILCS 5/3-111) (from Ch. 26, par. 3-111)
Sec. 3-111. 
		Place of payment. 
		Except as otherwise provided for items in
Article 4, an instrument is payable at the place of payment stated in the
instrument. If no place of payment is stated, an instrument is payable at
the address of the drawee or maker stated in the instrument.  If no address
is stated, the place of payment is the place of business of the drawee or
maker.  If a drawee or maker has more than one place of business, the place
of payment is any place of business of the drawee or maker chosen by the
person entitled to enforce the instrument.  If the drawee or maker has no
place of business, the place of payment is the residence of the drawee or
maker.
(Source: P.A. 87-582.)
(810 ILCS 5/3-112) (from Ch. 26, par. 3-112)
Sec. 3-112. 
		Interest.
(a) Unless otherwise provided in the instrument, (i) an instrument is
not payable with interest, and (ii) interest on an interest-bearing
instrument is payable from the date of the instrument.
(b) Interest may be stated in an instrument as a fixed or variable
amount of money or it may be expressed as a fixed or variable rate or
rates.  The amount or rate of interest may be stated or described in the
instrument in any manner and may require reference to information not
contained in the instrument.  If an instrument provides for interest, but
the amount of interest payable cannot be ascertained from the description,
interest is payable at the judgment rate in effect at the place of payment
of the instrument and at the time interest first accrues.
(Source: P.A. 87-582; 87-1135.)
(810 ILCS 5/3-113) (from Ch. 26, par. 3-113)
Sec. 3-113. 
		Date of instrument.
(a) An instrument may be antedated or postdated.  The date stated
determines the time of payment if the instrument is payable at a fixed
period after date. Except as provided in Section 4-401(c), an instrument
payable on demand is not payable before the date of the instrument.
(b) If an instrument is undated, its date is the date of its issue or,
in the case of an unissued instrument, the date it first comes into
possession of a holder.
(Source: P.A. 87-582.)
(810 ILCS 5/3-114) (from Ch. 26, par. 3-114)
Sec. 3-114. 
		Contradictory terms of instrument. 
		If an instrument contains
contradictory terms, typewritten terms prevail over printed terms,
handwritten terms prevail over both, and words prevail over numbers.
(Source: P.A. 87-582.)
(810 ILCS 5/3-115) (from Ch. 26, par. 3-115)
Sec. 3-115. 
		Incomplete instrument.
(a) "Incomplete instrument" means a signed writing, whether or not
issued by the signer, the contents of which show at the time of signing
that it is incomplete but that the signer intended it to be completed by
the addition of words or numbers.
(b) Subject to subsection (c), if an incomplete instrument is an
instrument under Section 3-104, it may be enforced according to its
terms if it is not completed, or according to its terms as augmented
by completion.  If an incomplete instrument is not an instrument under
Section 3-104, but, after completion, the requirements of Section 3-104 are
met, the instrument may be enforced according to its terms as augmented
by completion.
(c) If words or numbers are added to an incomplete instrument without
authority of the signer, there is an alteration of the incomplete
instrument under Section 3-407.
(d) The burden of establishing that words or numbers were added to an
incomplete instrument without authority of the signer is on the person
asserting the lack of authority.
(Source: P.A. 87-582; 87-1135.)
(810 ILCS 5/3-116) (from Ch. 26, par. 3-116)
Sec. 3-116. 
		Joint and several liability; contribution.
(a) Except as otherwise provided in the instrument, 2 or more persons
who have the same liability on an instrument as makers, drawers, acceptors,
indorsers who are indorsing joint payees, or anomalous indorsers are
jointly and severally liable in the capacity in which they sign.
(b) Except as provided in Section 3-419(e) or by agreement of the
affected parties, a party having joint and several liability that pays the
instrument is entitled to receive from any party having the same joint and
several liability contribution in accordance with applicable law.
(c) Discharge of one party having joint and several liability by a
person entitled to enforce the instrument does not affect the right under
subsection (b) of a party having the same joint and several liability to
receive contribution from the party discharged.
(Source: P.A. 87-582.)
(810 ILCS 5/3-117) (from Ch. 26, par. 3-117)
Sec. 3-117. 
		Other agreements affecting an instrument. 
		Subject to
applicable law regarding exclusion of proof of contemporaneous or previous
agreements, the obligation of a party to an instrument to pay the
instrument may be modified, supplemented, or nullified by a separate
agreement of the obligor and a person entitled to enforce the instrument,
if the instrument is issued or the obligation is incurred in reliance on the
agreement or as part of the same transaction giving rise to the agreement.
To the extent an obligation is modified, supplemented, or nullified by an
agreement under this Section, the agreement is a defense to the obligation.
(Source: P.A. 87-582; 87-1135.)
(810 ILCS 5/3-118) (from Ch. 26, par. 3-118)
Sec. 3-118. 
		Statute of limitations.
(a) (Blank).
(b) (Blank).
(c) Except as provided in subsection (d), an action to enforce the
obligation of a party to an unaccepted draft to pay the draft must be
commenced within 3 years after dishonor of the draft or 10 years after the
date of the draft, whichever period expires first.
(d) An action to enforce the obligation of the acceptor of a certified
check or the issuer of a teller's check, cashier's check, or traveler's
check must be commenced within 3 years after demand for payment is made to
the acceptor or issuer, as the case may be.
(e) An action to enforce the obligation of a party to a certificate of
deposit to pay the instrument must be commenced within 6 years after demand
for payment is made to the maker, but if the instrument states a due date
and the maker is not required to pay before that date, the 6-year period
begins when a demand for payment is in effect and the due date has passed.
(f) An action to enforce the obligation of a
party to pay an accepted draft, other than a certified check, must
be commenced (i) within 6 years after the due date or dates stated in the draft
or acceptance if the obligation of the acceptor is payable at a
definite time, or (ii) within 6 years after the date of the acceptance
if the obligation of the acceptor is payable on demand.
(g) Unless governed by other law regarding claims for indemnity or
contribution, an action (i) for conversion of an instrument, for money had
and received, or like action based on conversion, (ii) for breach of
warranty, or (iii) to enforce an obligation, duty, or right arising under
this Article and not governed by this Section must be commenced within 3
years after the cause of action accrues.
(Source: P.A. 90-451, eff. 1-1-98.)
(810 ILCS 5/3-119) (from Ch. 26, par. 3-119)
Sec. 3-119. 
		Notice of right to defend action. 
		In an action for breach
of an obligation for which a third person is answerable over pursuant to
this Article or Article 4, the defendant may give the third person written
notice of the litigation, and the person notified may then give similar
notice to any other person who is answerable over.  If the notice states
(i) that the person notified may come in and defend and (ii) that failure
to do so will bind the person notified in an action later brought by the
person giving the notice as to any determination of fact common to the 2
litigations, the person notified is so bound unless after seasonable
receipt of the notice the person notified does come in and defend.
(Source: P.A. 87-582.)
(810 ILCS 5/Art. 3 Pt. 2 heading)
PART 2.  
		NEGOTIATION, TRANSFER AND INDORSEMENT
(810 ILCS 5/3-201) (from Ch. 26, par. 3-201)
Sec. 3-201. 
		Negotiation.
(a) "Negotiation" means a transfer of possession, whether voluntary or
involuntary, of an instrument by a person other than the issuer to a
person who thereby becomes its holder.
(b) Except for negotiation by a remitter, if an instrument is payable to
an identified person, negotiation requires transfer of possession of the
instrument and its indorsement by the holder.  If an instrument is payable
to bearer, it may be negotiated by transfer of possession alone.
(Source: P.A. 87-582; 87-1135.)
(810 ILCS 5/3-202) (from Ch. 26, par. 3-202)
Sec. 3-202. 
		Negotiation subject to rescission.
(a) Negotiation is effective even if obtained (i) from an infant, a
corporation exceeding its powers, or a person without capacity, (ii) by
fraud, duress, or mistake, or (iii) in breach of duty or as part of an
illegal transaction.
(b) To the extent permitted by other law, negotiation may be rescinded
or may be subject to other remedies, but those remedies may not be asserted
against a subsequent holder in due course or a person paying the instrument
in good faith and without knowledge of facts that are a basis for
rescission or other remedy.
(Source: P.A. 87-582; 87-1135.)
(810 ILCS 5/3-203) (from Ch. 26, par. 3-203)
Sec. 3-203. 
		Transfer of instrument; rights acquired by transfer.
(a) An instrument is transferred when it is delivered by a person other
than its issuer for the purpose of giving to the person receiving delivery
the right to enforce the instrument.
(b) Transfer of an instrument, whether or not the transfer is a
negotiation, vests in the transferee any right of the transferor to enforce
the instrument, including any right as a holder in due course, but the
transferee cannot acquire rights of a holder in due course by a transfer,
directly or indirectly, from a holder in due course if the transferee
engaged in fraud or illegality affecting the instrument.
(c) Unless otherwise agreed, if an instrument is transferred for value
and the transferee does not become a holder because of lack of indorsement
by the transferor, the transferee has a specifically enforceable right to
the unqualified indorsement of the transferor, but negotiation of the
instrument does not occur until the indorsement is made.
(d) If a transferor purports to transfer less than the entire
instrument, negotiation of the instrument does not occur.  The transferee
obtains no rights under this Article and has only the rights of a partial
assignee.
(Source: P.A. 87-582; 87-1135.)
(810 ILCS 5/3-204) (from Ch. 26, par. 3-204)
Sec. 3-204. 
		Indorsement.
(a) "Indorsement" means a signature, other than that of a signer as
maker, drawer, or acceptor, that alone or accompanied by other words is
made on an instrument for the purpose of (i) negotiating the instrument,
(ii) restricting payment of the instrument, or (iii) incurring indorser's
liability on the instrument, but regardless of the intent of the signer, a
signature and its accompanying words is an indorsement unless the
accompanying words, terms of the instrument, place of the
signature, or other circumstances unambiguously indicate that the signature
was made for a purpose other than indorsement.  For the purpose of
determining whether a signature is made on an instrument, a paper affixed
to the instrument is a part of the instrument.
(b) "Indorser" means a person who makes an indorsement.
(c) For the purpose of determining whether the transferee of an
instrument is a holder, an indorsement that transfers a security interest in
the instrument is effective as an unqualified indorsement of the instrument.
(d) If an instrument is payable to a holder under a name that is not the
name of the holder, indorsement may be made by the holder in the name
stated in the instrument or in the holder's name or both, but signature in
both names may be required by a person paying or taking the instrument for
value or collection.
(Source: P.A. 87-582; 87-1135.)
(810 ILCS 5/3-205) (from Ch. 26, par. 3-205)
Sec. 3-205. 
		Special indorsement; blank indorsement; anomalous indorsement.
(a) If an indorsement is made by the holder of an instrument, whether
payable to an identified person or payable to bearer, and the indorsement
identifies a person to whom it makes the instrument payable, it is a
"special indorsement".  When specially indorsed, an instrument becomes
payable to the identified person and may be negotiated only by the
indorsement of that person.  The principles stated in Section 3-110 apply
to special indorsements.
(b) If an indorsement is made by the holder of an instrument and it is
not a special indorsement, it is a "blank indorsement".  When indorsed in
blank, an instrument becomes payable to bearer and may be negotiated by
transfer of possession alone until specially indorsed.
(c) The holder may convert a blank indorsement that consists only of a
signature into a special indorsement by writing, above the signature of the
indorser, words identifying the person to whom the instrument is made payable.
(d) "Anomalous indorsement" means an indorsement made by a person that
is not the holder of the instrument.  An anomalous indorsement does not
affect the manner in which the instrument may be negotiated.
(Source: P.A. 87-582.)
(810 ILCS 5/3-206) (from Ch. 26, par. 3-206)
Sec. 3-206. 
		Restrictive indorsement.
(a) An indorsement limiting payment to a particular person or otherwise
prohibiting further transfer or negotiation of the instrument is not
effective to prevent further transfer or negotiation of the instrument.
(b) An indorsement stating a condition to the right of the indorsee to
receive payment does not affect the right of the indorsee to enforce the
instrument.  A person paying the instrument or taking it for value or
collection may disregard the condition, and the rights and liabilities of
that person are not affected by whether the condition has been fulfilled.
(c) If an instrument bears an indorsement (i) described in Section 4-201(b),
or (ii) in blank or to a particular bank using the words "for deposit", "for
collection", or other words indicating a purpose of having the instrument
collected by a bank for the indorser or for a particular account, the following
rules apply:
(1) A person, other than a bank, who purchases the     instrument when so indorsed converts the instrument unless the amount paid for the instrument is received by the indorser or applied consistently with the indorsement.
(2) A depositary bank that purchases the instrument     or takes it for collection when so indorsed converts the instrument unless the amount paid by the bank with respect to the instrument is received by the indorser or applied consistently with the indorsement.
(3) A payor bank that is also the depositary bank or     that takes the instrument for immediate payment over the counter from a person other than a collecting bank converts the instrument unless the proceeds of the instrument are received by the indorser or applied consistently with the indorsement.
(4) Except as otherwise provided in paragraph (3), a     payor bank or intermediary bank may disregard the indorsement and is not liable if the proceeds of the instrument are not received by the indorser or applied consistently with the indorsement.
(d) Except for an indorsement covered by subsection (c), if an instrument
bears an indorsement using words to the effect that payment is to be made to
the indorsee as agent, trustee, or other fiduciary for the benefit of the
indorser or another person the following rules apply:
(1) Unless there is notice of breach of fiduciary     duty as provided in Section 3-307, a person who purchases the instrument from the indorsee or takes the instrument from the indorsee for collection or payment may pay the proceeds of payment or the value given for the instrument to the indorsee without regard to whether the indorsee violates a fiduciary duty to the indorser.
(2) A later transferee of the instrument or person     who pays the instrument is neither given notice nor otherwise affected by the restriction in the indorsement unless the transferee or payor knows that the fiduciary dealt with the instrument or its proceeds in breach of fiduciary duty.
(e) The presence on an instrument of an indorsement to which this
Section applies does not prevent a purchaser of the instrument from
becoming a holder in due course of the instrument unless the purchaser is a
converter under subsection (c) or has notice or knowledge of breach of
fiduciary duty as stated in subsection (d).
(f) In an action to enforce the obligation of a party to pay the
instrument, the obligor has a defense if payment would violate an
indorsement to which this Section applies and the payment is not permitted
by this Section.
(Source: P.A. 87-582; 87-1135.)
(810 ILCS 5/3-207) (from Ch. 26, par. 3-207)
Sec. 3-207. 
		Reacquisition. 
		Reacquisition of an instrument occurs if it is
transferred to a former holder, by negotiation or otherwise.  A former holder
who reacquires the instrument may cancel indorsements made after the reacquirer
first became a holder of the instrument.  If the cancellation causes the
instrument to be payable to the reacquirer or to bearer, the reacquirer may
negotiate the instrument.  An indorser whose indorsement is canceled is
discharged, and the discharge is effective against any subsequent holder.
(Source: P.A. 87-582; 87-895; 87-1135.)
(810 ILCS 5/Art. 3 Pt. 3 heading)
PART 3.  
		ENFORCEMENT OF INSTRUMENTS
(810 ILCS 5/3-301) (from Ch. 26, par. 3-301)
Sec. 3-301. 
		Person entitled to enforce instrument. 
		"Person
entitled to enforce" an instrument means (i) the holder of
the instrument, (ii) a nonholder in possession of the instrument
who has the rights of a holder, or (iii) a person not in possession
of the instrument who is entitled to enforce the instrument pursuant
to Section 3-309 or 3-418(d).  A person may be a person entitled
to enforce the instrument even though the person is not the owner
of the instrument or is in wrongful possession of the
instrument.
(Source: P.A. 87-582.)
(810 ILCS 5/3-302) (from Ch. 26, par. 3-302)
Sec. 3-302. 
		Holder in due course.
(a) Subject to subsection (c) and Section 3-106(d), "holder in due
course" means the holder of an instrument if:
(1) the instrument when issued or negotiated to the     holder does not bear such apparent evidence of forgery or alteration or is not otherwise so irregular or incomplete as to call into question its authenticity, and
(2) the holder took the instrument (i) for value,     (ii) in good faith, (iii) without notice that the instrument is overdue or has been dishonored or that there is an uncured default with respect to payment of another instrument issued as part of the same series, (iv) without notice that the instrument contains an unauthorized signature or has been altered, (v) without notice of any claim to the instrument described in Section 3-306, and (vi) without notice that any party has a defense or claim in recoupment stated in Section 3-305(a).
(b) Notice of discharge of a party, other than discharge in an
insolvency proceeding, is not notice of a defense under subsection (a), but
discharge is effective against a person who became a holder in due course
with notice of the discharge.  Public filing or recording of a document
does not of itself constitute notice of a defense, claim in recoupment, or
claim to the instrument.
(c) Except to the extent a transferor or predecessor in interest has
rights as a holder in due course, a person does not acquire rights of a
holder in due course of an instrument taken (i) by legal process or by
purchase at an execution, bankruptcy, or creditor's sale or similar
proceeding, (ii) by purchase as part of a bulk transaction not in the ordinary
course of business of the transferor, or (iii) as the successor in interest
to an estate or other organization.
(d) If, under Section 3-303(a)(1), the promise of performance that is
the consideration for an instrument has been partially performed, the
holder may assert rights as a holder in due course of the instrument only
to the fraction of the amount payable under the instrument equal to the
value of the partial performance divided by the value of the promised
performance.
(e) If (i) the person entitled to enforce an instrument has only a
security interest in the instrument and (ii) the person obliged to pay the
instrument has a defense, claim in recoupment, or claim to the instrument
that may be asserted against the person who granted the security interest,
the person entitled to enforce the instrument may assert rights as a holder
in due course only to an amount payable under the instrument which, at the
time of enforcement of the instrument, does not exceed the amount of the
unpaid obligation secured.
(f) To be effective, notice must be received at a time and in a manner
that gives a reasonable opportunity to act on it.
(g) This Section is subject to any law limiting status as a holder in
due course in particular classes of transactions.
(Source: P.A. 87-582; 87-1135.)
(810 ILCS 5/3-303) (from Ch. 26, par. 3-303)
Sec. 3-303. 
		Value and consideration.
(a) An instrument is issued or transferred for value if:
(1) the instrument is issued or transferred for a     promise of performance, to the extent the promise has been performed;
(2) the transferee acquires a security interest or     other lien in the instrument other than a lien obtained by judicial proceeding;
(3) the instrument is issued or transferred as     payment of, or as security for, an antecedent claim against any person, whether or not the claim is due;
(4) the instrument is issued or transferred in     exchange for a negotiable instrument; or
(5) the instrument is issued or transferred in     exchange for the incurring of an irrevocable obligation to a third party by the person taking the instrument.
(b) "Consideration" means any consideration sufficient to support a
simple contract.  The drawer or maker of an instrument has a defense if the
instrument is issued without consideration.  If an instrument is issued for
a promise of performance, the issuer has a defense to the extent
performance of the promise is due and the promise has not been performed.
If an instrument is issued for value as stated in subsection (a), the
instrument is also issued for consideration.
(Source: P.A. 87-582.)
(810 ILCS 5/3-304) (from Ch. 26, par. 3-304)
Sec. 3-304. 
		Overdue instrument.
(a) An instrument payable on demand becomes overdue at the earliest of
the following times:
(1) on the day after the day demand for payment is     duly made;
(2) if the instrument is a check, 90 days after its     date; or
(3) if the instrument is not a check, when the     instrument has been outstanding for a period of time after its date which is unreasonably long under the circumstances of the particular case in light of the nature of the instrument and usage of the trade.
(b) With respect to an instrument payable at a definite time the
following rules apply:
(1) If the principal is payable in installments and a     due date has not been accelerated, the instrument becomes overdue upon default under the instrument for nonpayment of an installment, and the instrument remains overdue until the default is cured.
(2) If the principal is not payable in installments     and the due date has not been accelerated, the instrument becomes overdue on the day after the due date.
(3) If a due date with respect to principal has been     accelerated, the instrument becomes overdue on the day after the accelerated due date.
(c) Unless the due date of principal has been accelerated, an instrument
does not become overdue if there is default in payment of interest but no
default in payment of principal.
(Source: P.A. 87-582; 87-1135.)
(810 ILCS 5/3-305) (from Ch. 26, par. 3-305)
Sec. 3-305. Defenses and claims in recoupment.
(a) Except as stated in subsection (b), the right to enforce the
obligation of a party to pay an instrument is subject to the
following:
(1) a defense of the obligor based on (i) infancy of     the obligor to the extent it is a defense to a simple contract, (ii) duress, lack of legal capacity, or illegality of the transaction which, under the law, nullifies the obligation of the obligor, (iii) fraud that induced the obligor to sign the instrument with neither knowledge nor reasonable opportunity to learn of its character or its essential terms, or (iv) discharge of the obligor in insolvency proceedings;
(2) a defense of the obligor stated in another     Section of this Article or a defense of the obligor that would be available if the person entitled to enforce the instrument were enforcing a right to payment under a simple contract; and
(3) a claim in recoupment of the obligor against the     original payee of the instrument if the claim arose from the transaction that gave rise to the instrument; but  the claim of the obligor may be asserted against a transferee of the instrument only to reduce the amount owing on the instrument at the time the action is brought.
(b) The right of a holder in due course to enforce the obligation of a
party to pay the instrument is subject to defenses of the obligor stated in
subsection (a)(1), but is not subject to defenses of the obligor stated in
subsection (a)(2) or claims in recoupment stated in subsection (a)(3)
against a person other than the holder.
(c) Except as stated in subsection (d), in an action to enforce the
obligation of a party to pay the instrument, the obligor may not assert
against the person entitled to enforce the instrument a defense, claim in
recoupment, or claim to the instrument (Section 3-306) of another person,
but the other person's claim to the instrument may be asserted by the
obligor if the other person is joined in the action and personally asserts
the claim against the person entitled to enforce the instrument.  An
obligor is not obliged to pay the instrument if the person seeking
enforcement of the instrument does not have rights of a holder in due
course and the obligor proves that the instrument is a lost or stolen
instrument.
(d) In an action to enforce the obligation of an accommodation party to
pay an instrument, the accommodation party may assert against the person
entitled to enforce the instrument any defense or claim in recoupment under
subsection (a) that the accommodated party could assert against the person
entitled to enforce the instrument, except the defenses of discharge in
insolvency proceedings, infancy, or lack of legal capacity.
(Source: P.A. 97-813, eff. 7-13-12.)
(810 ILCS 5/3-306) (from Ch. 26, par. 3-306)
Sec. 3-306. 
		Claims to an instrument. 
		A person taking an instrument,
other than a person having rights of a holder in due course, is subject to
a claim of a property or possessory right in the instrument or its
proceeds, including a claim to rescind a negotiation and to recover the
instrument or its proceeds.  A person having rights of a holder in due
course takes free of the claim to the instrument.
(Source: P.A. 87-582.)
(810 ILCS 5/3-307) (from Ch. 26, par. 3-307)
Sec. 3-307. 
		Notice of breach of fiduciary duty.
(a) In this Section:
(1) "Fiduciary" means an agent, trustee, partner,     corporate officer or director, or other representative owing a fiduciary duty with respect to an instrument.
(2) "Represented person" means the principal,     beneficiary, partnership, corporation, or other person to whom the duty stated in paragraph (1) is owed.
(b) If (i) an instrument is taken from a fiduciary for payment or
collection or for value, (ii) the taker has knowledge of the fiduciary
status of the fiduciary, and (iii) the represented person makes a claim to
the instrument or its proceeds on the basis that the transaction of the
fiduciary is a breach of fiduciary duty, the following rules apply:
(1) Notice of breach of fiduciary duty by the     fiduciary is notice of the claim of the represented person.
(2) In the case of an instrument payable to the     represented person or the fiduciary, as such, the taker has notice of the breach of fiduciary duty if the instrument is (i) taken in payment of or as security for a debt known by the taker to be the personal debt of the fiduciary, (ii) taken in a transaction known by the taker to be for the personal benefit of the fiduciary, or (iii) deposited to an account other than an account of the fiduciary, as such, or an account of the represented person.
(3) If an instrument is issued by the represented     person or the fiduciary, as such, and made payable to the fiduciary personally, the taker does not have notice of the breach of fiduciary duty unless the taker knows of the breach of fiduciary duty.
(4) If an instrument is issued by the represented     person or the fiduciary, as such, to the taker as payee, the taker has notice of the breach of fiduciary duty if the instrument is (i) taken in payment of or as security for a debt known by the taker to be the personal debt of the fiduciary, (ii) taken in a transaction known by the taker to be for the personal benefit of the fiduciary, or (iii) deposited to an account other than an account of the fiduciary, as such, or an account of the represented person.
(Source: P.A. 87-582; 87-1135.)
(810 ILCS 5/3-308) (from Ch. 26, par. 3-308)
Sec. 3-308. 
		
		Proof of signatures and status as holder in due
course.
(a) In an action with respect to an instrument, the authenticity of, and
authority to make, each signature on the instrument is admitted unless
specifically denied in the pleadings.  If the validity of a signature is
denied in the pleadings, the burden of establishing validity is on the
person claiming validity, but the signature is presumed to be authentic and
authorized unless the action is to enforce the liability of the purported
signer and the signer is dead or incompetent at the time of trial of the
issue of validity of the signature. If an action to enforce the instrument
is brought against a person as the undisclosed principal of a person who
signed the instrument as a party to the instrument, the plaintiff has the
burden of establishing that the defendant is liable on the instrument as a
represented person pursuant to Section 3-402(a).
(b) If the validity of signatures is admitted or proved and there is
compliance with subsection (a), a plaintiff producing the instrument is
entitled to payment if the plaintiff proves entitlement to enforce the
instrument under Section 3-301, unless the defendant proves a defense or
claim in recoupment.  If a defense or claim in recoupment is proved, the
right to payment of the plaintiff is subject to the defense or claim, except
to the extent the plaintiff proves that the plaintiff has rights of a
holder in due course which are not subject to the defense or claim.
(Source: P.A. 87-582; 87-1135.)
(810 ILCS 5/3-309) (from Ch. 26, par. 3-309)
Sec. 3-309. 
		Enforcement of lost,  destroyed, or stolen instrument.
(a) A person not in possession of an instrument is entitled to enforce
the instrument if (i) the person was in possession of the
instrument and entitled to enforce it when loss of possession occurred,
(ii) the loss of possession was not the result of a transfer by the person
or a lawful seizure, and (iii) the person cannot reasonably obtain
possession of the instrument because the instrument was destroyed, its
whereabouts cannot be determined, or it is in the wrongful possession of an
unknown person or a person that cannot be found or is not amenable to
service of process.
(b) A person seeking enforcement of an instrument under subsection
(a) must prove the terms of the instrument and the person's right to
enforce the instrument.  If that proof is made, Section 3-308 applies to
the case as if the person seeking enforcement had produced the instrument.
The court may not enter judgment in favor of the person seeking enforcement
unless it finds that the person required to pay the instrument is
adequately protected against loss that might occur by reason of a claim by
another person to enforce the instrument.  Adequate protection may be
provided by any reasonable means.
(Source: P.A. 87-582; 87-1135.)
(810 ILCS 5/3-310) (from Ch. 26, par. 3-310)
Sec. 3-310. 
		Effect of instrument on obligation for which taken.
(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.
(Source: P.A. 87-582; 87-1135.)
(810 ILCS 5/3-311) (from Ch. 26, par. 3-311)
Sec. 3-311. 
		Accord and satisfaction by use of instrument.
(a) If a person against whom a claim is asserted
proves that (i) that person in good faith tendered an instrument to the
claimant as full satisfaction of the claim, (ii) the amount of the claim
was unliquidated or subject to a bona fide dispute, and (iii) the claimant
obtained payment of the instrument, the following subsections apply.
(b) Unless subsection (c) applies, the claim is discharged if the person
against whom the claim is asserted proves that the instrument or an
accompanying written communication contained a conspicuous statement to the
effect that the instrument was tendered as full satisfaction of the claim.
(c) Subject to subsection (d), a claim is not discharged under
subsection (b) if either of the following applies:
(1) The claimant, if an organization, proves that (i)     within a reasonable time before the tender, the claimant sent a conspicuous statement to the person against whom the claim is asserted that communications concerning disputed debts, including an instrument tendered as full satisfaction of a debt, are to be sent to a designated person, office, or place, and (ii) the instrument or accompanying communication was not received by that designated person, office, or place.
(2) The claimant, whether or not an organization,     proves that within 90 days after payment of the instrument, the claimant tendered repayment of the amount of the instrument to the person against whom the claim is asserted.  This paragraph does not apply if the claimant is an organization that sent a statement complying with paragraph (1)(i).
(d) A claim is discharged if the person against whom the claim is
asserted proves that within a reasonable time before collection of the
instrument was initiated, the claimant or an agent of the claimant having
direct responsibility with respect to the disputed obligation knew that the
instrument was tendered in full satisfaction of the claim.
(Source: P.A. 87-582; 87-1135.)
(810 ILCS 5/3-312) (from Ch. 26, par. 3-312)
Sec. 3-312. 
		
		Lost, destroyed, or stolen cashier's check, teller's
check, or certified check.
(a) In this Section:
(1) "Check" means a cashier's check, teller's check,     or certified check.
(2) "Claimant" means a person who claims the right to     receive the amount of a cashier's check, teller's check, or certified check that was lost, destroyed, or stolen.
(3) "Declaration of loss" means a written statement,     made under penalty of perjury, to the effect that (i) the declarer lost possession of a check, (ii) the declarer is the drawer or payee of the check, in the case of a certified check, or the remitter or payee of the check, in the case of a cashier's check or teller's check, (iii) the loss of possession was not the result of a transfer by the declarer of a lawful seizure, and (iv) the declarer cannot reasonably obtain possession of the check because the check was destroyed, its whereabouts cannot be determined, or it is in the wrongful possession of an unknown person or a person that cannot be found or is not amenable to service of process.
(4) "Obligated bank" means the issuer of a cashier's     check or teller's check or the acceptor of a certified check.
(b) A claimant may assert a claim to the amount of a check by a
communication to the obligated bank describing the check with reasonable
certainty and requesting payment of the amount of the check, if (i) the
claimant is the drawer or payee of a certified check or the remitter or
payee of a cashier's check or teller's check, (ii) the communication
contains or is accompanied by a declaration of loss of the claimant with
respect to the check, (iii) the communication is received at a time and in
a manner affording the bank a reasonable time to act on it before the check
is paid, and (iv) the claimant provides reasonable identification if
requested by the obligated bank.  Delivery of a declaration
of loss is a warranty of the truth of the statements made in the
declaration.  If a claim is asserted in compliance with this subsection, the
following rules apply:
(1) The claim becomes enforceable at the later of (i)     the time the claim is asserted, or (ii) the 90th day following the date of the check, in the case of a cashier's check or teller's check, or the 90th day following the date of the acceptance, in the case of a certified check.
(2) Until the claim becomes enforceable, it has no     legal effect and the obligated bank may pay the check or, in the case of a teller's check, may permit the drawee to pay the check.  Payment to a person entitled to enforce the check discharges all liability of the obligated bank with respect to the check.
(3) If the claim becomes enforceable before the check     is presented for payment, the obligated bank is not obliged to pay the check.
(4) When the claim becomes enforceable, the obligated     bank becomes obliged to pay the amount of the check to the claimant if payment of the check has not been made to a person entitled to enforce the check.  Subject to Section 4-302(a)(1), payment to the claimant discharges all liability of the obligated bank with respect to the check.
(c) If the obligated bank pays the amount of a check to a claimant under
subsection (b)(4) and the check is presented for payment by a person having
rights of a holder in due course, the claimant is obliged to (i) refund the
payment to the obligated bank if the check is paid, or (ii) pay the amount
of the check to the person having rights of a holder in due course if the
check is dishonored.
(d) If a claimant has the right to assert a claim under subsection (b)
and is also a person entitled to enforce a cashier's check, teller's check,
or certified check that is lost, destroyed, or stolen, the claimant may
assert rights with respect to the check either under this Section or
Section 3-309.
(Source: P.A. 87-582; 87-895; 87-1135.)
(810 ILCS 5/Art. 3 Pt. 4 heading)
PART 4.  
		LIABILITY OF PARTIES
(810 ILCS 5/3-401) (from Ch. 26, par. 3-401)
Sec. 3-401. 
		Signature.
(a) A person is not liable on an instrument unless (i) the person
signed the instrument, or (ii) the person is represented by an agent or
representative who signed the instrument and the signature is binding on
the represented person under Section 3-402.
(b) A signature may be made (i) manually or by means of a device or
machine, and (ii) by the use of any name, including any trade or assumed
name, or by a word, mark, or symbol executed or adopted by a person
with present intention to authenticate a writing.
(Source: P.A. 87-582; 87-1135.)
(810 ILCS 5/3-402) (from Ch. 26, par. 3-402)
Sec. 3-402. 
		Signature by representative.
(a) If a person acting, or purporting to act, as a representative signs
an instrument by signing either the name of the represented person or the
name of the signer, the represented person is bound by the signature to the
same extent the represented person would be bound if the signature were on
a simple contract.  If the represented person is bound, the signature of
the representative is the "authorized signature of the represented person"
and the represented person is liable on the instrument, whether or not
identified in the instrument.
(b) If a representative signs the name of the representative to an
instrument and the signature is an authorized signature of the
represented
person, the following rules apply:
(1) If the form of the signature shows unambiguously     that the signature is made on behalf of the represented person who is identified in the instrument, the representative is not liable on the instrument.
(2) Subject to subsection (c), if (i) the form of the     signature does not show unambiguously that the signature is made in a representative capacity or (ii) the represented person is not identified in the instrument, the representative is liable on the instrument to a holder in due course that took the instrument without notice that the representative was not intended to be liable on the instrument.  With respect to any other person, the representative is liable on the instrument unless the representative proves that the original parties did not intend the representative to be liable on the instrument.
(c) If a representative signs the name of the representative as drawer
of a check without indication of the representative status and the check is
payable from an account of the represented person who is identified on the
check, the signer is not liable on the check if the signature is an
authorized signature of the represented person.
(Source: P.A. 87-582; 87-1135.)
(810 ILCS 5/3-403) (from Ch. 26, par. 3-403)
Sec. 3-403. 
		Unauthorized signature.
(a) Unless otherwise provided in this Article or Article 4, an
unauthorized signature is ineffective except as the signature of the
unauthorized signer in favor of a person who in good faith pays the
instrument or takes it for value.  An unauthorized signature may be
ratified for all purposes of this Article.
(b) If the signature of more than one person is required to constitute
the authorized signature of an organization, the signature of the
organization is unauthorized if one of the required signatures is missing.
(c) The civil or criminal liability of a person who makes an
unauthorized signature is not affected by any provision of this Article
which makes the unauthorized signature effective for the purposes
of this Article.
(Source: P.A. 87-582; 87-1135.)
(810 ILCS 5/3-404) (from Ch. 26, par. 3-404)
Sec. 3-404. 
		Impostors; fictitious payees.
(a) If an impostor, by use of the mails or otherwise, induces the issuer
of an instrument to issue the instrument to the impostor, or to a person
acting in concert with the impostor, by impersonating the payee of the
instrument or a person authorized to act for the payee, an indorsement of
the instrument by any person in the name of the payee is effective as the
indorsement of the payee in favor of a person who in good faith, pays the
instrument or takes it for value or for collection.
(b) If (i) a person whose intent determines to whom an instrument is
payable (Section 3-110(a) or (b)) does not intend the person identified as
payee to have any interest in the instrument, or (ii) the person identified
as payee of an instrument is a fictitious person, the following rules apply
until the instrument is negotiated by special indorsement:
(1) Any person in possession of the instrument is its     holder.
(2) An indorsement by any person in the name of the     payee stated in the instrument is effective as the indorsement of the payee in favor of a person who in good faith, pays the instrument or takes it for value or for collection.
(c) Under subsection (a) or (b), an indorsement is made in the name of a
payee if (i) it is made in a name substantially similar to that of the
payee or (ii) the instrument, whether or not indorsed, is deposited in a
depositary bank to an account in a name substantially similar to that of
the payee.
(d) With respect to an instrument to which subsection (a) or (b)
applies, if a person paying the instrument or taking it for value or for
collection fails to exercise ordinary care in paying or taking the
instrument and that failure substantially contributes to loss resulting
from payment of the instrument, the person bearing the loss may recover
from the person failing to exercise ordinary care to the extent the failure
to exercise ordinary care contributed to the loss.
(Source: P.A. 87-582; 87-1135.)
(810 ILCS 5/3-405) (from Ch. 26, par. 3-405)
Sec. 3-405. 
		Employer responsibility for fraudulent indorsement by employee.
(a) In this Section:
(1) "Employee" includes an independent contractor and     employee of an independent contractor retained by the employer.
(2) "Fraudulent indorsement" means (i) in the case of     an instrument payable to the employer, a forged indorsement purporting to be that of the employer, or (ii) in the case of an instrument with respect to which the employer is the issuer, a forged indorsement purporting to be that of the person identified as payee.
(3) "Responsibility" with respect to instruments     means authority (i) to sign or indorse instruments on behalf of the employer,  (ii) to process instruments received by the employer for bookkeeping purposes, for deposit to an account, or for other disposition, (iii) to prepare or process instruments for issue in the name of the employer, (iv) to supply information determining the names or addresses of payees of instruments to be issued in the name of the employer, (v) to control the disposition of instruments to be issued in the name of the employer, or (vi) to otherwise act with respect to instruments in a responsible capacity. "Responsibility" does not include authority that merely allows an employee to have access to instruments or blank or incomplete instrument forms that are being stored or transported or are part of incoming or outgoing mail, or similar access.
(b) For the purpose of determining the rights and liabilities of a
person who, in good faith, pays an instrument or takes it for value or for
collection, if an employer entrusted an employee with responsibility with
respect to the instrument and the employee or a person acting in concert with
the employee makes a fraudulent indorsement of the instrument, the indorsement
is effective as the indorsement of the person to whom the instrument is payable
if it is made in the name of that person. If the person paying the instrument
or taking it for value or for collection fails to exercise ordinary care in
paying or taking the instrument and that failure substantially contributes to
loss resulting from the fraud, the person bearing the loss may recover from the
person failing to exercise ordinary care to the extent the failure to exercise
ordinary care contributed to the loss.
(c) Under subsection (b), an indorsement is made in the name of the
person to whom an instrument is payable if (i) it is made in a name
substantially similar to the name of that person or (ii) the instrument,
whether or not indorsed, is deposited in a depositary bank to an account in
a name substantially similar to the name of that person.
(Source: P.A. 87-582; 87-1135.)
(810 ILCS 5/3-406) (from Ch. 26, par. 3-406)
Sec. 3-406. 
		
		Negligence contributing to forged signature or alteration of
instrument.
(a) A person whose failure to exercise ordinary care substantially
contributes to an alteration of an instrument or to the making of a forged
signature on an instrument is precluded from asserting the alteration or the
forgery against a person who, in good faith, pays the instrument or takes it
for value or for collection.
(b) Under subsection (a), if the person asserting the preclusion
fails to exercise ordinary care in paying or taking the instrument and that
failure substantially contributes to loss, the loss is allocated between the
person precluded and the person asserting the preclusion according to the
extent to which the failure of each to exercise ordinary care contributed to
the loss.
(c) Under subsection (a), the burden of proving failure to exercise
ordinary care is on the person asserting the preclusion.  Under subsection
(b), the burden of proving failure to exercise ordinary care is on the person
precluded.
(Source: P.A. 87-582; 87-1135.)
(810 ILCS 5/3-407) (from Ch. 26, par. 3-407)
Sec. 3-407. 
		Alteration.
(a) "Alteration" means (i) an unauthorized change in an instrument that
purports to modify in any respect the obligation of a party, or (ii) an
unauthorized addition of words or numbers or other change to an incomplete
instrument relating to the obligation of a party.
(b) Except as provided in subsection (c), an alteration fraudulently
made discharges a party whose obligation is affected by the alteration
unless that party assents or is precluded from asserting the alteration.
No other alteration discharges a party, and the instrument may be enforced
according to its original terms.
(c) A payor bank or drawee paying a fraudulently altered instrument or a
person taking it for value, in good faith and without notice of the
alteration, may enforce rights with respect to the instrument (i) according
to its original terms, or (ii) in the case of an incomplete instrument
altered by unauthorized completion, according to its terms as completed.
(Source: P.A. 87-582; 87-1135.)
(810 ILCS 5/3-408) (from Ch. 26, par. 3-408)
Sec. 3-408. 
		Drawee not liable on unaccepted draft. 
		A check or other
draft does not of itself operate as an assignment of funds in the hands of
the drawee available for its payment, and the drawee is not liable on the
instrument until the drawee accepts it.
(Source: P.A. 87-582.)
(810 ILCS 5/3-409) (from Ch. 26, par. 3-409)
Sec. 3-409. 
		Acceptance of draft; certified check.
(a) "Acceptance" means the drawee's signed agreement to pay a draft as
presented.  It must be written on the draft and may consist of the drawee's
signature alone.  Acceptance may be made at any time and becomes effective
when notification pursuant to instructions is given or the accepted draft
is delivered for the purpose of giving rights on the acceptance to any person.
(b) A draft may be accepted although it has not been signed by the
drawer, is otherwise incomplete, is overdue, or has been dishonored.
(c) If a draft is payable at a fixed period after sight and the acceptor
fails to date the acceptance, the holder may complete the acceptance by
supplying  a date in good faith.
(d) "Certified check" means a check accepted by the bank on which it is
drawn.  Acceptance may be made as stated in subsection (a) or by a writing
on the check which indicates that the check is certified.  The drawee of a
check has no obligation to certify the check, and refusal to certify is not
dishonor of the check.
(Source: P.A. 87-582.)
(810 ILCS 5/3-410) (from Ch. 26, par. 3-410)
Sec. 3-410. 
		Acceptance varying draft.
(a) If the terms of a drawee's acceptance vary from the terms of the
draft as presented, the holder may refuse the acceptance and treat the
draft as dishonored.  In that case, the drawee may cancel the acceptance.
(b) The terms of a draft are not varied by an acceptance to pay at a
particular bank or place in the United States, unless the acceptance states
that the draft is to be paid only at that bank or place.
(c) If the holder assents to an acceptance varying the terms of a draft,
the obligation of each drawer and indorser that does not expressly assent
to the acceptance is discharged.
(Source: P.A. 87-582.)
(810 ILCS 5/3-411) (from Ch. 26, par. 3-411)
Sec. 3-411. 
		
		Refusal to pay cashier's checks, teller's checks, and
certified checks.
(a) In this Section, "obligated bank" means the acceptor of a certified
check or the issuer of a cashier's check or teller's check bought from
the issuer.
(b) If the obligated bank wrongfully (i) refuses to pay a cashier's
check or certified check, (ii) stops payment of a teller's check, or (iii)
refuses to pay a dishonored teller's check, the person asserting the right
to enforce the check is entitled to compensation for expenses and loss of
interest resulting from the nonpayment and may recover consequential
damages if the obligated bank refuses to pay after receiving notice of
particular circumstances giving rise to the damages.
(c) Expenses or consequential damages under subsection (b) are not
recoverable if the refusal of the obligated bank to pay occurs because (i)
the bank suspends payments, (ii) the obligated bank asserts a claim or
defense of the bank that it has reasonable grounds to believe is available
against the person entitled to enforce the instrument, (iii) the obligated
bank has a reasonable doubt whether the person demanding payment is the
person entitled to enforce the instrument, or (iv) payment is prohibited
by law.
(Source: P.A. 87-582; 87-1135.)
(810 ILCS 5/3-412) (from Ch. 26, par. 3-412)
Sec. 3-412. 
		Obligation of issuer of note or cashier's check. 
		The issuer of a note or cashier's check or other draft drawn
on the drawer is obliged to pay the instrument (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 issuer signed an incomplete instrument, according to its
terms when completed, to the extent stated in Sections 3-115 and
3-407. The obligation is owed to a person entitled to enforce the
instrument or to an indorser who paid the instrument under Section 3-415.
(Source: P.A. 87-582; 87-1135.)
(810 ILCS 5/3-413) (from Ch. 26, par. 3-413)
Sec. 3-413. 
		Obligation of acceptor.
(a) The acceptor of a draft is obliged to pay the draft (i) according to
its terms at the time it was accepted, even though the acceptance states
that the draft is payable "as originally drawn" or equivalent terms, (ii)
if the acceptance varies the terms of the draft, according to the terms of
the draft as varied, or (iii) if the acceptance is of a draft that is an
incomplete instrument, according to its terms when completed, to the
extent stated in Sections 3-115 and 3-407.  The obligation is owed to a person
entitled to enforce the draft or to the drawer or an indorser who paid the
draft under Section 3-414 or 3-415.
(b) If the certification of a check or other acceptance of a draft
states the amount certified or accepted, the obligation of the acceptor is
that amount.  If (i) the certification or acceptance does not state an
amount, (ii) the amount of the instrument is subsequently raised, and (iii)
the instrument is then negotiated to a holder in due course, the obligation
of the acceptor is the amount of the instrument at the time it was taken by
the holder in due course.
(Source: P.A. 87-582; 87-1135.)
(810 ILCS 5/3-414) (from Ch. 26, par. 3-414)
Sec. 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 as stated in Sections 3-115 and 3-407.  The obligation is owed to
a person entitled to enforce the draft or to an indorser who paid the
draft under Section 3-415.
(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 Section
3-415(a) and (c).
(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) to pay the draft if the draft is not a check.
A disclaimer of the liability stated in subsection (b) 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 30 days after its date, (ii) the drawee suspends
payments after expiration of the 30-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.
(Source: P.A. 87-582; 87-1135.)
(810 ILCS 5/3-415) (from Ch. 26, par. 3-415)
Sec. 3-415. 
		Obligation of indorser.
(a) Subject to subsections (b), (c), and (d) and to Section 3-419(d), if
an instrument is dishonored, an indorser is obliged to pay the amount due
on the instrument (i) according to the terms of the instrument at the time
it was indorsed, or (ii) if the indorser indorsed an incomplete instrument,
according to its terms when completed to the extent stated in Sections 3-115
and 3-407.  The obligation of the indorser is owed to a person entitled to
enforce the instrument or to a subsequent indorser who paid the instrument
under this Section.
(b) If an indorsement states that it is made "without recourse" or
otherwise disclaims liability of the indorser, the indorser is not liable
under subsection (a) to pay the instrument.
(c) If notice of dishonor of an instrument is required by Section 3-503
and notice of dishonor complying with that Section is not given to an
indorser, the liability of the indorser under subsection (a) is discharged.
(d) If a draft is accepted by a bank after an indorsement is made, the
liability of the indorser under subsection (a) is discharged.
(e) If an indorser of a check is liable under subsection (a) and the
check is not presented for payment, or given to a depositary bank for
collection, within 30 days after the day the indorsement was made, the
liability of the indorser under subsection (a) is discharged.
(Source: P.A. 87-582; 87-1135.)
(810 ILCS 5/3-416) (from Ch. 26, par. 3-416)
Sec. 3-416. 
		Transfer warranties.
(a) A person who transfers an instrument for consideration warrants to
the transferee and, if the transfer is by indorsement, to any subsequent
transferee that:
(1) the warrantor is a person entitled to enforce the     instrument,
(2) all signatures on the instrument are authentic     and authorized,
(3) the instrument has not been altered,
(4) the instrument is not subject to a defense or     claim in recoupment of any party which can be asserted against the warrantor, and
(5) the warrantor has no knowledge of any insolvency     proceeding commenced with respect to the maker or acceptor or, in the case of an unaccepted draft, the drawer.
(b) A person to whom the warranties under subsection (a) are made and
who took the instrument in good faith may recover from the warrantor as
damages for breach of warranty an amount equal to the loss suffered as a
result of the breach, but not more than the amount of the instrument plus
expenses and loss of interest incurred as a result of the breach.
(c) The warranties stated in subsection (a) cannot be disclaimed with
respect to checks.  Unless notice of a claim for breach of warranty is
given to the warrantor within 30 days after the claimant has reason to know
of the breach and the identity of the warrantor, the liability of the
warrantor under subsection (b) is discharged to the extent of any loss
caused by the delay in giving notice of the claim.
(d) A cause of action for breach of warranty under this Section accrues
when the claimant has reason to know of the breach.
(Source: P.A. 87-582; 87-1135.)
(810 ILCS 5/3-417) (from Ch. 26, par. 3-417)
Sec. 3-417. 
		Presentment warranties.
(a) If an unaccepted draft is presented to the drawee for payment or
acceptance and the drawee pays or accepts the draft, (i) the person
obtaining payment or acceptance, at the time of presentment, and (ii) a
previous transferor of the draft, at the time of transfer, warrant to the
drawee making payment or accepting the draft in good faith that:
(1) the warrantor is or was, at the time the     warrantor transferred the draft, a person entitled to enforce the draft or authorized to obtain payment or acceptance of the draft on behalf of a person entitled to enforce the draft;
(2) the draft has not been altered; and
(3) the warrantor has no knowledge that the signature     of the purported drawer of the draft is unauthorized.
(b) A drawee making payment may recover from any warrantor damages for
breach of warranty equal to the amount paid by the drawee less the amount
the drawee received or is entitled to receive from the drawer because of
the payment.  In addition the drawee is entitled to compensation for
expenses and loss of interest resulting from the breach.  The right of the
drawee to recover damages under this subsection is not affected by any
failure of the drawee to exercise ordinary care in making payment.  If the
drawee accepts the draft, breach of warranty is a defense to the obligation
of the acceptor.  If the acceptor makes payment with respect to the draft,
the acceptor is entitled to recover from any warrantor for breach of
warranty the amounts stated in this subsection.
(c) If a drawee asserts a claim for breach of warranty under subsection
(a) based on an unauthorized indorsement of the draft or an alteration of
the draft, the warrantor may defend by proving that the indorsement is
effective under Section 3-404 or 3-405 or the drawer is precluded under
Section 3-406 or 4-406 from asserting against the drawee the unauthorized
indorsement or alteration.
(d) If (i) a dishonored draft is presented for payment to the drawer or
an indorser or (ii) any other instrument is presented for payment to a
party obliged to pay the instrument, and (iii) payment is received, the
following rules apply:
(1) The person obtaining payment and a prior     transferor of the instrument warrant to the person making payment in good faith that the warrantor is or was, at the time the warrantor transferred the instrument, a person entitled to enforce the instrument or authorized to obtain payment on behalf of a person entitled to enforce the instrument.
(2) The person making payment may recover from any     warrantor for breach of warranty an amount equal to the amount paid plus expenses and loss of interest resulting from the breach.
(e) The warranties stated in subsections (a) and (d) cannot be
disclaimed with respect to checks.  Unless notice of a claim for breach of
warranty is given to the warrantor within 30 days after the claimant has
reason to know of the breach and the identity of the warrantor, the
liability of the warrantor under subsection (b) or (d) is discharged to the
extent of any loss caused by the delay in giving notice of the claim.
(f) A cause of action for breach of warranty under this Section accrues
when the claimant has reason to know of the breach.
(Source: P.A. 87-582; 87-1135.)
(810 ILCS 5/3-418) (from Ch. 26, par. 3-418)
Sec. 3-418. 
		Payment or acceptance by mistake.
(a) Except as provided in subsection (c), if the drawee of a draft pays
or accepts the draft and the drawee acted on the mistaken belief that (i)
payment of the draft had not been stopped under Section 4-403 or (ii) the
signature of the drawer of the draft was authorized, the drawee
may recover the amount of the draft from the person to whom or for whose
benefit payment was made or, in the case of acceptance, may revoke the
acceptance.  Rights of the drawee under this subsection are not affected by
failure of the drawee to exercise ordinary care in paying or accepting
the draft.
(b) Except as provided in subsection (c), if an instrument has been paid
or accepted by mistake and the case is not covered by subsection (a), the
person paying or accepting may, to the extent permitted by the law
governing mistake and restitution, (i) recover the payment from the person
to whom or for whose benefit payment was made or (ii) in the case of
acceptance, may revoke the acceptance.
(c) The remedies provided by subsection (a) or (b) may not be asserted
against a person who took the instrument in good faith and for value or who
in good faith changed position in reliance on the payment or acceptance.
This subsection does not limit remedies provided by Section 3-417 or 4-407.
(d) Notwithstanding Section 4-215, if an instrument is paid or accepted
by mistake and the payor or acceptor recovers payment or revokes acceptance
under subsection (a) or (b), the instrument is deemed not to have been paid
or accepted and is treated as dishonored, and the person from whom payment
is recovered has rights as a person entitled to enforce the dishonored
instrument.
(Source: P.A. 87-582; 87-1135.)
(810 ILCS 5/3-419) (from Ch. 26, par. 3-419)
Sec. 3-419. 
		Instruments signed for accommodation.
(a) If an instrument is issued for value given for the benefit of a
party to the instrument ("accommodated party") and another party to the
instrument ("accommodation party") signs the instrument for the purpose of
incurring liability on the instrument without being a direct beneficiary of
the value given for the instrument, the instrument is signed by the
accommodation party "for accommodation".
(b) An accommodation party may sign the instrument as maker, drawer,
acceptor, or indorser and, subject to subsection (d), is obliged to pay the
instrument in the capacity in which the accommodation party signs.  The
obligation of an accommodation party may be enforced notwithstanding any
statute of frauds and whether or not the accommodation
party receives consideration for the accommodation.
(c) A person signing an instrument is presumed to be an accommodation
party and there is notice that the instrument is signed for accommodation
if the signature is an anomalous indorsement or is accompanied by words
indicating that the signer is acting as surety or guarantor with respect to
the obligation of another party to the instrument.  Except as provided in
Section 3-605, the obligation of an accommodation party to pay the
instrument is not affected by the fact that the person enforcing the
obligation had notice when the instrument was taken by that person that the
accommodation party signed the instrument for accommodation.
(d) If the signature of a party to an instrument is accompanied by words
indicating unambiguously that the party is guaranteeing collection rather
than payment of the obligation of another party to the instrument, the
signer is obliged to pay the amount due on the instrument to a person
entitled to enforce the instrument only if (i) execution of judgment
against the other party has been returned unsatisfied, (ii) the other party
is insolvent or in an insolvency proceeding, (iii) the other party cannot
be served with process, or (iv) it is otherwise apparent that payment
cannot be obtained from the other party.
(e) An accommodation party who pays the instrument is entitled to
reimbursement from the accommodated party and is entitled to enforce the
instrument against the accommodated party.  An accommodated party that pays
the instrument has no right of recourse against, and is not entitled to
contribution from, an accommodation party.
(Source: P.A. 87-582; 87-1135.)
(810 ILCS 5/3-420) (from Ch. 26, par. 3-420)
Sec. 3-420. 
		Conversion of instrument.
(a) The law applicable to conversion of personal property applies to
instruments.  An instrument is also converted if it is taken by transfer,
other than a negotiation, from a person not entitled to enforce the instrument
or a bank makes or obtains payment with respect to the instrument for a person
not entitled to enforce the instrument or receive payment.  An action for
conversion of an instrument may not be brought by (i) the issuer or acceptor of
the instrument or (ii) a payee or indorsee who did not receive delivery of the
instrument either directly or through delivery to an agent or a co-payee.
(b) In an action under subsection (a), the measure of liability is
presumed to be the amount payable on the instrument, but recovery may not
exceed the amount of the plaintiff's interest in the instrument.
(c) A representative, other than a depositary bank, that has in good
faith dealt with an instrument or its proceeds on behalf of one who was not
the person entitled to enforce the instrument is not liable in conversion
to that person beyond the amount of any proceeds that it has not paid out.
(Source: P.A. 87-582; 87-1135.)
(810 ILCS 5/Art. 3 Pt. 5 heading)
PART 5.  
		DISHONOR
(810 ILCS 5/3-501) (from Ch. 26, par. 3-501)
Sec. 3-501. 
		Presentment.
(a) "Presentment" means a demand made by or on behalf of a person
entitled to enforce an instrument (i) to pay the instrument made to the
drawee or a party obliged to pay the instrument or, in the case of a note
or accepted draft payable at a bank, to the bank or (ii) to accept a draft
made to the drawee.
(b) The following rules are subject to Article 4, agreement of the
parties, and clearing-house rules and the like:
(1) Presentment may be made at the place of payment     of the instrument and must be made at the place of payment if the instrument is payable at a bank in the United States; may be made by any commercially reasonable means, including an oral, written, or electronic communication; is effective when the demand for payment or acceptance is received by the person to whom presentment is made; is effective if made to any one of 2 or more makers, acceptors, drawees or other payors.
(2) Upon demand of the person to whom presentment is     made, the person making presentment must (i) exhibit the instrument, (ii) give reasonable identification and, if presentment is made on behalf of another person, reasonable evidence of authority to do so, and (iii) sign a receipt on the instrument for any payment made or surrender the instrument if full payment is made.
(3) Without dishonoring the instrument, the party to     whom presentment is made may (i) return the instrument for lack of a necessary endorsement, or (ii) refuse payment or acceptance for failure of the presentment to comply with the terms of the instrument, an agreement of the parties, or other applicable law or rule.
(4) The party to whom presentment is made may treat     presentment as occurring on the next business day after the day of presentment if the party to whom presentment is made has established a cut-off hour not earlier than 2 p.m. for the receipt and processing of instruments presented for payment or acceptance and presentment is made after the cut-off hour.
(Source: P.A. 87-582; 87-1135.)
(810 ILCS 5/3-502) (from Ch. 26, par. 3-502)
Sec. 3-502. 
		Dishonor.
(a) Dishonor of a note is governed by the following rules:
(1) If the note is payable on demand, the note is     dishonored if presentment is duly made to the maker and the note is not paid on the day of presentment.
(2) If the note is not payable on demand and is     payable at or through a bank or the terms of the note require presentment, the note is dishonored if presentment is duly made and the note is not paid on the day it becomes payable or the day of presentment, whichever is later.
(3) If the note is not payable on demand and     paragraph (2) does not apply, the note is dishonored if it is not paid on the day it becomes payable.
(b) Dishonor of an unaccepted draft other than a documentary draft is
governed by the following rules:
(1) If a check is duly presented for payment to the     payor bank otherwise than for immediate payment over the counter, the check is dishonored if the payor bank makes timely return of the check or sends timely notice of dishonor or nonpayment under Section 4-301 or 4-302, or becomes accountable for the amount of the check under Section 4-302.
(2) If a draft is payable on demand and paragraph (1)     does not apply, the draft is dishonored if presentment for payment is duly made to the drawee and the draft is not paid on the day of presentment.
(3) If a draft is payable on a date stated in the     draft, the draft is dishonored if (i) presentment for payment is duly made to the drawee and payment is not made on the day the draft becomes payable or the day of presentment, whichever is later, or (ii) presentment for acceptance is duly made before the day the draft becomes payable and the draft is not accepted on the day of presentment.
(4) If a draft is payable on elapse of a period of     time after sight or acceptance, the draft is dishonored if presentment for acceptance is duly made and the draft is not accepted on the day of presentment.
(c) Dishonor of an unaccepted documentary draft occurs according to the
rules stated in subsection (b)(2), (3), and (4), except that
payment or acceptance may be delayed without dishonor until no later than
the close of the third business day of the drawee following the day on
which payment or acceptance is required by those paragraphs.
(d) Dishonor of an accepted draft is governed by the following rules:
(1) If the draft is payable on demand, the draft is     dishonored if presentment for payment is duly made to the acceptor and the draft is not paid on the day of presentment.
(2) If the draft is not payable on demand, the draft     is dishonored if presentment for payment is duly made to the acceptor and payment is not made on the day it becomes payable or the day of presentment, whichever is later.
(e) In any case in which presentment is otherwise required for dishonor
under this Section and presentment is excused under Section 3-504, dishonor
occurs without presentment if the instrument is not duly accepted or paid.
(f) If a draft is dishonored because timely acceptance of the draft was
not made and the person entitled to demand acceptance consents to a late
acceptance, from the time of acceptance the draft is treated as never
having been dishonored.
(Source: P.A. 87-582; 87-1135.)
(810 ILCS 5/3-503) (from Ch. 26, par. 3-503)
Sec. 3-503. 
		Notice of dishonor.
(a) The obligation of an indorser stated in Section 3-415(a)
and the obligation of a drawer stated in Section 3-414(d) may not be
enforced unless (i) the indorser or drawer is given notice of dishonor of
the instrument complying with this Section or (ii) notice of dishonor is
excused under Section 3-504(b).
(b) Notice of dishonor may be given by any person; may be given by any
commercially reasonable means, including an oral, written, or electronic
communication; and is sufficient if it reasonably identifies the instrument
and indicates that the instrument has been dishonored or has not been paid or
accepted.  Return of an instrument given to a bank for collection is a
sufficient notice of dishonor.
(c) Subject to Section 3-504(c), with respect to an instrument taken
for collection by a collecting bank, notice of dishonor must be given (i)
by the bank before midnight of the next banking day following the banking
day on which the bank receives notice of dishonor of the instrument, or
(ii) by any other person within 30 days following the day on which the
person receives notice of dishonor.  With respect to any other instrument,
notice of dishonor must be given within 30 days following the day on which
dishonor occurs.
(Source: P.A. 87-582; 87-1135.)
(810 ILCS 5/3-504) (from Ch. 26, par. 3-504)
Sec. 3-504. 
		Excused presentment and notice of dishonor.
(a) Presentment for payment or acceptance of an instrument is excused if
(i) the person entitled to present the instrument cannot with reasonable
diligence make presentment, (ii) the maker or acceptor has repudiated an
obligation to pay the instrument or is dead or in insolvency proceedings,
(iii) by the terms of the instrument presentment is not necessary to enforce
the obligation of indorsers or the drawer, (iv) the drawer or indorser whose
obligation is being enforced has waived presentment or otherwise has no reason
to expect or right to require that the instrument be paid or accepted, or
(v) the drawer instructed the drawee not to pay or accept the draft or the
drawee was not obligated to the drawer to pay the draft.
(b) Notice of dishonor is excused if (i) by the terms of the instrument
notice of dishonor is not necessary to enforce the obligation of a party to
pay the instrument, or (ii) the party whose obligation is
being enforced waived notice of dishonor.  A waiver of presentment is also
a waiver of notice of dishonor.
(c) Delay in giving notice of dishonor is excused if the delay was
caused by circumstances beyond the control of the person giving the notice
and the person giving the notice exercised reasonable diligence after the
cause of the delay ceased to operate.
(Source: P.A. 87-582; 87-1135.)
(810 ILCS 5/3-505) (from Ch. 26, par. 3-505)
Sec. 3-505. 
		Evidence of dishonor.
(a) The following are admissible as evidence and create a presumption of
dishonor and of any notice of dishonor stated:
(1) a document regular in form as provided in     subsection (b) which purports to be a protest;
(2) a purported stamp or writing of the drawee, payor     bank, or presenting bank on or accompanying the instrument stating that acceptance or payment has been refused unless reasons for the refusal are stated and the reasons are not consistent with dishonor;
(3) a book or record of the drawee, payor bank, or     collecting bank, kept in the usual course of business which shows dishonor, even if there is no evidence of who made the entry.
(b) A protest is a certificate of dishonor made by a United States
consul or vice consul, or a notary public or other person authorized to
administer oaths by the law of the place where dishonor occurs.  It may be
made upon information satisfactory to that person.  The protest must
identify the instrument and certify either that presentment has been made
or, if not made, the reason why it was not made, and that the instrument has
been dishonored by nonacceptance or nonpayment.  The protest may also
certify that notice of dishonor has been given to some or all parties.
(Source: P.A. 87-582; 87-1135.)
(810 ILCS 5/3-505A) (from Ch. 26, par. 3-505A)
Sec. 3-505A. 
Provision of credit card number as a condition of check
cashing or acceptance prohibited.
(1) No person may record the number of a credit card given as
identification or given as proof of creditworthiness when payment for goods
or services is made by check or draft other than a transaction in which the
check or draft is issued in payment of the credit card designated by the
credit card number.
(2) This Section shall not prohibit a person from requesting a purchaser
to display a credit card as indication of creditworthiness and financial
responsibility or as additional identification, but the only information
concerning a credit card which may be recorded is the type of credit card
so displayed and the issuer of the credit card.  This Section shall not
require acceptance of a check or draft whether or not a credit card is
presented.
(3) This Section shall not prohibit a person from requesting or receiving
a credit card number or expiration date and recording the number or date,
or both, in lieu of a deposit to secure payment in the event of default,
loss, damage, or other occurrence.
(4) This Section shall not prohibit a person from recording a credit card
number and expiration date as a condition for cashing or accepting a check
or draft if that person, firm, partnership or association has agreed with
the card issuer to cash or accept checks and share drafts from the issuer's
cardholders and the issuer guarantees cardholder checks and drafts cashed
or accepted by that person.
(5) Recording a credit card number in connection with a sale of goods or
services in which the purchaser pays by check or draft, or in connection
with the acceptance of a check or draft, is a business offense with a fine
not to exceed $500.
As used in this Section, credit card has the meaning as
defined in Section 17-0.5 of the Criminal Code of 2012.
(Source: P.A. 96-1551, eff. 7-1-11; 97-1150, eff. 1-25-13.)
(810 ILCS 5/Art. 3 Pt. 6 heading)
PART 6.  
		DISCHARGE AND PAYMENT
(810 ILCS 5/3-601) (from Ch. 26, par. 3-601)
Sec. 3-601. 
		Discharge and effect of discharge.
(a) The obligation of a party to pay the instrument is discharged as
stated in this Article or by an act or agreement with the party which would
discharge an obligation to pay money under a simple contract.
(b) Discharge of the obligation of a party is not effective against a
person acquiring rights of a holder in due course of the instrument without
notice of the discharge.
(Source: P.A. 87-582.)
(810 ILCS 5/3-602) (from Ch. 26, par. 3-602)
Sec. 3-602. 
		Payment.
(a) Subject to subsection (b), an instrument is paid to the extent
payment is made (i) by or on behalf of a party obliged to pay the
instrument, and (ii) to a person entitled to enforce the instrument.  To
the extent of the payment, the obligation of the party obliged to pay the
instrument is discharged even though payment is made with knowledge of a
claim to the instrument under Section 3-306 by another person.
(b) The obligation of a party to pay the instrument is not discharged
under subsection (a) if:
(1) a claim to the instrument under Section 3-306 is     enforceable against the party receiving payment and (i) payment is made with knowledge by the payor that payment is prohibited by injunction or similar process of a court of competent jurisdiction, or (ii) in the case of an instrument other than a cashier's check, teller's check, or certified check, the party making payment accepted, from the person having a claim to the instrument, indemnity against loss resulting from refusal to pay the person entitled to enforce the instrument, or
(2) the person making payment knows that the     instrument is a stolen instrument and pays a person it knows is in wrongful possession of the instrument.
(Source: P.A. 87-582; 87-1135.)
(810 ILCS 5/3-603) (from Ch. 26, par. 3-603)
Sec. 3-603. 
		Tender of payment.
(a) If tender of payment of an obligation to pay an instrument is made
to a person entitled to enforce the instrument, the effect of tender is
governed by principles of law applicable to tender of payment under a simple
contract.
(b) If tender of payment of an obligation to pay an instrument is made
to a person entitled to enforce the instrument and the tender is refused,
there is discharge, to the extent of the amount of the tender, of the
obligation of an indorser or accommodation party having a right of recourse
with respect to the obligation to which the tender relates.
(c) If tender of payment of an amount due on an instrument is made to
the person entitled to enforce the instrument, the obligation of the
obligor to pay interest after the due date on the amount tendered is
discharged.  If presentment is required with respect to an instrument and
the obligor is  able and ready to pay on the due date at every place of
payment stated in the instrument, the obligor is deemed to have made tender
of payment on the due date to the person entitled to enforce the instrument.
(Source: P.A. 87-582.)
(810 ILCS 5/3-604) (from Ch. 26, par. 3-604)
Sec. 3-604. 
		Discharge by cancellation or renunciation.
(a) A person entitled to enforce an instrument, with or without
consideration, may discharge the obligation of a party to pay the instrument
(i) by an intentional voluntary act, such as surrender of the instrument to
the party, destruction, mutilation, or cancellation of the instrument,
cancellation or striking out of the party's signature, or the addition of
words to the instrument indicating discharge, or (ii) by agreeing not to
sue or otherwise renouncing rights against the party by a signed writing.
(b) Cancellation or striking out of an indorsement pursuant to
subsection (a) does not affect the status and rights of a party derived
from the indorsement.
(Source: P.A. 87-582; 87-1135.)
(810 ILCS 5/3-605) (from Ch. 26, par. 3-605)
Sec. 3-605. 
		Discharge of indorsers and accommodation parties.
(a) In this Section, the term "indorser" includes a drawer having the
obligation described in Section 3-414(d).
(b) Discharge, under Section 3-604, of the obligation of a party to pay
an instrument does not discharge the obligation of an indorser or
accommodation party having a right of recourse against the discharged party.
(c) If a person entitled to enforce an instrument agrees, with or
without consideration, to an extension of the due date of the obligation of
a party to pay the instrument, the extension discharges an indorser or
accommodation party having a right of recourse against the party whose
obligation is extended to the extent the indorser or accommodation party
proves that the extension caused loss to the indorser or accommodation
party with respect to the right of recourse.
(d) If a person entitled to enforce an instrument agrees, with or
without consideration, to a material modification of the obligation of a party
other than an extension of the due date, the modification discharges the
obligation of an indorser or accommodation party having a right of recourse
against the person whose obligation is modified to the extent the modification
causes loss to the indorser or accommodation party with respect to the right of
recourse.  The loss suffered by the indorser or accommodation party as a result
of the modification is equal to the amount of the right of recourse unless the
person enforcing the instrument proves that no loss was caused by the
modification or that the loss caused by the modification was an amount less
than the amount of the right of recourse.
(e) If the obligation of a party to pay an instrument is secured by an
interest in collateral and a person entitled to enforce the instrument
impairs the value of the interest in collateral, the obligation of an
indorser or accommodation party having a right of recourse against the
obligor is discharged to the extent of the impairment.  The value of an
interest in collateral is impaired to the extent (i) the value of the
interest is reduced to an amount less than the amount of the right of
recourse of the party asserting discharge, or (ii) the reduction in value
of the interest causes an increase in the amount by which the amount of the
right of recourse exceeds the value of the interest.  The burden of proving
impairment is on the party asserting discharge.
(f) If the obligation of a party is secured by an interest in collateral
not provided by an accommodation party and a person entitled to enforce the
instrument impairs the value of the interest in collateral, the obligation
of any party who is jointly and severally liable with respect to the
secured obligation is discharged to the extent the impairment causes the
party asserting discharge to pay more than that party would have been
obliged to pay, taking into account rights of contribution, if impairment
had not occurred.  If the party asserting discharge is an accommodation
party not entitled to discharge under subsection (e), the party is deemed
to have a right to contribution based on joint and several liability rather
than a right to reimbursement.  The burden of proving impairment is on the
party asserting discharge.
(g) Under subsection (e) or (f), impairing value of an interest in
collateral includes (i) failure to obtain or maintain perfection or
recordation of the interest in collateral, (ii) release of collateral
without substitution of collateral of equal value, (iii) failure to perform
a duty to preserve the value of collateral owed, under Article 9 or other
law, to a debtor or surety or other person secondarily liable, or (iv)
failure to comply with applicable law in disposing of collateral.
(h) An accommodation party is not discharged under subsection (c), (d),
or (e) unless the person entitled to enforce the instrument knows of the
accommodation or has notice under Section 3-419(c) that the instrument was
signed for accommodation.
(i) A party is not discharged under this Section if (i) the party
asserting discharge consents to the event or conduct that is the basis of
the discharge, or (ii) the instrument or a separate agreement of the party
provides for waiver or discharge under this Section either specifically or
by general language indicating that parties waive defenses based on
suretyship or impairment of collateral.
(Source: P.A. 87-582; 87-1135.)
(810 ILCS 5/Art. 3 Pt. 8 heading)
PART 8.  
		MISCELLANEOUS
(810 ILCS 5/3-806) (from Ch. 26, par. 3-806)
Sec. 3-806. 
		
		Any person who issues a check or other draft that is not
honored upon presentment because the drawer does not have an account with
the drawee, or because the drawer does not have sufficient funds in his
account, or because the drawer does not have sufficient credit with the
drawee, shall be liable in the amount of $25, or for all costs and
expenses, including reasonable attorney's fees, incurred by any person in
connection with the collection of the amount for which the check or other
draft was written, whichever is greater, and shall be liable for interest
upon the amount of the check or other draft at the rate provided in
subsection (1) of Section 4 of the Interest Act.  Costs and expenses shall
include reasonable costs and expenses incurred in the nonlitigated
collection of the check or other draft.
A person who undertakes a nonlitigated collection against the person who
issued a check or other draft that is not honored upon presentment shall
make a written demand by certified mail, return receipt requested, delivered
to the last known address of that person in order to become eligible for
any costs and expenses in excess of $25.  The written demand shall demand
payment within 30 days of the mailing of the demand and shall include
notice of liability for the costs and expenses.
A fee or charge not to exceed $4.50 may be assessed to any person or
owner of a commercial checking account or other similar commercial account
where a check or other draft that is deposited into the account is
dishonored upon presentment because of insufficient funds or because the
drawer does not have an account with the drawee; provided, however, that,
the limitation on the fee or charge specified in this paragraph does not
apply to any fee or charge assessed to any bank or other depository
institution or to any non-commercial checking account or other similar
non-commercial account.
(Source: P.A. 87-582; 87-624.)