(810 ILCS 5/Art. 3 Pt. 6 heading) PART 6.
DISCHARGE AND PAYMENT
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(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.)
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(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 | ||
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(2) the person making payment knows that the | ||
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(Source: P.A. 87-582; 87-1135.)
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(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.)
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(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.)
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(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.)
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