Book Opener

a note or a draft. Three conditions must be met before the drawer orindorsers have liability to pay:l The instrument must be properly presented to the primary party ordrawee, and payment must be demanded.l Payment must have been refused by the primary party (this kind ofrefusal is called dishonor).l Notice of this refusal must be given to the secondary party within thetime and in the manner prescribed by the UCC.Presentment A demand made by a holder to pay or accept an instrumentis called presentment . Presentment may be made by using anycommercially reasonable means, including oral, written, or electroniccommunication. If requested by the person to whom presentment ismade, the person making presentment must exhibit the instrument andprovide identification. A holder need not make proper presentment tohold secondary parties liable in some situations (see Figure 26.3).For some instruments, presentment is made twice—once for acceptanceand once for payment. To be sure that a secondary party (draweror indorser) will be liable on an instrument, the holder must make properpresentment for payment unless excused. This means that the holdermust present the instrument to the maker or drawee and ask for payment.If such presentment is not made at the proper time, all indorsersare discharged from their obligation. They will not have to pay the holderof the instrument. In addition, if such presentment is not properly madeand the drawee cannot pay because of insolvency (inability to pay debts),the drawer is discharged from all obligation.Time for Presentment Presentment must be made on the date theinstrument is due. If there is no due date stated on the instrument, presentmentmust be made in a reasonable time after the maker or drawerbecomes liable on it. The definition of a reasonable time for instrumentsother than checks will vary according to the circumstances. A reasonabletime for a check is 30 days with respect to the liability of the drawerand 7 days with respect to the liability of an indorser.FinancialDifficultiesDominique does yardwork for a dozen homeownersin her neighborhood.One of her clientsis Mrs. Belfield, anelderly widow. Some ofDominique’s clients payher when she comes totheir homes, but othersmail their checks. Mrs.Belfield has requestedthat she be allowed tomail her check, eventhough she’s homewhen Dominique isworking there. For thepast three months, Mrs.Belfield’s checks havebeen late. They havebecome so late that sheis now two paymentsbehind. The last checkshe sent bounced.Dominique has triedto talk to Mrs. Belfield,but Mrs. Belfield claimsshe is having financialdifficulties. Whatshould Dominique do?Example 7. Joanne Lawler made out a check to Doris Maddenfor $100. Madden indorsed the check and cashed it at a grocerystore near her home. The store kept the check for eight daysbefore taking it to the bank. If the check did not clear, the storecould not hold Madden liable on the instrument. She would nothave to pay it because the store did not present the check to thebank within a reasonable time to hold the indorser responsible.Chapter 26: Collecting Negotiable Instruments 569