N.Y. Uniform Commercial Code 3-507 – Dishonor; Holder's Right of Recourse; Term Allowing Re-Presentment
Section 3–507. Dishonor; Holder's Right of Recourse; Term Allowing
Terms Used In N.Y. Uniform Commercial Code 3-507
- Instrument: means a negotiable instrument. See N.Y. Uniform Commercial Code 3-102
- Recourse: An arrangement in which a bank retains, in form or in substance, any credit risk directly or indirectly associated with an asset it has sold (in accordance with generally accepted accounting principles) that exceeds a pro rata share of the bank's claim on the asset. If a bank has no claim on an asset it has sold, then the retention of any credit risk is recourse. Source: FDIC
- Secondary party: means a drawer or endorser. See N.Y. Uniform Commercial Code 3-102
Re-Presentment.
(1) An instrument is dishonored when
(a) a necessary or optional presentment is duly made and due
acceptance or payment is refused or cannot be obtained within
the prescribed time or in case of bank collections the
instrument is seasonably returned by the midnight deadline
(Section 4–301); or
(b) presentment is excused and the instrument is not duly
accepted or paid.
(2) Subject to any necessary notice of dishonor and protest, the holder has upon dishonor an immediate right of recourse against the drawers and indorsers.
(3) Return of an instrument for lack of proper indorsement is not dishonor.
(4) A term in a draft or an indorsement thereof allowing a stated time for re-presentment in the event of any dishonor of the draft by nonacceptance if a time draft or by nonpayment if a sight draft gives the holder as against any secondary party bound by the term an option to waive the dishonor without affecting the liability of the secondary party and he may present again up to the end of the stated time.