                                 CODE OF VIRGINIA

EFFECT OF INSTRUMENT ON OBLIGATION FOR WHICH TAKEN (§ 8.3A-310)

a. Unless otherwise agreed, if a certified check, cashier&#8217;s check, or
teller&#8217;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
endorser 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&#8217;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.

HISTORY: 1964, c. 219, § 8.3-802; 1992, c. 693.