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 55-3-115 and 55-3-407 NMSA 1978. The obligation is owed to a person entitled to enforce the instrument or to an indorser who paid the instrument under Section 55-3-415 NMSA 1978.

History: 1978 Comp., § 55-3-412, enacted by Laws 1992, ch. 114, § 137.

OFFICIAL COMMENTS

UCC Official Comments by ALI & the NCCUSL. Reproduced with permission of the PEB for the UCC. All rights reserved.

1. The obligations of the maker, acceptor, drawer, and indorser are stated in four separate sections. Section 3-412 [55-3-412 NMSA 1978] states the obligation of the maker of a note and is consistent with former Section 3-413(1). Section 3-412 [55-3-412 NMSA 1978] also applies to the issuer of a cashier's check or other draft drawn on the drawer. Under former Section 3-118(a), since a cashier's check or other draft drawn on the drawer was "effective as a note," the drawer was liable under former Section 3-413(1) as a maker. Under Sections 3-103(a)(6) and 3-104(f) [55-3-103 and 55-3-104 NMSA 1978, respectively] a cashier's check or other draft drawn on the drawer is treated as a draft to reflect common commercial usage, but the liability of the drawer is stated by Section 3-412 [55-3-412 NMSA 1978] as being the same as that of the maker of a note rather than that of the drawer of a draft. Thus, Section 3-412 [55-3-412 NMSA 1978] does not in substance change former law.

2. Under Section 3-105(b) [55-3-105 NMSA 1978] nonissuance of either a complete or incomplete instrument is a defense by a maker or drawer against a person that is not a holder in due course.

3. The obligation of the maker may be modified in the case of alteration if, under Section 3-406 [55-3-406 NMSA 1978], the maker is precluded from asserting the alteration.

4. The rule of this section is similar to the rule of Article 39 of the Convention on International Bills of Exchange and International Promissory Notes.

Repeals. — Laws 1992, ch. 114, § 237 repealed former 55-3-412 NMSA 1978, as enacted by Laws 1967, ch. 186, § 10, relating to acceptance varying draft, effective July 1, 1992. Laws 1992, ch. 114, § 137, enacted a new section, effective July 1, 1992. For provisions of former section, see the 1991 NMSA on NMOneSource.com. For present comparable provisions, see 55-3-410 NMSA 1978.

Compiler's notes. — Laws 1967, ch. 186, § 11, is compiled as 55-3-504 NMSA 1978.