(a) The obligation of an indorser stated in Section 55-3-415(a) NMSA 1978 and the obligation of a drawer stated in Section 55-3-414(d) NMSA 1978 may not be enforced unless (i) the indorser or drawer is given notice of dishonor of the instrument complying with this section or (ii) notice of dishonor is excused under Section 55-3-504(b) NMSA 1978.

(b) Notice of dishonor may be given by any person; may be given by any commercially reasonable means, including an oral, written, or electronic communication; and is sufficient if it reasonably identifies the instrument and indicates that the instrument has been dishonored or has not been paid or accepted. Return of an instrument given to a bank for collection is sufficient notice of dishonor.

(c) Subject to Section 55-3-504(c) NMSA 1978, with respect to an instrument taken for collection by a collecting bank, notice of dishonor must be given (i) by the bank before midnight of the next banking day following the banking day on which the bank receives notice of dishonor of the instrument, or (ii) by any other person within thirty days following the day on which the person receives notice of dishonor. With respect to any other instrument, notice of dishonor must be given within thirty days following the day on which dishonor occurs.

History: 1978 Comp., § 55-3-503, enacted by Laws 1992, ch. 114, § 148.

OFFICIAL COMMENTS

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

1. Subsection (a) is consistent with former Section 3-501(2)(a), but notice of dishonor is no longer relevant to the liability of a drawer except for the case of a draft accepted by an acceptor other than a bank. Comments 2 and 4 to Section 3-414 [55-3-414 NMSA 1978]. There is no reason why drawers should be discharged on instruments they draw until payment or acceptance. They are entitled to have the instrument presented to the drawee and dishonored (Section 3-414(b)) [55-3-414 NMSA 1978] before they are liable to pay, but no notice of dishonor need be made to them as a condition of liability. Subsection (b), which states how notice of dishonor is given, is based on former Section 3-508(3) [repealed].

2. Subsection (c) replaces former Section 3-508(2) [repealed]. It differs from that section in that it provides a 30-day period for a person other than a collecting bank to give notice of dishonor rather than the three-day period allowed in former Article 3. Delay in giving notice of dishonor may be excused under Section 3-504(c) [55-3-504 NMSA 1978].

Repeals. — Laws 1992, ch. 114, § 237 repealed former 55-3-503 NMSA 1978, as enacted by Laws 1961, ch. 96, § 3-503, relating to time of presentment, effective July 1, 1992. Laws 1992, ch. 114, § 148, enacted a new section, effective July 1, 1992. For provisions of former section, see the 1991 NMSA 1978 on NMOneSource.com.

Am. Jur. 2d, A.L.R. and C.J.S. references. — Validity, construction, and application of the uniform customs and practice for documentary credits (UCP), 56 A.L.R.5th 565.