|
(810 ILCS 5/Art.
3 Pt. 3 heading)
PART
3. ENFORCEMENT OF INSTRUMENTS
|
(810 ILCS 5/3-301) (from Ch. 26,
par. 3-301)
Sec. 3-301. Person entitled
to enforce instrument. "Person entitled to enforce" an
instrument means (i) the holder of the instrument, (ii) a nonholder
in possession of the instrument who has the rights of a holder,
or (iii) a person not in possession of the instrument who is
entitled to enforce the instrument pursuant to Section 3-309
or 3-418(d). A person may be a person entitled to enforce
the instrument even though the person is not the owner of the
instrument or is in wrongful possession of the instrument.
(Source: P.A. 87-582.)
|
(810 ILCS 5/3-302) (from Ch. 26,
par. 3-302)
Sec. 3-302. Holder in due
course.
(a) Subject to subsection (c) and
Section 3-106(d), "holder in due course" means
the holder of an instrument if:
(1) the
instrument when issued or negotiated to the
|
|
|
holder does not bear such apparent evidence
of forgery or alteration or is not otherwise so
irregular or incomplete as to call into question
its authenticity, and
|
|
|
(2)
the holder took the instrument (i) for value,
|
|
|
(ii) in good faith, (iii) without notice
that the instrument is overdue or has been dishonored
or that there is an uncured default with respect
to payment of another instrument issued as part
of the same series, (iv) without notice that the
instrument contains an unauthorized signature or
has been altered, (v) without notice of any claim
to the instrument described in Section 3-306,
and (vi) without notice that any party has a defense
or claim in recoupment stated in Section 3-305(a).
|
|
|
(b) Notice of
discharge of a party, other than discharge in an insolvency
proceeding, is not notice of a defense under subsection
(a), but discharge is effective against a person who became
a holder in due course with notice of the discharge. Public
filing or recording of a document does not of itself constitute
notice of a defense, claim in recoupment, or claim to the
instrument.
(c) Except to the extent a transferor
or predecessor in interest has rights as a holder in due course,
a person does not acquire rights of a holder in due course of an
instrument taken (i) by legal process or by purchase at an execution,
bankruptcy, or creditor's sale or similar proceeding, (ii) by purchase
as part of a bulk transaction not in the ordinary course of business
of the transferor, or (iii) as the successor in interest to an
estate or other organization.
(d) If, under Section 3-303(a)(1),
the promise of performance that is the consideration for an instrument
has been partially performed, the holder may assert rights as a
holder in due course of the instrument only to the fraction of
the amount payable under the instrument equal to the value of the
partial performance divided by the value of the promised performance.
(e) If (i) the person entitled
to enforce an instrument has only a security interest in the instrument
and (ii) the person obliged to pay the instrument has a defense,
claim in recoupment, or claim to the instrument that may be asserted
against the person who granted the security interest, the person
entitled to enforce the instrument may assert rights as a holder
in due course only to an amount payable under the instrument which,
at the time of enforcement of the instrument, does not exceed the
amount of the unpaid obligation secured.
(f) To be effective, notice must
be received at a time and in a manner that gives a reasonable opportunity
to act on it.
(g) This Section is subject to
any law limiting status as a holder in due course in particular
classes of transactions.
(Source: P.A. 87-582; 87-1135.)
|
(810 ILCS 5/3-303) (from Ch. 26,
par. 3-303)
Sec. 3-303. Value and consideration.
(a) An instrument is issued or
transferred for value if:
(1) the
instrument is issued or transferred for a
|
|
|
promise of performance, to the extent
the promise has been performed;
|
|
|
(2)
the transferee acquires a security interest or
|
|
|
other lien in the instrument other than
a lien obtained by judicial proceeding;
|
|
|
(3)
the instrument is issued or transferred as
|
|
|
payment of, or as security for, an antecedent
claim against any person, whether or not the claim
is due;
|
|
|
(4)
the instrument is issued or transferred in
|
|
|
exchange for a negotiable instrument;
or
|
|
|
(5)
the instrument is issued or transferred in
|
|
|
exchange for the incurring of an irrevocable
obligation to a third party by the person taking
the instrument.
|
|
|
(b) "Consideration" means
any consideration sufficient to support a simple contract.
The drawer or maker of an instrument has a defense if the
instrument is issued without consideration. If an instrument
is issued for a promise of performance, the issuer has
a defense to the extent performance of the promise is due
and the promise has not been performed. If an instrument
is issued for value as stated in subsection (a), the instrument
is also issued for consideration.
(Source: P.A. 87-582.)
|
(810 ILCS 5/3-304) (from Ch. 26,
par. 3-304)
Sec. 3-304. Overdue instrument.
(a) An instrument payable on demand
becomes overdue at the earliest of the following times:
(1) on
the day after the day demand for payment is
|
|
|
|
(2)
if the instrument is a check, 90 days after its
|
|
|
|
(3)
if the instrument is not a check, when the
|
|
|
instrument has been outstanding for
a period of time after its date which is unreasonably
long under the circumstances of the particular
case in light of the nature of the instrument and
usage of the trade.
|
|
|
(b) With respect
to an instrument payable at a definite time the following
rules apply:
(1) If
the principal is payable in installments and
|
|
|
a due date has not been accelerated,
the instrument becomes overdue upon default under
the instrument for nonpayment of an installment,
and the instrument remains overdue until the default
is cured.
|
|
|
(2)
If the principal is not payable in installments
|
|
|
and the due date has not been accelerated,
the instrument becomes overdue on the day after
the due date.
|
|
|
(3)
If a due date with respect to principal has been
|
|
|
accelerated, the instrument becomes
overdue on the day after the accelerated due date.
|
|
|
(c) Unless the
due date of principal has been accelerated, an instrument
does not become overdue if there is default in payment
of interest but no default in payment of principal.
(Source: P.A. 87-582; 87-1135.)
|
(810 ILCS 5/3-305) (from Ch. 26,
par. 3-305)
Sec. 3-305. Defenses and
claims in recoupment.
(a) Except as stated in subsection
(b), the right to enforce the obligation of a party to pay an
instrument is subject to the following:
(1) a defense
of the obligor based on (i) infancy of
|
|
|
the obligor to the extent it is a defense
to a simple contract, (ii) duress, lack of legal
capacity, or illegality of the transaction which,
under the law, nullifies the obligation of the
obligor, (iii) fraud that induced the obligor to
sign the instrument with neither knowledge nor
reasonable opportunity to learn of its character
or its essential terms, or (iv) discharge of the
obligor in insolvency proceedings;
|
|
|
(2)
a defense of the obligor stated in another
|
|
|
Section of this Article or a defense
of the obligor that would be available if the person
entitled to enforce the instrument were enforcing
a right to payment under a simple contract; and
|
|
|
(3)
a claim in recoupment of the obligor against the
|
|
|
original payee of the instrument if
the claim arose from the transaction that give
rise to the instrument; but the claim of the obligor
may be asserted against a transferee of the instrument
only to reduce the amount owing on the instrument
at the time the action is brought.
|
|
|
(b) The right
of a holder in due course to enforce the obligation of
a party to pay the instrument is subject to defenses of
the obligor stated in subsection (a)(1), but is not subject
to defenses of the obligor stated in subsection (a)(2)
or claims in recoupment stated in subsection (a)(3) against
a person other than the holder.
(c) Except as stated in subsection
(d), in an action to enforce the obligation of a party to pay the
instrument, the obligor may not assert against the person entitled
to enforce the instrument a defense, claim in recoupment, or claim
to the instrument (Section 3-306) of another person, but
the other person's claim to the instrument may be asserted by the
obligor if the other person is joined in the action and personally
asserts the claim against the person entitled to enforce the instrument.
An obligor is not obliged to pay the instrument if the person seeking
enforcement of the instrument does not have rights of a holder
in due course and the obligor proves that the instrument is a lost
or stolen instrument.
(d) In an action to enforce the
obligation of an accommodation party to pay an instrument, the
accommodation party may assert against the person entitled to enforce
the instrument any defense or claim in recoupment under subsection
(a) that the accommodated party could assert against the person
entitled to enforce the instrument, except the defenses of discharge
in insolvency proceedings, infancy, or lack of legal capacity.
(Source: P.A. 87-582; 87-1135.)
|
(810 ILCS 5/3-306) (from Ch. 26,
par. 3-306)
Sec. 3-306. Claims to an
instrument. A person taking an instrument, other than a person
having rights of a holder in due course, is subject to a claim
of a property or possessory right in the instrument or its
proceeds, including a claim to rescind a negotiation and to
recover the instrument or its proceeds. A person having rights
of a holder in due course takes free of the claim to the instrument.
(Source: P.A. 87-582.)
|
(810 ILCS 5/3-307) (from Ch. 26,
par. 3-307)
Sec. 3-307. Notice of breach
of fiduciary duty.
(a) In this Section:
(1) "Fiduciary" means
an agent, trustee, partner,
|
|
|
corporate officer or director, or other
representative owing a fiduciary duty with respect
to an instrument.
|
|
|
(2) "Represented
person" means the principal,
|
|
|
beneficiary, partnership, corporation,
or other person to whom the duty stated in paragraph
(1) is owed.
|
|
|
(b) If (i) an
instrument is taken from a fiduciary for payment or collection
or for value, (ii) the taker has knowledge of the fiduciary
status of the fiduciary, and (iii) the represented person
makes a claim to the instrument or its proceeds on the
basis that the transaction of the fiduciary is a breach
of fiduciary duty, the following rules apply:
(1) Notice
of breach of fiduciary duty by the
|
|
|
fiduciary is notice of the claim of
the represented person.
|
|
|
(2)
In the case of an instrument payable to the
|
|
|
represented person or the fiduciary,
as such, the taker has notice of the breach of
fiduciary duty if the instrument is (i) taken in
payment of or as security for a debt known by the
taker to be the personal debt of the fiduciary,
(ii) taken in a transaction known by the taker
to be for the personal benefit of the fiduciary,
or (iii) deposited to an account other than an
account of the fiduciary, as such, or an account
of the represented person.
|
|
|
(3)
If an instrument is issued by the represented
|
|
|
person or the fiduciary, as such, and
made payable to the fiduciary personally, the taker
does not have notice of the breach of fiduciary
duty unless the taker knows of the breach of fiduciary
duty.
|
|
|
(4)
If an instrument is issued by the represented
|
|
|
person or the fiduciary, as such, to
the taker as payee, the taker has notice of the
breach of fiduciary duty if the instrument is (i)
taken in payment of or as security for a debt known
by the taker to be the personal debt of the fiduciary,
(ii) taken in a transaction known by the taker
to be for the personal benefit of the fiduciary,
or (iii) deposited to an account other than an
account of the fiduciary, as such, or an account
of the represented person.
|
|
|
(Source: P.A. 87-582; 87-1135.)
|
(810 ILCS 5/3-308) (from Ch. 26,
par. 3-308)
Sec. 3-308. Proof of signatures
and status as holder in due course.
(a) In an action with respect to
an instrument, the authenticity of, and authority to make, each
signature on the instrument is admitted unless specifically denied
in the pleadings. If the validity of a signature is denied in
the pleadings, the burden of establishing validity is on the
person claiming validity, but the signature is presumed to be
authentic and authorized unless the action is to enforce the
liability of the purported signer and the signer is dead or incompetent
at the time of trial of the issue of validity of the signature.
If an action to enforce the instrument is brought against a person
as the undisclosed principal of a person who signed the instrument
as a party to the instrument, the plaintiff has the burden of
establishing that the defendant is liable on the instrument as
a represented person pursuant to Section 3-402(a).
(b) If the validity of signatures
is admitted or proved and there is compliance with subsection
(a), a plaintiff producing the instrument is entitled to payment
if the plaintiff proves entitlement to enforce the instrument
under Section 3-301, unless the defendant proves a defense
or claim in recoupment. If a defense or claim in recoupment is
proved, the right to payment of the plaintiff is subject to the
defense or claim, except to the extent the plaintiff proves that
the plaintiff has rights of a holder in due course which are
not subject to the defense or claim.
(Source: P.A. 87-582; 87-1135.)
|
(810 ILCS 5/3-309) (from Ch. 26,
par. 3-309)
Sec. 3-309. Enforcement of
lost, destroyed, or stolen instrument.
(a) A person not in possession
of an instrument is entitled to enforce the instrument if (i)
the person was in possession of the instrument and entitled to
enforce it when loss of possession occurred, (ii) the loss of
possession was not the result of a transfer by the person or
a lawful seizure, and (iii) the person cannot reasonably obtain
possession of the instrument because the instrument was destroyed,
its whereabouts cannot be determined, or it is in the wrongful
possession of an unknown person or a person that cannot be found
or is not amenable to service of process.
(b) A person seeking enforcement
of an instrument under subsection (a) must prove the terms of
the instrument and the person's right to enforce the instrument.
If that proof is made, Section 3-308 applies to the case
as if the person seeking enforcement had produced the instrument.
The court may not enter judgment in favor of the person seeking
enforcement unless it finds that the person required to pay the
instrument is adequately protected against loss that might occur
by reason of a claim by another person to enforce the instrument.
Adequate protection may be provided by any reasonable means.
(Source: P.A. 87-582; 87-1135.)
|
(810 ILCS 5/3-310) (from Ch. 26,
par. 3-310)
Sec. 3-310. Effect of instrument
on obligation for which taken.
(a) Unless otherwise agreed, if
a certified check, cashier's check, or teller'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 indorser 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'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.
(Source: P.A. 87-582; 87-1135.)
|
(810 ILCS 5/3-311) (from Ch.
| |
