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Arkansas Code Annotated

Ark. Code Ann. § 4-3-310 (2020)

Effect of instrument on obligation for which taken

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  1. 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.
  2. 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.
  3. 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. Acts 1991, No. 572, § 5.

Case Notes

In General.

This section does no more than recognize the uncertainty attendant upon an uncertified and unpaid check and suspends the obligation until that uncertainty is resolved. France v. Ford Motor Credit Co., 323 Ark. 167, 913 S.W.2d 770 (1996).

Effect of Transfer.

Under subdivision (b)(3), an obligee may enforce either the note or the debt; however, when the note is transferred to a third party the only right that survives is the right to enforce the note. McKay v. Capital Resources Co., 327 Ark. 737, 940 S.W.2d 869 (1997).

Notes of Decisions
Cited in 3 cases (1 in the last 5 years), 1996–2022 · leading case: France v. Ford Motor Credit Co., 913 S.W.2d 770 (Ark. 1996).
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France v. Ford Motor Credit Co., 913 S.W.2d 770 (Ark. 1996). · cites it 5× “France claimed, and argues on appeal, that the obligation was “suspended” according to Ark. Code Ann. § 4-3-310 (Repl. 1991) and, therefore, Ford Credit was not entitled to replevin.”
McKay v. Capital Resources Co., 940 S.W.2d 869 (Ark. 1997). · cites it 2× “Under § 4-3-310(b)(3), an obligee may enforce either the note or the debt.”
Indiana Harbor Belt R.R. Co. v. United Rail Serv., Inc., No. 2:17-cv-00287 (N.D. Ind. Feb. 23, 2022). “§ 4-3-310 ; Ark. Code Ann. § 4-3-310 ; see also DiMaggio v.”
Ark. Code Ann. § 4-3-310(b)(3): 1 case
McKay v. Capital Resources Co., 940 S.W.2d 869 (Ark. 1997). “Under § 4-3-310(b)(3), an obligee may enforce either the note or the debt.”
Ark. Code Ann. § 4-3-310(b)(4): 1 case
McKay v. Capital Resources Co., 940 S.W.2d 869 (Ark. 1997). “Under § 4-3-310(b)(3), an obligee may enforce either the note or the debt.”
Ark. Code Ann. § 4-3-310(b)(l): 1 case
France v. Ford Motor Credit Co., 913 S.W.2d 770 (Ark. 1996). “France claimed, and argues on appeal, that the obligation was “suspended” according to Ark. Code Ann. § 4-3-310 (Repl. 1991) and, therefore, Ford Credit was not entitled to replevin.”
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