1995 Wisconsin Act 449

(a) If the draft is payable on demand, the draft is dishonored if presentment for payment is duly made to the acceptor and the draft is not paid on the day of presentment.

(b) If the draft is not payable on demand, the draft is dishonored if presentment for payment is duly made to the acceptor and payment is not made on the day on which it becomes payable or the day of presentment, whichever is later.

(5) In any case in which presentment is otherwise required for dishonor under this section and presentment is excused under s. 403.504, dishonor occurs without presentment if the instrument is not duly accepted or paid.

(6) If a draft is dishonored because timely acceptance of the draft was not made and the person entitled to demand acceptance consents to a late acceptance, from the time of acceptance the draft is treated as never having been dishonored.

403.503 Notice of dishonor. (1) The obligation of an endorser stated in s. 403.415 (1) and the obligation of a drawer stated in s. 403.414 (4) may not be enforced unless the endorser or drawer is given notice of dishonor of the instrument complying with this section or notice of dishonor is excused under s. 403.504 (2).

(2) 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.

(3) Subject to s. 403.504 (3), with respect to an instrument taken for collection by a collecting bank, notice of dishonor shall be given 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 by any other person within 30 days following the day on which the person receives notice of dishonor. With respect to any other instrument, notice of dishonor shall be given within 30 days following the day on which dishonor occurs.

403.504 Excused presentment and notice of dishonor. (1) Presentment for payment or acceptance of an instrument is excused if any of the following conditions exists:

(a) The person entitled to present the instrument cannot with reasonable diligence make presentment.

(b) The maker or acceptor has repudiated an obligation to pay the instrument or is dead or in insolvency proceedings.

(c) By the terms of the instrument, presentment is not necessary to enforce the obligation of endorsers or the drawer.

(d) The drawer or endorser whose obligation is being enforced has waived presentment or otherwise has no reason to expect or right to require that the instrument be paid or accepted.

(e) The drawer instructed the drawee not to pay or accept the draft or the drawee was not obligated to the drawer to pay the draft.

(2) Notice of dishonor is excused if, by the terms of the instrument, notice of dishonor is not necessary to enforce the obligation of a party to pay the instrument or if the party whose obligation is being enforced waived notice of dishonor. A waiver of presentment is also a waiver of notice of dishonor.

(3) Delay in giving notice of dishonor is excused if the delay was caused by circumstances beyond the control of the person giving the notice and the person giving the notice exercised reasonable diligence after the cause of the delay ceased to operate.

403.505 Evidence of dishonor. (1) The following are admissible as evidence and create a presumption of dishonor and of any notice of dishonor stated:

(a) A document regular in form as provided in sub. (2) which purports to be a protest.

(b) A purported stamp or writing of the drawee, payer bank or presenting bank on or accompanying the instrument stating that acceptance or payment has been refused unless reasons for the refusal are stated and the reasons are not consistent with dishonor.

(c) A book or record of the drawee, payer bank or collecting bank kept in the usual course of business which shows dishonor, even if there is no evidence of who made the entry.

(2) A protest is a certificate of dishonor made by a U.S. consul or vice consul, or a notary public or other person authorized to administer oaths by the law of the place where dishonor occurs. A protest may be made upon information satisfactory to that person. The protest shall identify the instrument and certify either that presentment has been made or, if not made, the reason why it was not made, and that the instrument has been dishonored by nonacceptance or nonpayment. The protest may also certify that notice of dishonor has been given to some or all parties.

Subchapter VI
Discharge and payment

403.601 Discharge and effect of discharge. (1) The obligation of a party to pay the instrument is discharged as stated in this chapter or by an act or agreement with the party which would discharge an obligation to pay money under a simple contract.

(2) Discharge of the obligation of a party is not effective against a person acquiring rights of a holder in due course of the instrument without notice of the discharge.

403.602 Payment. (1) Subject to sub. (2), an instrument is paid to the extent that payment is made by or on behalf of a party obliged to pay the instrument and to a person entitled to enforce the instrument. To the extent of the payment, the obligation of the party obliged to pay the instrument is discharged even though payment is made with knowledge of a claim to the instrument under s. 403.306 by another person.

(2) The obligation of a party to pay the instrument is not discharged under sub. (1) if any of the following applies:

(a) A claim to the instrument under s. 403.306 is enforceable against the party receiving payment and payment is made with knowledge by the payer that payment is prohibited by injunction or similar process of a court of competent jurisdiction, or, in the case of an instrument other than a cashier's check, teller's check or certified check, the party making payment accepted, from the person having a claim to the instrument, indemnity against loss resulting from refusal to pay the person entitled to enforce the instrument.

(b) The person making payment knows that the instrument is a stolen instrument and pays a person with knowledge that the person is in wrongful possession of the instrument.

403.603 Tender of payment. (1) If tender of payment of an obligation to pay an instrument is made to a person entitled to enforce the instrument, the effect of tender is governed by principles of law applicable to tender of payment under a simple contract.

(2) If tender of payment of an obligation to pay an instrument is made to a person entitled to enforce the instrument and the tender is refused, there is discharge, to the extent of the amount of the tender, of the obligation of an endorser or accommodation party having a right of recourse with respect to the obligation to which the tender relates.

(3) If tender of payment of an amount due on an instrument is made to a person entitled to enforce the instrument, the obligation of the obligor to pay interest after the due date on the amount tendered is discharged. If presentment is required with respect to an instrument and the obligor is able and ready to pay on the due date at every place of payment stated in the instrument, the obligor is considered to have made tender of payment on the due date to the person entitled to enforce the instrument.

403.604 Discharge by cancellation or renunciation. (1) A person entitled to enforce an instrument, with or without consideration, may discharge the obligation of a party to pay the instrument by doing any of the following:

(a) An intentional voluntary act, such as surrender of the instrument to the party, destruction, mutilation or cancellation of the instrument, cancellation or striking out of the party's signature or the addition of words to the instrument indicating discharge.

(b) Agreeing not to sue or otherwise renouncing rights against the party by a signed writing.

(2) Cancellation or striking out of an endorsement pursuant to sub. (1) (a) does not affect the status and rights of a party derived from the endorsement.

403.605 Discharge of endorsers and accommodation parties. (1) In this section, “endorser" includes a drawer having the obligation described in s. 403.414 (4).

(2) Discharge, under s. 403.604, of the obligation of a party to pay an instrument does not discharge the obligation of an endorser or accommodation party having a right of recourse against the discharged party.

(3) If a person entitled to enforce an instrument agrees, with or without consideration, to an extension of the due date of the obligation of a party to pay the instrument, the extension discharges an endorser or accommodation party having a right of recourse against the party whose obligation is extended to the extent that the endorser or accommodation party proves that the extension caused loss to the endorser or accommodation party with respect to the right of recourse.

(4) If a person entitled to enforce an instrument agrees, with or without consideration, to a material modification of the obligation of a party other than an extension of the due date, the modification discharges the obligation of an endorser or accommodation party having a right of recourse against the person whose obligation is modified to the extent that the modification causes loss to the endorser or accommodation party with respect to the right of recourse. The loss suffered by the endorser or accommodation party as a result of the modification is equal to the amount of the right of recourse unless the person enforcing the instrument proves that no loss was caused by the modification or that the loss caused by the modification was an amount less than the amount of the right of recourse.

(5) If the obligation of a party to pay an instrument is secured by an interest in collateral and a person entitled to enforce the instrument impairs the value of the interest in collateral, the obligation of an endorser or accommodation party having a right of recourse against the obligor is discharged to the extent of the impairment. The value of an interest in collateral is impaired to the extent that the value of the interest is reduced to an amount less than the amount of the right of recourse of the party asserting discharge, or to the extent that the reduction in value of the interest causes an increase in the amount by which the amount of the right of recourse exceeds the value of the interest. The burden of proving impairment is on the party asserting discharge.

(6) If the obligation of a party is secured by an interest in collateral not provided by an accommodation party and a person entitled to enforce the instrument impairs the value of the interest in collateral, the obligation of any party who is jointly and severally liable with respect to the secured obligation is discharged to the extent that the impairment causes the party asserting discharge to pay more than that party would have been obliged to pay, taking into account rights of contribution, if impairment had not occurred. If the party asserting discharge is an accommodation party not entitled to discharge under sub. (5), the party is considered to have a right to contribution based on joint and several liability rather than a right to reimbursement. The burden of proving impairment is on the party asserting discharge.

(7) Under sub. (5) or (6), impairing value of an interest in collateral includes all of the following:

(a) Failure to obtain or maintain perfection or recordation of the interest in collateral.

(b) Release of collateral without substitution of collateral of equal value.

(c) Failure to perform a duty to preserve the value of collateral owed, under ch. 409 or other law, to a debtor or surety or other person secondarily liable.

(d) Failure to comply with applicable law in disposing of collateral.

(8) An accommodation party is not discharged under sub. (3), (4) or (5) unless the person entitled to enforce the instrument knows of the accommodation or has notice under s. 403.419 (3) that the instrument was signed for accommodation.

(9) A party is not discharged under this section if the party asserting discharge consents to the event or conduct that is the basis of the discharge or if the instrument or a separate agreement of the party provides for waiver of discharge under this section either specifically or by general language indicating that parties waive defenses based on suretyship or impairment of collateral.

449,10 Section 10 . The unnumbered subchapter title preceding 404.101 of the statutes is renumbered subchapter I (title) of chapter 404.

449,11 Section 11 . 404.101 of the statutes is repealed.

449,12 Section 12 . 404.102 of the statutes is amended to read:

404.102 Applicability. (1) To the extent that items within this chapter are also within the scope of chs. 403 and 408, they are subject to the provisions of those chapters. In the event of If there is conflict the provisions of, this chapter govern those of governs ch. 403, but the provisions of ch. 408 govern those of governs this chapter.

(2) The liability of a bank for action or nonaction with respect to any an item handled by it for purposes of presentment, payment or collection is governed by the law of the place where the bank is located. In the case of action or nonaction by or at a branch or separate office of a bank, its liability is governed by the law of the place where the branch or separate office is located.

449,13 Section 13 . 404.103 of the statutes is amended to read:

404.103 (title) Variation by agreement; measure of damages; certain action constituting ordinary care. (1) The effect of the provisions of this chapter may be varied by agreement except that no agreement can, but the parties to the agreement cannot disclaim a bank's responsibility for its own lack of good faith or failure to exercise ordinary care or can limit the measure of damages for such the lack or failure ; but. However, the parties may determine by agreement determine the standards by which such the bank's responsibility is to be measured if such those standards are not manifestly unreasonable.

(2) Federal reserve regulations and operating letters circulars, clearinghouse rules, and the like, have the effect of agreements under sub. (1), whether or not specifically assented to by all parties interested in items handled.

(3) Action or nonaction approved by this chapter or pursuant to federal reserve regulations or operating letters constitutes circulars is the exercise of ordinary care and, in the absence of special instructions, action or nonaction consistent with clearinghouse rules and the like or with a general banking usage not disapproved by this chapter, is prima facie constitutes the exercise of ordinary care.

(4) The specification or approval of certain procedures by this chapter does not constitute is not disapproval of other procedures which that may be reasonable under the circumstances.

(5) The measure of damages for failure to exercise ordinary care in handling an item is the amount of the item reduced by an amount which that could not have been realized by the use exercise of ordinary care, and where. If there is also bad faith it includes any other damages, if any, suffered by the party suffered as a proximate consequence.

449,14 Section 14 . 404.104 (1) (intro.) and (a) to (f) of the statutes are amended to read:

404.104 (1) (intro.) In this chapter, unless the context otherwise requires:

(a) “Account" means any deposit or credit account with a bank and includes a checking, time, interest or savings account;, including a demand, time, savings, passbook, share draft or like account, other than an account evidenced by a certificate of deposit.

(b) “Afternoon" means the period of a day between noon and midnight;.

(c) “Banking day" means that the part of any a day on which a bank is open to the public for carrying on substantially all of its banking functions;.

(d) “Clearinghouse" means any an association of banks or other payors payers regularly clearing items;.

(e) “Customer" means any a person having an account with a bank or for whom a bank has agreed to collect items and includes, including a bank carrying that maintains an account with at another bank;.

(f) “Documentary draft" means any negotiable or nonnegotiable draft with accompanying documents, securities or other papers to be delivered against honor of the draft; a draft to be presented for acceptance or payment if specified documents, certificated securities or instructions for uncertificated securities, or other certificates, statements or the like are to be received by the drawee or other payer before acceptance or payment of the draft.

449,15 Section 15 . 404.104 (1) (g), (h) and (j) of the statutes are renumbered 404.104 (1) (i), (j) and (k) and amended to read:

404.104 (1) (i) “Item" means any an instrument for the payment of money even though it is not negotiable but does not include money; or a promise or order to pay money handled by a bank for collection or payment. “Item" does not include a payment order governed by ch. 410 or a credit or debit card slip.

(j) “Midnight deadline" with respect to a bank is midnight on its next banking day following the banking day on which it receives the relevant item or notice or from which the time for taking action commences to run, whichever is later;.

(k) “Settle" means to pay in cash, by clearinghouse settlement, in a charge or credit or by remittance, or otherwise as instructed agreed. A settlement may be either provisional or final;.

449,16 Section 16 . 404.104 (1) (g) and (h) of the statutes are created to read:

404.104 (1) (g) “Draft" means a draft as defined in s. 403.104 (5), or an item, other than an instrument, that is an order.

(h) “Drawee" means a person ordered in a draft to make a payment.

449,17 Section 17 . 404.104 (1) (i) of the statutes is repealed.

449,18 Section 18 . 404.104 (1) (k) of the statutes is renumbered 404.104 (1) (L).

449,19 Section 19 . 404.104 (2) (a) to (e) of the statutes are renumbered 404.104 (2) (c) to (g), and 404.104 (2) (f), as renumbered, is amended to read:

404.104 (2) (f) “Payor “ Payer bank" — s. 404.105.

449,20 Section 20 . 404.104 (2) (a), (b) and (h) of the statutes are created to read:

404.104 (2) (a) “Agreement for electronic presentment" — s. 404.110 (1).

(b) “Bank" — s. 404.105 (1).

(h) “Presentment notice" — s. 404.110 (1).

449,21 Section 21 . 404.104 (2) (f) of the statutes is repealed.

449,22 Section 22 . 404.104 (3) (a) of the statutes is amended to read:

404.104 (3) (a) “Acceptance" — s. 403.410 403.409 (1).

449,23 Section 23 . 404.104 (3) (b), (d), (f), (g) and (h) of the statutes are renumbered 404.104 (3) (d), (f), (h), (j) and (n), and 404.104 (3) (j) and (n), as renumbered, are amended to read:

404.104 (3) (j) “Notice of dishonor" — s. 403.508 403.503.

(n) “Presentment" — s. 403.504 403.501 (1).

449,24 Section 24 . 404.104 (3) (b), (c), (e), (g), (i), (k) to (m) and (p) to (s) of the statutes are created to read:

404.104 (3) (b) “Alteration" — s. 403.407 (1).