SB358: Bill Text

10. Accord and satisfactions. This bill clarifies rules regarding the effect of communications accompanying a check to the effect that the check is offered as full payment for the claim and that obtaining payment of the check is an agreement by the claimant to a settlement of the dispute for the amount tendered. Generally, the bill follows the general common law rule. Except in certain specified situations, a claim is discharged if the person against whom the claim is asserted proves that the instrument or an accompanying written communication contained a conspicuous statement to the effect that the instrument was tendered as full satisfaction for the claim. Under the bill, the claim is not, however, discharged, if the claimant is an organization and proves that, within a reasonable time before tendering the instrument, the claimant sent a conspicuous statement to the person against whom the claim is asserted that communications concerning disputed debts are to be sent to a designated person, office or place, and that the instrument or accompanying communication was not received by that designated person, office or place. The bill also provides that a claim is not discharged if, within 90 days after payment of the instrument, the claimant tenders repayment of the amount of the instrument to the person against whom the claim is asserted.

11. Truncation agreements. This bill authorizes "truncation agreements", a concept not included in the existing article 4. A truncation agreement between a bank and a customer allows a bank to present an item for payment by "transmission of an image of an item or information describing the item (called a presentment notice) rather than by presenting the item itself. A related change made by the bill recognizes the practice of a bank providing a customer with an itemized statement of items credited to and debited against the customer's account in lieu of providing the actual item to the customer with the statement. Current law ties the customer's responsibility to report altered or forged items upon receipt of the items with the customer's statement. This bill allows a sufficiently detailed statement to constitute notification of altered or forged items and ties the customer's responsibility to report such items to the receipt of the statement, rather than the item. The bill requires a bank that does not provide the items to retain the items or legible copies for at least 7 years and must supply at least legible copies at the customer's request.

12. Direct suits for conversion of a negotiable instrument. This bill amends provisions in current article 3 in order to allow a person whose endorsement is forged to sue the depository bank directly. Under current law, the owner of the instrument is generally required to bring multiple actions against the various payor banks and to require those banks to assert warranty rights against the depository bank.

13. Warranties. Under current article 4, there are a number of warranties that customers and collecting banks make to a payor of an item and to a subsequent transferee or collecting bank. In addition to making some modifications to these warranties, this bill adds "encoding" and "retention" warranties. The encoding warranty is a warranty from a person who encodes information with respect to an item that the information is correctly encoded. The retention warranty refers to items that are presented pursuant to a truncation agreement and retain the original instrument while transmitting an image of it as presentation for payment.

For further information see the state and local fiscal estimate, which will be printed as an appendix to this bill.

The people of the state of Wisconsin, represented in senate and assembly, do enact as follows:

SB358, s. 1 Section 1. 401.201 (20) of the statutes is amended to read:

SB358,6,8 401.201 (20) "Holder", with respect to a negotiable instrument, means a the person who is in possession of a document of title or an instrument or a certificated investment security drawn, issued or endorsed to him or her or to his or her order or to bearer or in blank if the instrument is payable to bearer or, in the case of an instrument payable to an identified person, if the identified person is in possession. "Holder", with respect to a document of title, means the person in possession if the goods are deliverable to bearer or to the order of the person in possession.

SB358, s. 2 Section 2. 401.201 (24) of the statutes is amended to read:

SB358,6,13 401.201 (24) "Money" means a medium of exchange authorized or adopted by a domestic or foreign government as a part of its currency and includes a monetary unit of account established by an intergovernmental organization or by agreement between 2 or more nations.

SB358, s. 3 Section 3. 401.201 (43) of the statutes is amended to read:

SB358,6,16 401.201 (43) "Unauthorized" signature or indorsement means one made without actual, implied or apparent authority and includes a forgery.

SB358, s. 4 Section 4. 401.201 (44) (intro.) of the statutes is amended to read:

SB358,7,3 401.201 (44) (intro.) "Value". Except as otherwise provided with respect to negotiable instruments and bank collections (ss. 403.303, 404.208 and 404.209 404.210 and 404.211) a person gives "value" for rights if the person acquires them:

SB358, s. 5 Section 5. 401.207 of the statutes is renumbered 401.207 (1) and amended to read:

SB358,7,9 401.207 (1) A party who, with explicit reservation of rights, performs or promises performance or assents to performance in a manner demanded or offered by the other party does not thereby prejudice the rights reserved. Such words as "without prejudice", "under protest" or the like are sufficient.

SB358, s. 6 Section 6. 401.207 (2) of the statutes is created to read:

SB358,7,11 401.207 (2) Subsection (1) does not apply to an accord and satisfaction.

SB358, s. 7 Section 7. 402.103 (3) (e) of the statutes is amended to read:

SB358,7,13 402.103 (3) (e) "Dishonor" — s. 403.507 403.502.

SB358, s. 8 Section 8. 402.511 (3) of the statutes is amended to read:

SB358,7,17 402.511 (3) Subject to s. 403.802 403.310 on the effect of an instrument on an obligation, payment by check is conditional and is defeated as between the parties by dishonor of the check on due presentment.

SB358, s. 9 Section 9. Chapter 403 of the statutes is repealed and recreated to read:

SB358,7,21 Chapter 403 UNIFORM COMMERCIAL CODE — NEGOTIABLE INSTRUMENTS

SB358,7,24 SUBCHAPTER I GENERAL PROVISIONS AND DEFINITIONS

SB358,8,3 403.102 Subject matter. (1) This chapter applies to negotiable instruments. It does not apply to money, to payment orders governed by ch. 410 or to securities governed by ch. 408.

SB358,8,5 (2) If there is a conflict between this chapter and ch. 404 or 409, chs. 404 and 409 govern.

SB358,8,8 (3) Regulations of the board of governors of the federal reserve system and operating circulars of the federal reserve banks supersede any inconsistent provision of this chapter to the extent of the inconsistency.

SB358,8,9 403.103 Definitions. (1) In this chapter:

SB358,8,10 (a) "Acceptor" means a drawee who has accepted a draft.

SB358,8,11 (b) "Drawee" means a person ordered in a draft to make payment.

SB358,8,13 (c) "Drawer" means a person who signs or is identified in a draft as a person ordering payment.

SB358,8,15 (d) "Good faith" means honesty in fact and the observance of reasonable commercial standards of fair dealing.

SB358,8,17 (e) "Maker" means a person who signs or is identified in a note as a person undertaking to pay.

SB358,8,22 (f) "Order" means a written instruction to pay money signed by the person giving the instruction. The instruction may be addressed to any person, including the person giving the instruction, or to one or more persons jointly or in the alternative but not in succession. An authorization to pay is not an order unless the person authorized to pay is also instructed to pay.

SB358,9,5 (g) "Ordinary care" in the case of a person engaged in business means observance of reasonable commercial standards, prevailing in the area in which the person is located, with respect to the business in which the person is engaged. In the case of a bank that takes an instrument for processing for collection or payment by automated means, reasonable commercial standards do not require the bank to examine the instrument if the failure to examine does not violate the bank's prescribed procedures and the bank's procedures do not vary unreasonably from general banking usage not disapproved by this chapter or ch. 404.

SB358,9,6 (h) "Party" means a party to an instrument.

SB358,9,9 (i) "Promise" means a written undertaking to pay money signed by the person undertaking to pay. An acknowledgment of an obligation by the obligor is not a promise unless the obligor also undertakes to pay the obligation.

SB358,9,11 (j) "Prove" with respect to a fact means to meet the burden of establishing a fact, as defined in s. 401.201 (8).

SB358,9,13 (k) "Remitter" means a person who purchases an instrument from its issuer if the instrument is payable to an identified person other than the purchaser.

SB358,9,15 (2) Other definitions applying to this chapter and the sections in which they appear are:

SB358,9,16 (ae) "Acceptance" — s. 403.409 (1).

SB358,9,17 (am) "Accommodated party" — s. 403.419 (1).

SB358,9,18 (as) "Accommodation party" — s. 403.419 (1).

SB358,9,19 (b) "Alteration" — s. 403.407 (1).

SB358,9,20 (c) "Anomalous endorsement" — s. 403.205 (4).

SB358,9,21 (d) "Blank endorsement" — s. 403.205 (2).

SB358,9,22 (e) "Cashier's check" — s. 403.104 (7).

SB358,9,23 (fg) "Certificate of deposit" — s. 403.104 (10).

SB358,9,24 (fr) "Certified check" — s. 403.409 (4).

SB358,9,25 (g) "Check" — s. 403.104 (6).

SB358,10,1 (h) "Consideration" — s. 403.303 (2).

SB358,10,2 (i) "Draft" — s. 403.104 (5).

SB358,10,3 (jg) "Endorsement" — s. 403.204 (1).

SB358,10,4 (jr) "Endorser" — s. 403.204 (2).

SB358,10,5 (k) "Holder in due course" — s. 403.302 (1).

SB358,10,6 (L) "Incomplete instrument" — s. 403.115 (1).

SB358,10,7 (m) "Instrument" — s. 403.104 (2).

SB358,10,8 (ng) "Issue" — s. 403.105 (1).

SB358,10,9 (nr) "Issuer" — s. 403.105 (3).

SB358,10,10 (og) "Negotiable instrument" — s. 403.104 (1).

SB358,10,11 (or) "Negotiation" — s. 403.201 (1).

SB358,10,12 (p) "Note" — s. 403.104 (5).

SB358,10,13 (qd) "Payable at a definite time" — s. 403.108 (2).

SB358,10,14 (qh) "Payable on demand" — s. 403.108 (1).

SB358,10,15 (qp) "Payable to bearer" — s. 403.109 (1).

SB358,10,16 (qt) "Payable to order" — s. 403.109 (2).

SB358,10,17 (r) "Payment" — s. 403.602 (1).

SB358,10,18 (s) "Person entitled to enforce" — s. 403.301.

SB358,10,19 (t) "Presentment" — s. 403.501 (1).

SB358,10,20 (u) "Reacquisition" — s. 403.207.

SB358,10,21 (v) "Special endorsement" — s. 403.205 (1).

SB358,10,22 (w) "Teller's check" — s. 403.104 (8).

SB358,10,23 (xg) "Transfer of instrument" — s. 403.203 (1).

SB358,10,24 (xr) "Traveler's check" — s. 403.104 (9).

SB358,10,25 (y) "Value" — s. 403.303 (1).

SB358,11,1 (3) The following definitions in other chapters apply to this chapter:

SB358,11,2 (a) "Bank" — s. 404.105 (1).

SB358,11,3 (b) "Banking day" — s. 404.104 (1) (c).

SB358,11,4 (c) "Clearinghouse" — s. 404.104 (1) (d).

SB358,11,5 (d) "Collecting bank" — s. 404.105 (2).

SB358,11,6 (e) "Depositary bank" — s. 404.105 (3).

SB358,11,7 (f) "Documentary draft" — s. 404.104 (1) (f).

SB358,11,8 (g) "Intermediary bank" — s. 404.105 (4).

SB358,11,9 (h) "Item" — s. 404.104 (1) (i).

SB358,11,10 (i) "Payer bank" — s. 404.105 (5).

SB358,11,11 (j) "Suspends payments" — s. 404.104 (1) (L).

SB358,11,13 (4) In addition, ch. 401 contains general definitions and principles of construction and interpretation applicable throughout this chapter.