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Document Type

Peach Sheet

Abstract

The Act amends the entirety of those provisions of the Code regarding commercial paper, namely negotiable instruments and bank deposits and collections. The Act largely adopts Uniform Commercial Code Articles 3 and 4. The purpose of the Act is to keep regulations current with technology and business practices and to accommodate efficient payment processing. In its revisions to Article 3, the Act clarifies the requirements for "holder in due course" status, expands the provisions governing the discharge of an obligation, reconciles the law regarding liability for signatures on instruments to conform with general agency law, and provides a comparative negligence standard for liability for fraudulent indorsements. The Act also revises the provisions regarding transfer and presentment warranties, reconciles a split in authority regarding conversion of instruments, and clarifies the suretyship defenses. The Act also makes several changes to Article 4 to reflect the increasing automation of the banking industry.

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