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https://law.justia.com/codes/alabama/title-7/article-2a/part-5/division-a/section-7-2a-501/
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Justia›US Law›US Codes and Statutes›Code of Alabama›2023 Code of Alabama›Title 7 - Commercial Code.›Article 2A - Leases.›Part 5 - Default.›Division A - In General.›Section 7-2A-501 - Default: Procedure.
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2023 Code of Alabama › Title 7 - Commercial Code. › Article 2A - Leases. › Part 5 - Default. › Division A - In General. › Section 7-2A-501 - Default: Procedure.
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Section 7-2A-501
Default: Procedure.
(1) Whether the lessor or the lessee is in default under a lease contract is determined by the lease agreement and this article.
(2) If the lessor or the lessee is in default under the lease contract, the party seeking enforcement has rights and remedies as provided in this article and, except as limited by this article, as provided in the lease agreement.
(3) If the lessor or the lessee is in default under the lease contract, the party seeking enforcement may reduce the party's claim to judgment, or otherwise enforce the lease contract by self-help or any available judicial procedure or nonjudicial procedure, including administrative proceeding, arbitration, or the like, in accordance with this article.
(4) Except as otherwise provided in Section 7-1-305(a), or this article or the lease agreement, the rights and remedies referred to in subsections (2) and (3) are cumulative.
(5) If the lease agreement covers both real property and goods, the party seeking enforcement may proceed under this part as to the goods, or under other applicable law as to both the real property and the goods in accordance with that party's rights and remedies in respect of the real property, in which case this part does not apply.
(Acts 1992, 2nd Ex. Sess., No. 92-700, p. 92, §501; Act 2004-524, p. 1070, §2.)
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https://law.justia.com/codes/alabama/title-7/article-2a/part-5/division-a/section-7-2a-502/
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Justia›US Law›US Codes and Statutes›Code of Alabama›2023 Code of Alabama›Title 7 - Commercial Code.›Article 2A - Leases.›Part 5 - Default.›Division A - In General.›Section 7-2A-502 - Notice After Default.
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2023 Code of Alabama › Title 7 - Commercial Code. › Article 2A - Leases. › Part 5 - Default. › Division A - In General. › Section 7-2A-502 - Notice After Default.
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Section 7-2A-502
Notice after default.
Except as otherwise provided in this article or the lease agreement, the lessor or lessee in default under the lease contract is not entitled to notice of default or notice of enforcement from the other party to the lease agreement.
(Acts 1992, 2nd Ex. Sess., No. 92-700, p. 92, §502.)
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https://law.justia.com/codes/alabama/title-7/article-2a/part-5/division-a/section-7-2a-503/
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Justia›US Law›US Codes and Statutes›Code of Alabama›2023 Code of Alabama›Title 7 - Commercial Code.›Article 2A - Leases.›Part 5 - Default.›Division A - In General.›Section 7-2A-503 - Modification or Impairment of Rights and Remedies.
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2023 Code of Alabama › Title 7 - Commercial Code. › Article 2A - Leases. › Part 5 - Default. › Division A - In General. › Section 7-2A-503 - Modification or Impairment of Rights and Remedies.
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Section 7-2A-503
Modification or impairment of rights and remedies.
(1) Except as otherwise provided in this article, the lease agreement may include rights and remedies for default in addition to or in substitution for those provided in this article and may limit or alter the measure of damages recoverable under this article.
(2) Resort to a remedy provided under this article or in the lease agreement is optional unless the remedy is expressly agreed to be exclusive. If circumstances cause an exclusive or limited remedy to fail of its essential purpose, or provision for an exclusive remedy is unconscionable, remedy may be had as provided in this article.
(3) Consequential damages may be liquidated under Section 7-2A-504, or may otherwise be limited, altered, or excluded unless the limitation, alteration, or exclusion is unconscionable. Limitation, alteration, or exclusion of consequential damages for injury to the person in the case of consumer goods is prima facie unconscionable but limitation, alteration, or exclusion of damages where the loss is commercial is not prima facie unconscionable.
(4) Rights and remedies on default by the lessor or the lessee with respect to any obligation or promise collateral or ancillary to the lease contract are not impaired by this article.
(5) Nothing in this section or in Section 7-2A-504 shall be construed so as to limit or expand the lessor's liability for damages for injury to the person in the case of consumer goods.
(Acts 1992, 2nd Ex. Sess., No. 92-700, p. 92, §503.)
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https://law.justia.com/codes/alabama/title-7/article-2a/part-5/division-a/section-7-2a-504/
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Justia›US Law›US Codes and Statutes›Code of Alabama›2023 Code of Alabama›Title 7 - Commercial Code.›Article 2A - Leases.›Part 5 - Default.›Division A - In General.›Section 7-2A-504 - Liquidation of Damages.
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2023 Code of Alabama › Title 7 - Commercial Code. › Article 2A - Leases. › Part 5 - Default. › Division A - In General. › Section 7-2A-504 - Liquidation of Damages.
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Section 7-2A-504
Liquidation of damages.
(1) Damages payable by either party for default, or any other act or omission, including indemnity for loss or diminution of anticipated tax benefits or loss or damage to lessor's residual interest, may be liquidated in the lease agreement but only at an amount or by a formula that is reasonable in light of the then anticipated harm caused by the default or other act or omission.
(2) If the lease agreement provides for liquidation of damages, and such provision does not comply with subsection (1), or such provision is an exclusive or limited remedy that circumstances cause to fail of its essential purpose, remedy may be had as provided in this article.
(3) If the lessor justifiably withholds or stops delivery of goods because of the lessee's default or insolvency (Section 7-2A-525 or 7-2A-526), the lessee is entitled to restitution of any amount by which the sum of his or her payments exceeds:
(a) the amount to which the lessor is entitled by virtue of terms liquidating the lessor's damages in accordance with subsection (1); or
(b) in the absence of those terms, 20 percent of the then present value of the total rent the lessee was obligated to pay for the balance of the lease term, or, in the case of a consumer lease, the lesser of such amount or $500.
(4) A lessee's right to restitution under subsection (3) is subject to offset to the extent the lessor establishes:
(a) a right to recover damages under the provisions of this article other than subsection (1); and
(b) the amount or value of any benefits received by the lessee directly or indirectly by reason of the lease contract.
(Acts 1992, 2nd Ex. Sess., No. 92-700, p. 92, §504.)
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https://law.justia.com/codes/alabama/title-7/article-2a/part-5/division-a/section-7-2a-505/
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Justia›US Law›US Codes and Statutes›Code of Alabama›2023 Code of Alabama›Title 7 - Commercial Code.›Article 2A - Leases.›Part 5 - Default.›Division A - In General.›Section 7-2A-505 - Cancellation and Termination and Effect of Cancellation, Termination, Rescission,...
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2023 Code of Alabama › Title 7 - Commercial Code. › Article 2A - Leases. › Part 5 - Default. › Division A - In General. › Section 7-2A-505 - Cancellation and Termination and Effect of Cancellation, Termination, Rescission, or Fraud on Rights and Remedies.
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Section 7-2A-505
Cancellation and termination and effect of cancellation, termination, rescission, or fraud on rights and remedies.
(1) On cancellation of the lease contract, all obligations that are still executory on both sides are discharged, but any right based on prior default or performance survives, and the cancelling party also retains any remedy for default of the whole lease contract or any unperformed balance.
(2) On termination of the lease contract, all obligations that are still executory on both sides are discharged but any right based on prior default or performance survives.
(3) Unless the contrary intention clearly appears, expressions of "cancellation," "rescission," or the like of the lease contract may not be construed as a renunciation or discharge of any claim in damages for an antecedent default.
(4) Rights and remedies for material misrepresentation or fraud include all rights and remedies available under this article for default.
(5) Neither rescission nor a claim for rescission of the lease contract nor rejection or return of the goods may bar or be deemed inconsistent with a claim for damages or other right or remedy.
(Acts 1992, 2nd Ex. Sess., No. 92-700, p. 92, §505.)
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https://law.justia.com/codes/alabama/title-7/article-2a/part-5/division-a/section-7-2a-506/
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Justia›US Law›US Codes and Statutes›Code of Alabama›2023 Code of Alabama›Title 7 - Commercial Code.›Article 2A - Leases.›Part 5 - Default.›Division A - In General.›Section 7-2A-506 - Statute of Limitations.
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2023 Code of Alabama › Title 7 - Commercial Code. › Article 2A - Leases. › Part 5 - Default. › Division A - In General. › Section 7-2A-506 - Statute of Limitations.
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Section 7-2A-506
Statute of limitations.
(1) An action for default under a lease contract, including breach of warranty or indemnity, must be commenced within 4 years after the cause of action accrued. By the original lease contract the parties may reduce the period of limitation to not less than one year.
(2) A cause of action for default accrues when the act or omission on which the default or breach of warranty is based is or should have been discovered by the aggrieved party, or when the default occurs, whichever is later. A cause of action for indemnity accrues (a) in the case of an indemnity against liability, when the act or omission on which the claim for indemnity is based is or should have been discovered by the indemnified party, or when the default occurs, whichever is later, (b) in the case of an indemnity against loss or damage, when the person indemnified makes payment thereof. A cause of action for damages for injury to the person in the case of consumer goods accrues when the injury occurs.
(3) If an action commenced within the time limited by subsection (1) is so terminated as to leave available a remedy by another action for the same default or breach of warranty or indemnity, the other action may be commenced after the expiration of the time limited and within 6 months after the termination of the first action unless the termination resulted from voluntary discontinuance or from dismissal for failure or neglect to prosecute.
(4) This section does not alter the law on tolling of the statute of limitations nor does it apply to causes of action that have accrued before this article becomes effective.
(Acts 1992, 2nd Ex. Sess., No. 92-700, p. 92, §506.)
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https://law.justia.com/codes/alabama/title-7/article-2a/part-5/division-a/section-7-2a-507/
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Justia›US Law›US Codes and Statutes›Code of Alabama›2023 Code of Alabama›Title 7 - Commercial Code.›Article 2A - Leases.›Part 5 - Default.›Division A - In General.›Section 7-2A-507 - Proof of Market Rent: Time and Place.
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2023 Code of Alabama › Title 7 - Commercial Code. › Article 2A - Leases. › Part 5 - Default. › Division A - In General. › Section 7-2A-507 - Proof of Market Rent: Time and Place.
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Section 7-2A-507
Proof of market rent: Time and place.
(1) Damages based on market rent (Section 7-2A-519 or 7-2A-528) are determined according to the rent for the use of the goods concerned for a lease term identical to the remaining lease term of the original lease agreement and prevailing at the times specified in Sections 7-2A-519 and 7-2A-528.
(2) If evidence of rent for the use of the goods concerned for a lease term identical to the remaining lease term of the original lease agreement and prevailing at the times or places described in this article is not readily available, the rent prevailing within any reasonable time before or after the time described or at any other place or for a different lease term which in commercial judgment or under usage of trade would serve as a reasonable substitute for the one described may be used, making any proper allowance for the difference, including the cost of transporting the goods to or from the other place.
(3) Evidence of a relevant rent prevailing at a time or place or for a lease term other than the one described in this article offered by one party is not admissible unless and until he or she has given the other party notice the court finds sufficient to prevent unfair surprise.
(4) If the prevailing rent or value of any goods regularly leased in any established market is in issue, reports in official publications or trade journals or in newspapers or periodicals of general circulation published as the reports of that market are admissible in evidence. The circumstances of the preparation of the report may be shown to affect its weight but not its admissibility.
(Acts 1992, 2nd Ex. Sess., No. 92-700, p. 92, §507.)
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https://law.justia.com/codes/alabama/title-7/article-2a/part-5/division-b/section-7-2a-508/
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Justia›US Law›US Codes and Statutes›Code of Alabama›2023 Code of Alabama›Title 7 - Commercial Code.›Article 2A - Leases.›Part 5 - Default.›Division B - Default by Lessor.›Section 7-2A-508 - Lessee's Remedies.
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2023 Code of Alabama › Title 7 - Commercial Code. › Article 2A - Leases. › Part 5 - Default. › Division B - Default by Lessor. › Section 7-2A-508 - Lessee's Remedies.
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Section 7-2A-508
Lessee's remedies.
(1) If a lessor fails to deliver the goods in conformity to the lease contract (Section 7-2A-509) or repudiates the lease contract (Section 7-2A-402), or a lessee rightfully rejects the goods (Section 7-2A-509) or justifiably revokes acceptance of the goods (Section 7-2A-517), then with respect to any goods involved, and with respect to all of the goods if under an installment lease contract the value of the whole lease contract is substantially impaired (Section 7-2A-510), the lessor is in default under the lease contract and the lessee may:
(a) cancel the lease contract (Section 7-2A-505(1));
(b) recover so much of the rent and security as has been paid and is just under the circumstances;
(c) cover and recover damages as to all goods affected whether or not they have been identified to the lease contract (Sections 7-2A-518 and 7-2A-520), or recover damages for nondelivery (Sections 7-2A-519 and 7-2A-520);
(d) exercise any other rights or pursue any other remedies provided in the lease contract.
(2) If a lessor fails to deliver the goods in conformity to the lease contract or repudiates the lease contract, the lessee may also:
(a) if the goods have been identified, recover them (Section 7-2A-522); or
(b) in a proper case, obtain specific performance or replevy the goods (Section 7-2A-521).
(3) If a lessor is otherwise in default under a lease contract, the lessee may exercise the rights and pursue the remedies provided in the lease contract, which may include a right to cancel the lease, and in Section 7-2A-519(3).
(4) If a lessor has breached a warranty, whether express or implied, the lessee may recover damages (Section 7-2A-519(4)).
(5) On rightful rejection or justifiable revocation of acceptance, a lessee has a security interest in goods in the lessee's possession or control for any rent and security that has been paid and any expenses reasonably incurred in their inspection, receipt, transportation, and care and custody and may hold those goods and dispose of them in good faith and in a commercially reasonable manner, subject to Section 7-2A-527(5).
(6) Subject to the provisions of Section 7-2A-407, a lessee, on notifying the lessor of the lessee's intention to do so, may deduct all or any part of the damages resulting from any default under the lease contract from any part of the rent still due under the same lease contract.
(Acts 1992, 2nd Ex. Sess., No. 92-700, p. 92, §508.)
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https://law.justia.com/codes/alabama/title-7/article-2a/part-5/division-b/section-7-2a-509/
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Justia›US Law›US Codes and Statutes›Code of Alabama›2023 Code of Alabama›Title 7 - Commercial Code.›Article 2A - Leases.›Part 5 - Default.›Division B - Default by Lessor.›Section 7-2A-509 - Lessee's Rights on Improper Delivery; Rightful Rejection.
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2023 Code of Alabama › Title 7 - Commercial Code. › Article 2A - Leases. › Part 5 - Default. › Division B - Default by Lessor. › Section 7-2A-509 - Lessee's Rights on Improper Delivery; Rightful Rejection.
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Section 7-2A-509
Lessee's rights on improper delivery; rightful rejection.
(1) Subject to the provisions of Section 7-2A-510 on default in installment lease contracts, if the goods or the tender or delivery fail in any respect to conform to the lease contract, the lessee may reject or accept the goods or accept any commercial unit or units and reject the rest of the goods.
(2) Rejection of goods is ineffective unless it is within a reasonable time after tender or delivery of the goods and the lessee seasonably notifies the lessor.
(Acts 1992, 2nd Ex. Sess., No. 92-700, p. 92, §509.)
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https://law.justia.com/codes/alabama/title-7/article-2a/part-5/division-b/section-7-2a-510/
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Justia›US Law›US Codes and Statutes›Code of Alabama›2023 Code of Alabama›Title 7 - Commercial Code.›Article 2A - Leases.›Part 5 - Default.›Division B - Default by Lessor.›Section 7-2A-510 - Installment Lease Contracts: Rejection and Default.
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2023 Code of Alabama › Title 7 - Commercial Code. › Article 2A - Leases. › Part 5 - Default. › Division B - Default by Lessor. › Section 7-2A-510 - Installment Lease Contracts: Rejection and Default.
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Section 7-2A-510
Installment lease contracts: Rejection and default.
(1) Under an installment lease contract a lessee may reject any delivery that is nonconforming if the nonconformity substantially impairs the value of that delivery and cannot be cured or the nonconformity is a defect in the required documents; but if the nonconformity does not fall within subsection (2) and the lessor or the supplier gives adequate assurance of its cure, the lessee must accept that delivery.
(2) Whenever nonconformity or default with respect to one or more deliveries substantially impairs the value of the installment lease contract as a whole there is a default with respect to the whole. But, the aggrieved party reinstates the installment lease contract as a whole if the aggrieved party accepts a nonconforming delivery without seasonably notifying of cancellation or brings an action with respect only to past deliveries or demands performance as to future deliveries.
(Acts 1992, 2nd Ex. Sess., No. 92-700, p. 92, §510.)
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https://law.justia.com/codes/alabama/title-7/article-2a/part-5/division-b/section-7-2a-511/
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Justia›US Law›US Codes and Statutes›Code of Alabama›2023 Code of Alabama›Title 7 - Commercial Code.›Article 2A - Leases.›Part 5 - Default.›Division B - Default by Lessor.›Section 7-2A-511 - Merchant Lessee's Duties as to Rightfully Rejected Goods.
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2023 Code of Alabama › Title 7 - Commercial Code. › Article 2A - Leases. › Part 5 - Default. › Division B - Default by Lessor. › Section 7-2A-511 - Merchant Lessee's Duties as to Rightfully Rejected Goods.
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Section 7-2A-511
Merchant lessee's duties as to rightfully rejected goods.
(1) Subject to any security interest of a lessee (Section 7-2A-508(5)), if a lessor or a supplier has no agent or place of business at the market of rejection, a merchant lessee, after rejection of goods in his or her possession or control, shall follow any reasonable instructions received from the lessor or the supplier with respect to the goods. In the absence of those instructions, a merchant lessee shall make reasonable efforts to sell, lease, or otherwise dispose of the goods for the lessor's account if they threaten to decline in value speedily. Instructions are not reasonable if on demand indemnity for expenses is not forthcoming.
(2) If a merchant lessee (subsection (1)) or any other lessee (Section 7-2A-512) disposes of goods, he or she is entitled to reimbursement either from the lessor or the supplier or out of the proceeds for reasonable expenses of caring for and disposing of the goods and, if the expenses include no disposition commission, to such commission as is usual in the trade, or if there is none, to a reasonable sum not exceeding 10 percent of the gross proceeds.
(3) In complying with this section or Section 7-2A-512, the lessee is held only to good faith. Good faith conduct hereunder is neither acceptance or conversion nor the basis of an action for damages.
(4) A purchaser who purchases in good faith from a lessee pursuant to this section or Section 7-2A-512 takes the goods free of any rights of the lessor and the supplier even though the lessee fails to comply with one or more of the requirements of this article.
(Acts 1992, 2nd Ex. Sess., No. 92-700, p. 92, §511.)
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https://law.justia.com/codes/alabama/title-7/article-2a/part-5/division-b/section-7-2a-512/
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Justia›US Law›US Codes and Statutes›Code of Alabama›2023 Code of Alabama›Title 7 - Commercial Code.›Article 2A - Leases.›Part 5 - Default.›Division B - Default by Lessor.›Section 7-2A-512 - Lessee's Duties as to Rightfully Rejected Goods.
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2023 Code of Alabama › Title 7 - Commercial Code. › Article 2A - Leases. › Part 5 - Default. › Division B - Default by Lessor. › Section 7-2A-512 - Lessee's Duties as to Rightfully Rejected Goods.
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Section 7-2A-512
Lessee's duties as to rightfully rejected goods.
(1) Except as otherwise provided with respect to goods that threaten to decline in value speedily (Section 7-2A-511) and subject to any security interest of a lessee (Section 7-2A-508(5)):
(a) the lessee, after rejection of goods in the lessee's possession, shall hold them with reasonable care at the lessor's or the supplier's disposition for a reasonable time after the lessee's seasonable notification of rejection;
(b) if the lessor or the supplier gives no instructions within a reasonable time after notification of rejection, the lessee may store the rejected goods for the lessor's or the supplier's account or ship them to the lessor or the supplier or dispose of them for the lessor's or the supplier's account with reimbursement in the manner provided in Section 7-2A-511; but
(c) the lessee has no further obligations with regard to goods rightfully rejected.
(2) Action by the lessee pursuant to subsection (1) is not acceptance or conversion.
(Acts 1992, 2nd Ex. Sess., No. 92-700, p. 92, §512.)
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https://law.justia.com/codes/alabama/title-7/article-2a/part-5/division-b/section-7-2a-513/
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Justia›US Law›US Codes and Statutes›Code of Alabama›2023 Code of Alabama›Title 7 - Commercial Code.›Article 2A - Leases.›Part 5 - Default.›Division B - Default by Lessor.›Section 7-2A-513 - Cure by Lessor of Improper Tender or Delivery; Replacement.
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2023 Code of Alabama › Title 7 - Commercial Code. › Article 2A - Leases. › Part 5 - Default. › Division B - Default by Lessor. › Section 7-2A-513 - Cure by Lessor of Improper Tender or Delivery; Replacement.
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Section 7-2A-513
Cure by lessor of improper tender or delivery; replacement.
(1) If any tender or delivery by the lessor or the supplier is rejected because it is nonconforming and the time for performance has not yet expired, the lessor or the supplier may seasonably notify the lessee of the lessor's or the supplier's intention to cure and may then make a conforming delivery within the time provided in the lease contract.
(2) If the lessee rejects a nonconforming tender that the lessor or the supplier had reasonable grounds to believe would be acceptable with or without money allowance, the lessor or the supplier may have a further reasonable time to substitute a conforming tender if he or she seasonably notifies the lessee.
(Acts 1992, 2nd Ex. Sess., No. 92-700, p. 92, §513.)
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https://law.justia.com/codes/alabama/title-7/article-2a/part-5/division-b/section-7-2a-514/
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Justia›US Law›US Codes and Statutes›Code of Alabama›2023 Code of Alabama›Title 7 - Commercial Code.›Article 2A - Leases.›Part 5 - Default.›Division B - Default by Lessor.›Section 7-2A-514 - Waiver of Lessee's Objections.
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2023 Code of Alabama › Title 7 - Commercial Code. › Article 2A - Leases. › Part 5 - Default. › Division B - Default by Lessor. › Section 7-2A-514 - Waiver of Lessee's Objections.
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Section 7-2A-514
Waiver of lessee's objections.
(1) In rejecting goods, a lessee's failure to state a particular defect that is ascertainable by reasonable inspection precludes the lessee from relying on the defect to justify rejection or to establish default:
(a) if, stated seasonably, the lessor or the supplier could have cured it (Section 7-2A-513); or
(b) between merchants if the lessor or the supplier after rejection has made a request in writing for a full and final written statement of all defects on which the lessee proposes to rely.
(2) A lessee's failure to reserve rights when paying rent or other consideration against documents precludes recovery of the payment for defects apparent in the documents.
(Acts 1992, 2nd Ex. Sess., No. 92-700, p. 92, §514; Act 2004-315, p. 464, §2.)
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https://law.justia.com/codes/alabama/title-7/article-2a/part-5/division-b/section-7-2a-515/
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Justia›US Law›US Codes and Statutes›Code of Alabama›2023 Code of Alabama›Title 7 - Commercial Code.›Article 2A - Leases.›Part 5 - Default.›Division B - Default by Lessor.›Section 7-2A-515 - Acceptance of Goods.
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2023 Code of Alabama › Title 7 - Commercial Code. › Article 2A - Leases. › Part 5 - Default. › Division B - Default by Lessor. › Section 7-2A-515 - Acceptance of Goods.
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Section 7-2A-515
Acceptance of goods.
(1) Acceptance of goods occurs after the lessee has had a reasonable opportunity to inspect the goods and
(a) the lessee signifies or acts with respect to the goods in a manner that signifies to the lessor or the supplier that the goods are conforming or that the lessee will take or retain them in spite of their nonconformity; or
(b) the lessee fails to make an effective rejection of the goods (Section 7-2A-509(2)).
(2) Acceptance of a part of any commercial unit is acceptance of that entire unit.
(Acts 1992, 2nd Ex. Sess., No. 92-700, p. 92, §515.)
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https://law.justia.com/codes/alabama/title-7/article-2a/part-5/division-b/section-7-2a-516/
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Justia›US Law›US Codes and Statutes›Code of Alabama›2023 Code of Alabama›Title 7 - Commercial Code.›Article 2A - Leases.›Part 5 - Default.›Division B - Default by Lessor.›Section 7-2A-516 - Effect of Acceptance of Goods; Notice of Default; Burden of Establishing Default...
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2023 Code of Alabama › Title 7 - Commercial Code. › Article 2A - Leases. › Part 5 - Default. › Division B - Default by Lessor. › Section 7-2A-516 - Effect of Acceptance of Goods; Notice of Default; Burden of Establishing Default After Acceptance; Notice of Claim or Litigation to Person Answerable Over.
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Section 7-2A-516
Effect of acceptance of goods; notice of default; burden of establishing default after acceptance; notice of claim or litigation to person answerable over.
(1) A lessee must pay rent for any goods accepted in accordance with the lease contract, with due allowance for goods rightfully rejected or not delivered.
(2) A lessee's acceptance of goods precludes rejection of the goods accepted. In the case of a finance lease, other than a consumer lease in which the supplier assisted in the preparation of the lease contract or participated in negotiating the terms of the lease contract with the lessor, if made with knowledge of a nonconformity, acceptance cannot be revoked because of it. In any other case, if made with knowledge of a nonconformity, acceptance cannot be revoked because of it unless the acceptance was on the reasonable assumption that the nonconformity would be seasonably cured. Acceptance does not of itself impair any other remedy provided by this article or the lease agreement for nonconformity.
(3) If a tender has been accepted:
(a) within a reasonable time after the lessee discovers or should have discovered any default, the lessee shall notify the lessor and the supplier, if any, or be barred from any remedy against the party not notified;
(b) within a reasonable time after the lessee receives notice of litigation for infringement or the like (Section 7-2A-211) the lessee shall notify the lessor or be barred from any remedy over for liability established by the litigation; and
(c) the burden is on the lessee to establish any default.
(4) If a lessee is sued for breach of a warranty or other obligation for which a lessor or a supplier is answerable over the following apply:
(a) The lessee may give the lessor or the supplier, or both, written notice of the litigation. If the notice states that the person notified may come in and defend and that if the person notified does not do so that person will be bound in any action against that person by the lessee by any determination of fact common to the two litigations, then unless the person notified after seasonable receipt of the notice does come in and defend that person is so bound.
(b) The lessor or the supplier may demand in writing that the lessee turn over control of the litigation including settlement if the claim is one for infringement or the like (Section 7-2A-211) or else be barred from any remedy over. If the demand states that the lessor or the supplier agrees to bear all expense and to satisfy any adverse judgment, then unless the lessee after seasonable receipt of the demand does turn over control the lessee is so barred.
(5) Subsections (3) and (4) apply to any obligation of a lessee to hold the lessor or the supplier harmless against infringement or the like (Section 7-2A-211).
(6) Subsection (3) shall not apply to a consumer lease.
(Acts 1992, 2nd Ex. Sess., No. 92-700, p. 92, §516.)
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Justia›US Law›US Codes and Statutes›Code of Alabama›2023 Code of Alabama›Title 7 - Commercial Code.›Article 2A - Leases.›Part 5 - Default.›Division B - Default by Lessor.›Section 7-2A-517 - Revocation of Acceptance of Goods.
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2023 Code of Alabama › Title 7 - Commercial Code. › Article 2A - Leases. › Part 5 - Default. › Division B - Default by Lessor. › Section 7-2A-517 - Revocation of Acceptance of Goods.
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Section 7-2A-517
Revocation of acceptance of goods.
(1) A lessee may revoke acceptance of a lot or commercial unit whose nonconformity substantially impairs its value to the lessee if the lessee has accepted it:
(a) Except in the case of a finance lease, on the reasonable assumption that its nonconformity would be cured and it has not been seasonably cured; or
(b) Without discovery of the nonconformity if the lessee's acceptance was reasonably induced either by the lessor's assurances or, except in the case of a finance lease, by the difficulty of discovery before acceptance.
(2) Except in the case of a finance lease that is not a consumer lease, a lessee may revoke acceptance of a lot or commercial unit if the lessor defaults under the lease contract and the default substantially impairs the value of that lot or commercial unit to the lessee.
(3) If the lease agreement so provides, the lessee may revoke acceptance of a lot or commercial unit because of other defaults by the lessor.
(4) Revocation of acceptance must occur within a reasonable time after the lessee discovers or should have discovered the ground for it and before any substantial change in condition of the goods which is not caused by the nonconformity. Revocation is not effective until the lessee notifies the lessor.
(5) A lessee who so revokes has the same rights and duties with regard to the goods involved as if the lessee had rejected them.
(Acts 1992, 2nd Ex. Sess., No. 92-700, p. 92, §517.)
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Justia›US Law›US Codes and Statutes›Code of Alabama›2023 Code of Alabama›Title 7 - Commercial Code.›Article 2A - Leases.›Part 5 - Default.›Division B - Default by Lessor.›Section 7-2A-518 - Cover; Substitute Goods.
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2023 Code of Alabama › Title 7 - Commercial Code. › Article 2A - Leases. › Part 5 - Default. › Division B - Default by Lessor. › Section 7-2A-518 - Cover; Substitute Goods.
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Section 7-2A-518
Cover; substitute goods.
(1) After a default by a lessor under the lease contract of the type described in Section 7-2A-508(1), or, if agreed, after other default by the lessor, the lessee may cover by making any purchase or lease of or contract to purchase or lease goods in substitution for those due from the lessor.
(2) Except as otherwise provided with respect to damages liquidated in the lease agreement (Section 7-2A-504) or otherwise determined pursuant to agreement of the parties (Sections 7-1-302 and 7-2A-503), if a lessee's cover is by a lease agreement substantially similar to the original lease agreement and the new lease agreement is made in good faith and in a commercially reasonable manner, the lessee may recover from the lessor as damages (i) the present value, as of the date of the commencement of the term of the new lease agreement, of the rent under the new lease agreement applicable to that period of the new lease term which is comparable to the then remaining term of the original lease agreement minus the present value as of the same date of the total rent for the then remaining lease term of the original lease agreement, and (ii) any incidental or consequential damages, less expenses saved in consequence of the lessor's default.
(3) If a lessee's cover is by lease agreement that for any reason does not qualify for treatment under subsection (2), or is by purchase or otherwise, the lessee may recover from the lessor as if the lessee had elected not to cover and Section 7-2A-519 governs.
(Acts 1992, 2nd Ex. Sess., No. 92-700, p. 92, §518; Act 2004-524, p. 1070, §2.)
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Justia›US Law›US Codes and Statutes›Code of Alabama›2023 Code of Alabama›Title 7 - Commercial Code.›Article 2A - Leases.›Part 5 - Default.›Division B - Default by Lessor.›Section 7-2A-519 - Lessee's Damages for Nondelivery, Repudiation, Default, and Breach of Warranty in...
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2023 Code of Alabama › Title 7 - Commercial Code. › Article 2A - Leases. › Part 5 - Default. › Division B - Default by Lessor. › Section 7-2A-519 - Lessee's Damages for Nondelivery, Repudiation, Default, and Breach of Warranty in Regard to Accepted Goods.
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Section 7-2A-519
Lessee's damages for nondelivery, repudiation, default, and breach of warranty in regard to accepted goods.
(1) Except as otherwise provided with respect to damages liquidated in the lease agreement (Section 7-2A-504) or otherwise determined pursuant to agreement of the parties (Sections 7-1-302 and 7-2A-503), if a lessee elects not to cover or a lessee elects to cover and the cover is by lease agreement that for any reason does not qualify for treatment under Section 7-2A-518(2), or is by purchase or otherwise, the measure of damages for nondelivery or repudiation by the lessor or for rejection or revocation of acceptance by the lessee is the present value, as of the date of the default, of the then market rent minus the present value as of the same date of the original rent, computed for the remaining lease term of the original lease agreement, together with incidental and consequential damages, less expenses saved in consequence of the lessor's default.
(2) Market rent is to be determined as of the place for tender or, in cases of rejection after arrival or revocation of acceptance, as of the place of arrival.
(3) Except as otherwise agreed, if the lessee has accepted goods and given notification (Section 7-2A-516(3)), the measure of damages for nonconforming tender or delivery or other default by a lessor is the loss resulting in the ordinary course of events from the lessor's default as determined in any manner that is reasonable together with incidental and consequential damages, less expenses saved in consequence of the lessor's default.
(4) Except as otherwise agreed, the measure of damages for breach of warranty is the present value at the time and place of acceptance of the difference between the value of the use of the goods accepted and the value if they had been as warranted for the lease term, unless special circumstances show proximate damages of a different amount, together with incidental and consequential damages, less expenses saved in consequence of the lessor's default or breach of warranty.
(Acts 1992, 2nd Ex. Sess., No. 92-700, p. 92, §519; Act 2004-524, p. 1070, §2.)
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Justia›US Law›US Codes and Statutes›Code of Alabama›2023 Code of Alabama›Title 7 - Commercial Code.›Article 2A - Leases.›Part 5 - Default.›Division B - Default by Lessor.›Section 7-2A-520 - Lessee's Incidental and Consequential Damages.
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2023 Code of Alabama › Title 7 - Commercial Code. › Article 2A - Leases. › Part 5 - Default. › Division B - Default by Lessor. › Section 7-2A-520 - Lessee's Incidental and Consequential Damages.
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Section 7-2A-520
Lessee's incidental and consequential damages.
(1) Incidental damages resulting from a lessor's default include expenses reasonably incurred in inspection, receipt, transportation, and care and custody of goods rightfully rejected or goods the acceptance of which is justifiably revoked, any commercially reasonable charges, expenses or commissions in connection with effecting cover, and any other reasonable expense incident to the default.
(2) Consequential damages resulting from a lessor's default include:
(a) any loss resulting from general or particular requirements and needs of which the lessor at the time of contracting had reason to know and which could not reasonably be prevented by cover or otherwise; and
(b) injury to person or property proximately resulting from any breach of warranty.
(Acts 1992, 2nd Ex. Sess., No. 92-700, p. 92, §520.)
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Justia›US Law›US Codes and Statutes›Code of Alabama›2023 Code of Alabama›Title 7 - Commercial Code.›Article 2A - Leases.›Part 5 - Default.›Division B - Default by Lessor.›Section 7-2A-521 - Lessee's Right to Specific Performance or Replevin.
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2023 Code of Alabama › Title 7 - Commercial Code. › Article 2A - Leases. › Part 5 - Default. › Division B - Default by Lessor. › Section 7-2A-521 - Lessee's Right to Specific Performance or Replevin.
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Section 7-2A-521
Lessee's right to specific performance or replevin.
(1) Specific performance may be decreed if the goods are unique or in other proper circumstances.
(2) A decree for specific performance may include any terms and conditions as to payment of the rent, damages, or other relief that the court deems just.
(3) A lessee has a right of replevin, detinue, sequestration, claim and delivery, or the like for goods identified to the lease contract if after reasonable effort the lessee is unable to effect cover for those goods or the circumstances reasonably indicate that the effort will be unavailing.
(Acts 1992, 2nd Ex. Sess., No. 92-700, p. 92, §521.)
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Justia›US Law›US Codes and Statutes›Code of Alabama›2023 Code of Alabama›Title 7 - Commercial Code.›Article 2A - Leases.›Part 5 - Default.›Division B - Default by Lessor.›Section 7-2A-522 - Lessee's Right to Goods on Lessor's Insolvency.
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2023 Code of Alabama › Title 7 - Commercial Code. › Article 2A - Leases. › Part 5 - Default. › Division B - Default by Lessor. › Section 7-2A-522 - Lessee's Right to Goods on Lessor's Insolvency.
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Section 7-2A-522
Lessee's right to goods on lessor's insolvency.
(1) Subject to subsection (2) and even though the goods have not been shipped, a lessee who has paid a part or all of the rent and security for goods identified to a lease contract (Section 7-2A-217) on making and keeping good a tender of any unpaid portion of the rent and security due under the lease contract may recover the goods identified from the lessor if the lessor becomes insolvent within 10 days after receipt of the first installment of rent and security.
(2) A lessee acquires the right to recover goods identified to a lease contract only if they conform to the lease contract.
(Acts 1992, 2nd Ex. Sess., No. 92-700, p. 92, §522.)
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Justia›US Law›US Codes and Statutes›Code of Alabama›2023 Code of Alabama›Title 7 - Commercial Code.›Article 2A - Leases.›Part 5 - Default.›Division C - Default by Lessee.›Section 7-2A-523 - Lessor's Remedies.
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2023 Code of Alabama › Title 7 - Commercial Code. › Article 2A - Leases. › Part 5 - Default. › Division C - Default by Lessee. › Section 7-2A-523 - Lessor's Remedies.
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Section 7-2A-523
Lessor's remedies.
(1) If a lessee wrongfully rejects or revokes acceptance of goods or fails to make a payment when due or repudiates with respect to a part or the whole, then, with respect to any goods involved, and with respect to all of the goods if under an installment lease contract the value of the whole lease contract is substantially impaired (Section 7-2A-510), the lessee is in default under the lease contract and the lessor may:
(a) cancel the lease contract (Section 7-2A-505(1));
(b) proceed respecting goods not identified to the lease contract (Section 7-2A-524);
(c) withhold delivery of the goods and take possession of goods previously delivered (Section 7-2A-525);
(d) stop delivery of the goods by any bailee (Section 7-2A-526);
(e) dispose of the goods and recover damages (Section 7-2A-527), or retain the goods and recover damages (Section 7-2A-528), or in a proper case recover rent (Section 7-2A-529);
(f) exercise any other rights or pursue any other remedies provided in the lease contract.
(2) If a lessor does not fully exercise a right or obtain a remedy to which the lessor is entitled under subsection (1), the lessor may recover the loss resulting in the ordinary course of events from the lessee's default as determined in any reasonable manner, together with incidental damages, less expenses saved in consequence of the lessee's default.
(3) If a lessee is otherwise in default under a lease contract, the lessor may exercise the rights and pursue the remedies provided in the lease contract which may include a right to cancel the lease. In addition, unless otherwise provided in the lease contract:
(a) if the default substantially impairs the value of the lease contract to the lessor, the lessor may exercise the rights and pursue the remedies provided in subsections (1) or (2); or
(b) if the default does not substantially impair the value of the lease contract to the lessor, the lessor may recover as provided in subsection (2).
(Acts 1992, 2nd Ex. Sess., No. 92-700, p. 92, §523.)
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Justia›US Law›US Codes and Statutes›Code of Alabama›2023 Code of Alabama›Title 7 - Commercial Code.›Article 2A - Leases.›Part 5 - Default.›Division C - Default by Lessee.›Section 7-2A-524 - Lessor's Right to Identify Goods to Lease Contract.
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2023 Code of Alabama › Title 7 - Commercial Code. › Article 2A - Leases. › Part 5 - Default. › Division C - Default by Lessee. › Section 7-2A-524 - Lessor's Right to Identify Goods to Lease Contract.
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Section 7-2A-524
Lessor's right to identify goods to lease contract.
(1) A lessor aggrieved under Section 7-2A-523(1) may:
(a) identify to the lease contract conforming goods not already identified if at the time the lessor learned of the default they were in the lessor's or the supplier's possession or control; and
(b) dispose of goods (Section 7-2A-527(1)) that demonstrably have been intended for the particular lease contract even though those goods are unfinished.
(2) If the goods are unfinished, in the exercise of reasonable commercial judgment for the purposes of avoiding loss and of effective realization, an aggrieved lessor or the supplier may either complete manufacture and wholly identify the goods to the lease contract or cease manufacture and lease, sell, or otherwise dispose of the goods for scrap or salvage value or proceed in any other reasonable manner.
(Acts 1992, 2nd Ex. Sess., No. 92-700, p. 92, §524.)
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Justia›US Law›US Codes and Statutes›Code of Alabama›2023 Code of Alabama›Title 7 - Commercial Code.›Article 2A - Leases.›Part 5 - Default.›Division C - Default by Lessee.›Section 7-2A-525 - Lessor's Right to Possession of Goods.
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2023 Code of Alabama › Title 7 - Commercial Code. › Article 2A - Leases. › Part 5 - Default. › Division C - Default by Lessee. › Section 7-2A-525 - Lessor's Right to Possession of Goods.
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Section 7-2A-525
Lessor's right to possession of goods.
(1) If a lessor discovers the lessee to be insolvent, the lessor may refuse to deliver the goods.
(2) After a default by the lessee under the lease contract of the type described in Section 7-2A-523(1) or 7-2A-523(3)(a) or, if agreed, after other default by the lessee, the lessor has the right to take possession of the goods. If the lease contract so provides, the lessor may require the lessee to assemble the goods and make them available to the lessor at a place to be designated by the lessor which is reasonably convenient to both parties. Without removal, the lessor may render unusable any goods employed in trade or business, and may dispose of goods on the lessee's premises (Section 7-2A-527).
(3) The lessor may proceed under subsection (2) without judicial process if it can be done without breach of the peace or the lessor may proceed by action.
(Acts 1992, 2nd Ex. Sess., No. 92-700, p. 92, §525.)
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Justia›US Law›US Codes and Statutes›Code of Alabama›2023 Code of Alabama›Title 7 - Commercial Code.›Article 2A - Leases.›Part 5 - Default.›Division C - Default by Lessee.›Section 7-2A-526 - Lessor's Stoppage of Delivery in Transit or Otherwise.
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2023 Code of Alabama › Title 7 - Commercial Code. › Article 2A - Leases. › Part 5 - Default. › Division C - Default by Lessee. › Section 7-2A-526 - Lessor's Stoppage of Delivery in Transit or Otherwise.
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Section 7-2A-526
Lessor's stoppage of delivery in transit or otherwise.
(1) A lessor may stop delivery of goods in the possession of a carrier or other bailee if the lessor discovers the lessee to be insolvent and may stop delivery of carload, truckload, planeload, or larger shipments of express or freight if the lessee repudiates or fails to make a payment due before delivery, whether for rent, security or otherwise under the lease contract, or for any other reason the lessor has a right to withhold or take possession of the goods.
(2) In pursuing its remedies under subsection (1), the lessor may stop delivery until
(a) receipt of the goods by the lessee;
(b) acknowledgment to the lessee by any bailee of the goods, except a carrier, that the bailee holds the goods for the lessee; or
(c) such an acknowledgment to the lessee by a carrier via reshipment or as a warehouse.
(3)(a) To stop delivery, a lessor shall so notify as to enable the bailee by reasonable diligence to prevent delivery of the goods.
(b) After notification, the bailee shall hold and deliver the goods according to the directions of the lessor, but the lessor is liable to the bailee for any ensuing charges or damages.
(c) A carrier who has issued a nonnegotiable bill of lading is not obliged to obey a notification to stop received from a person other than the consignor.
(Acts 1992, 2nd Ex. Sess., No. 92-700, p. 92, §526; Act 2004-315, p. 464, §2.)
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Justia›US Law›US Codes and Statutes›Code of Alabama›2023 Code of Alabama›Title 7 - Commercial Code.›Article 2A - Leases.›Part 5 - Default.›Division C - Default by Lessee.›Section 7-2A-527 - Lessor's Rights to Dispose of Goods.
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2023 Code of Alabama › Title 7 - Commercial Code. › Article 2A - Leases. › Part 5 - Default. › Division C - Default by Lessee. › Section 7-2A-527 - Lessor's Rights to Dispose of Goods.
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Section 7-2A-527
Lessor's rights to dispose of goods.
(1) After a default by a lessee under the lease contract of the type described in Section 7-2A-523(1) or 7-2A-523(3)(a) or after the lessor refuses to deliver or takes possession of goods (Section 7-2A-525 or 7-2A-526), or, if agreed, after other default by a lessee, the lessor may dispose of the goods concerned or the undelivered balance thereof by lease, sale, or otherwise.
(2) Except as otherwise provided with respect to damages liquidated in the lease agreement (Section 7-2A-504) or otherwise determined pursuant to agreement of the parties (Sections 7-1-302 and 7-2A-503), if the disposition is by lease agreement substantially similar to the original lease agreement and the new lease agreement is made in good faith and in a commercially reasonable manner, the lessor may recover from the lessee as damages (i) accrued and unpaid rent as of the date of the commencement of the term of the new lease agreement, (ii) the present value, as of the same date, of the total rent for the then remaining lease term of the original lease agreement minus the present value, as of the same date, of the rent under the new lease agreement applicable to that period of the new lease term which is comparable to the then remaining term of the original lease agreement, and (iii) any incidental damages allowed under Section 7-2A-530, less expenses saved in consequence of the lessee's default.
(3) If the lessor's disposition is by lease agreement that for any reason does not qualify for treatment under subsection (2), or is by sale or otherwise, the lessor may recover from the lessee as if the lessor had elected not to dispose of the goods and Section 7-2A-528 governs.
(4) A subsequent buyer or lessee who buys or leases from the lessor in good faith for value as a result of a disposition under this section takes the goods free of the original lease contract and any rights of the original lessee even though the lessor fails to comply with one or more of the requirements of this article.
(5) The lessor is not accountable to the lessee for any profit made on any disposition. A lessee who has rightfully rejected or justifiably revoked acceptance shall account to the lessor for any excess over the amount of the lessee's security interest (Section 7-2A-508(5)).
(Acts 1992, 2nd Ex. Sess., No. 92-700, p. 92, §527; Act 2004-524, p. 1070, §2.)
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Justia›US Law›US Codes and Statutes›Code of Alabama›2023 Code of Alabama›Title 7 - Commercial Code.›Article 2A - Leases.›Part 5 - Default.›Division C - Default by Lessee.›Section 7-2A-528 - Lessor's Damages for Nonacceptance, Failure to Pay, Repudiation, or Other Default...
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2023 Code of Alabama › Title 7 - Commercial Code. › Article 2A - Leases. › Part 5 - Default. › Division C - Default by Lessee. › Section 7-2A-528 - Lessor's Damages for Nonacceptance, Failure to Pay, Repudiation, or Other Default.
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Section 7-2A-528
Lessor's damages for nonacceptance, failure to pay, repudiation, or other default.
(1) Except as otherwise provided with respect to damages liquidated in the lease agreement (Section 7-2A-504) or otherwise determined pursuant to agreement of the parties (Sections 7-1-302 and 7-2A-503), if a lessor elects to retain the goods or a lessor elects to dispose of the goods and the disposition is by lease agreement that for any reason does not qualify for treatment under Section 7-2A-527(2), or is by sale or otherwise, the lessor may recover from the lessee as damages for a default of the type described in Section 7-2A-523(1) or 7-2A-523(3)(a), or, if agreed, for other default of the lessee, (i) accrued and unpaid rent as of the date of default if the lessee has never taken possession of the goods, or, if the lessee has taken possession of the goods, as of the date the lessor repossesses the goods or an earlier date on which the lessee makes a tender of the goods to the lessor, (ii) the present value as of the date determined under clause (i) of the total rent for the then remaining lease term of the original lease agreement minus the present value as of the same date of the market rent at the place where the goods are located computed for the same lease term, and (iii) any incidental damages allowed under Section 7-2A-530, less expenses saved in consequence of the lessee's default.
(2) If the measure of damages provided in subsection (1) is inadequate to put a lessor in as good a position as performance would have, the measure of damages is the present value of the profit, including reasonable overhead, the lessor would have made from full performance by the lessee, together with any incidental damages allowed under Section 7-2A-530, due allowance for costs reasonably incurred and due credit for payments or proceeds of disposition.
(Acts 1992, 2nd Ex. Sess., No. 92-700, p. 92, §528; Act 2004-524, p. 1070, §2.)
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Justia›US Law›US Codes and Statutes›Code of Alabama›2023 Code of Alabama›Title 7 - Commercial Code.›Article 2A - Leases.›Part 5 - Default.›Division C - Default by Lessee.›Section 7-2A-529 - Lessor's Action for the Rent.
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2023 Code of Alabama › Title 7 - Commercial Code. › Article 2A - Leases. › Part 5 - Default. › Division C - Default by Lessee. › Section 7-2A-529 - Lessor's Action for the Rent.
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Section 7-2A-529
Lessor's action for the rent.
(1) After default by the lessee under the lease contract of the type described in Section 7-2A-523(1) or 7-2A-523(3)(a) or, if agreed, after other default by the lessee, if the lessor complies with subsection (2), the lessor may recover from the lessee as damages:
(a) for goods accepted by the lessee and not repossessed by or tendered to the lessor, and for conforming goods lost or damaged within a commercially reasonable time after risk of loss passes to the lessee (Section 7-2A-219), (i) accrued and unpaid rent as of the date of entry of judgment in favor of the lessor, (ii) the present value as of the same date of the rent for the then remaining lease term of the lease agreement, and (iii) any incidental damages allowed under Section 7-2A-530, less expenses saved in consequence of the lessee's default; and
(b) for goods identified to the lease contract if the lessor is unable after reasonable effort to dispose of them at a reasonable price or the circumstances reasonably indicate that effort will be unavailing, (i) accrued and unpaid rent as of the date of entry of judgment in favor of the lessor, (ii) the present value as of the same date of the rent for the then remaining lease term of the lease agreement, and (iii) any incidental damages allowed under Section 7-2A-530, less expenses saved in consequence of the lessee's default.
(2) Except as provided in subsection (3), the lessor shall hold for the lessee for the remaining lease term of the lease agreement any goods that have been identified to the lease contract and are in the lessor's control.
(3) The lessor may dispose of the goods at any time before collection of the judgment for damages obtained pursuant to subsection (1). If the disposition is before the end of the remaining lease term of the lease agreement, the lessor's recovery against the lessee for damages is governed by Section 7-2A-527 or 7-2A-528, and the lessor will cause an appropriate credit to be provided against a judgment for damages to the extent that the amount of the judgment exceeds the recovery available pursuant to Section 7-2A-527 or 7-2A-528.
(4) Payment of the judgment for damages obtained pursuant to subsection (1) entitles the lessee to the use and possession of the goods not then disposed of for the remaining lease term of and in accordance with the lease agreement.
(5) After a lessee has wrongfully rejected or revoked acceptance of goods, has failed to pay rent then due, or has repudiated (Section 7-2A-402), a lessor who is held not entitled to rent under this section must nevertheless be awarded damages for nonacceptance under Sections 7-2A-527 and 7-2A-528.
(Acts 1992, 2nd Ex. Sess., No. 92-700, p. 92, §529.)
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Justia›US Law›US Codes and Statutes›Code of Alabama›2023 Code of Alabama›Title 7 - Commercial Code.›Article 2A - Leases.›Part 5 - Default.›Division C - Default by Lessee.›Section 7-2A-530 - Lessor's Incidental Damages.
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2023 Code of Alabama › Title 7 - Commercial Code. › Article 2A - Leases. › Part 5 - Default. › Division C - Default by Lessee. › Section 7-2A-530 - Lessor's Incidental Damages.
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Section 7-2A-530
Lessor's incidental damages.
Incidental damages to an aggrieved lessor include any commercially reasonable charges, expenses, or commissions incurred in stopping delivery, in the transportation, care and custody of goods after the lessee's default, in connection with return or disposition of the goods, or otherwise resulting from the default.
(Acts 1992, 2nd Ex. Sess., No. 92-700, p. 92, §530.)
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https://law.justia.com/codes/alabama/title-7/article-2a/part-5/division-c/section-7-2a-531/
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Justia›US Law›US Codes and Statutes›Code of Alabama›2023 Code of Alabama›Title 7 - Commercial Code.›Article 2A - Leases.›Part 5 - Default.›Division C - Default by Lessee.›Section 7-2A-531 - Standing to Sue Third Parties for Injury to Goods.
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2023 Code of Alabama › Title 7 - Commercial Code. › Article 2A - Leases. › Part 5 - Default. › Division C - Default by Lessee. › Section 7-2A-531 - Standing to Sue Third Parties for Injury to Goods.
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Section 7-2A-531
Standing to sue third parties for injury to goods.
(1) If a third party so deals with goods that have been identified to a lease contract as to cause actionable injury to a party to the lease contract
(a) the lessor has a right of action against the third party, and
(b) the lessee also has a right of action against the third party if the lessee: (i) has a security interest in the goods; (ii) has an insurable interest in the goods; or (iii) bears the risk of loss under the lease contract or has since the injury assumed that risk as against the lessor and the goods have been converted or destroyed.
(2) If at the time of the injury the party plaintiff did not bear the risk of loss as against the other party to the lease contract and there is no arrangement between them for disposition of the recovery, his or her suit or settlement, subject to his or her own interest, is as a fiduciary for the other party to the lease contract.
(3) Either party with the consent of the other may sue for the benefit of whom it may concern.
(Acts 1992, 2nd Ex. Sess., No. 92-700, p. 92, §531.)
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https://law.justia.com/codes/alabama/title-7/article-2a/part-5/division-c/section-7-2a-532/
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Justia›US Law›US Codes and Statutes›Code of Alabama›2023 Code of Alabama›Title 7 - Commercial Code.›Article 2A - Leases.›Part 5 - Default.›Division C - Default by Lessee.›Section 7-2A-532 - Lessor's Rights to Residual Interest.
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2023 Code of Alabama › Title 7 - Commercial Code. › Article 2A - Leases. › Part 5 - Default. › Division C - Default by Lessee. › Section 7-2A-532 - Lessor's Rights to Residual Interest.
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Section 7-2A-532
Lessor's rights to residual interest.
In addition to any other recovery permitted by this article or other law, the lessor may recover from the lessee an amount that will fully compensate the lessor for any loss of or damage to the lessor's residual interest in the goods caused by the default of the lessee.
(Acts 1992, 2nd Ex. Sess., No. 92-700, p. 92, §532.)
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https://law.justia.com/codes/alabama/title-7/article-3/part-1/section-7-3-101/
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Justia›US Law›US Codes and Statutes›Code of Alabama›2023 Code of Alabama›Title 7 - Commercial Code.›Article 3 - Negotiable Instruments.›Part 1 - General Provisions and Definitions.›Section 7-3-101 - Short Title.
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2023 Code of Alabama › Title 7 - Commercial Code. › Article 3 - Negotiable Instruments. › Part 1 - General Provisions and Definitions. › Section 7-3-101 - Short Title.
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Section 7-3-101
Short title.
This article may be cited as Uniform Commercial Code - Negotiable Instruments.
(Acts 1965, No. 549, p. 811; repealed by Acts 1995, No. 95-668, p. 1381, §1; added by Acts 1995, No. 95-668, p. 1381, §1.)
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https://law.justia.com/codes/alabama/title-7/article-3/part-1/section-7-3-103/
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Justia›US Law›US Codes and Statutes›Code of Alabama›2023 Code of Alabama›Title 7 - Commercial Code.›Article 3 - Negotiable Instruments.›Part 1 - General Provisions and Definitions.›Section 7-3-103 - Definitions.
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2023 Code of Alabama › Title 7 - Commercial Code. › Article 3 - Negotiable Instruments. › Part 1 - General Provisions and Definitions. › Section 7-3-103 - Definitions.
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Section 7-3-103
Definitions.
(a) In this article:
(1) "Acceptor" means a drawee who has accepted a draft.
(2) "Drawee" means a person ordered in a draft to make payment.
(3) "Drawer" means a person who signs or is identified in a draft as a person ordering payment.
(4) "Good faith" means honesty in fact in the conduct or transaction concerned.
(5) "Maker" means a person who signs or is identified in a note as a person undertaking to pay.
(6) "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.
(7) "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 article or Article 4.
(8) "Party" means a party to an instrument.
(9) "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.
(10) "Prove" with respect to a fact means to meet the burden of establishing the fact (Section 7-1-201(b)(8)).
(11) "Remitter" means a person who purchases an instrument from its issuer if the instrument is payable to an identified person other than the purchaser.
(b) Other definitions applying to this article and the sections in which they appear are:
"Acceptance." Section 7-3-409.
"Accommodated party." Section 7-3-419.
"Accommodation party." Section 7-3-419.
"Alteration." Section 7-3-407.
"Anomalous indorsement." Section 7-3-205.
"Blank indorsement." Section 7-3-205.
"Cashier's check." Section 7-3-104.
"Certificate of deposit." Section 7-3-104.
"Certified check." Section 7-3-409.
"Check." Section 7-3-104.
"Consideration." Section 7-3-303.
"Draft." Section 7-3-104.
"Holder in due course." Section 7-3-302.
"Incomplete instrument." Section 7-3-115.
"Indorsement." Section 7-3-204.
"Indorser." Section 7-3-204.
"Instrument." Section 7-3-104.
"Issue." Section 7-3-105.
"Issuer." Section 7-3-105.
"Negotiable instrument." Section 7-3-104.
"Negotiation." Section 7-3-201.
"Note." Section 7-3-104.
"Payable at a definite time." Section 7-3-108.
"Payable on demand." Section 7-3-108.
"Payable to bearer." Section 7-3-109.
"Payable to order." Section 7-3-109.
"Payment." Section 7-3-602.
"Person entitled to enforce." Section 7-3-301.
"Presentment." Section 7-3-501.
"Reacquisition." Section 7-3-207.
"Special indorsement." Section 7-3-205.
"Teller's check." Section 7-3-104.
"Transfer of instrument." Section 7-3-203.
"Traveler's check." Section 7-3-104.
"Value." Section 7-3-303.
(c) The following definitions in other articles apply to this article:
"Bank." Section 7-4-105.
"Banking day." Section 7-4-104.
"Clearing house." Section 7-4-104.
"Collecting bank." Section 7-4-105.
"Depositary bank." Section 7-4-105.
"Documentary draft." Section 7-4-104.
"Intermediary bank." Section 7-4-105.
"Item." Section 7-4-104.
"Payor bank." Section 7-4-105.
"Suspends payments." Section 7-4-104.
(d) In addition, Article 1 contains general definitions and principles of construction and interpretation applicable throughout this article.
(Acts 1995, No. 95-668, p. 1381, §1; Act 2004-524, p. 1070, §2.)
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Justia›US Law›US Codes and Statutes›Code of Alabama›2023 Code of Alabama›Title 7 - Commercial Code.›Article 3 - Negotiable Instruments.›Part 1 - General Provisions and Definitions.›Section 7-3-102 - Subject Matter.
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2023 Code of Alabama › Title 7 - Commercial Code. › Article 3 - Negotiable Instruments. › Part 1 - General Provisions and Definitions. › Section 7-3-102 - Subject Matter.
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Section 7-3-102
Subject matter.
(a) This article applies to negotiable instruments. It does not apply to money, to payment orders governed by Article 4A, or to securities governed by Article 8.
(b) If there is conflict between this article and Article 4 or 9, Articles 4 and 9 govern.
(c) 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 article to the extent of the inconsistency.
(Acts 1995, No. 95-668, p. 1381, §1.)
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https://law.justia.com/codes/alabama/title-7/article-3/part-1/section-7-3-104/
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Justia›US Law›US Codes and Statutes›Code of Alabama›2023 Code of Alabama›Title 7 - Commercial Code.›Article 3 - Negotiable Instruments.›Part 1 - General Provisions and Definitions.›Section 7-3-104 - Negotiable Instrument.
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2023 Code of Alabama › Title 7 - Commercial Code. › Article 3 - Negotiable Instruments. › Part 1 - General Provisions and Definitions. › Section 7-3-104 - Negotiable Instrument.
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Section 7-3-104
Negotiable instrument.
(a) Except as provided in subsections (c) and (d), "negotiable instrument" means an unconditional promise or order to pay a fixed amount of money, with or without interest or other charges described in the promise or order, if it:
(1) Is payable to bearer or to order at the time it is issued or first comes into possession of a holder;
(2) Is payable on demand or at a definite time; and
(3) Does not state any other undertaking or instruction by the person promising or ordering payment to do any act in addition to the payment of money, but the promise or order may contain (i) an undertaking or power to give, maintain, or protect collateral to secure payment, (ii) an authorization or power to the holder to confess judgment or realize on or dispose of collateral, or (iii) a waiver of the benefit of any law intended for the advantage or protection of an obligor.
(b) "Instrument" means a negotiable instrument.
(c) An order that meets all of the requirements of subsection (a), except subdivision (1), and otherwise falls within the definition of "check" in subsection (f) is a negotiable instrument and a check.
(d) A promise or order other than a check is not an instrument if, at the time it is issued or first comes into possession of a holder, it contains a conspicuous statement, however expressed, to the effect that the promise or order is not negotiable or is not an instrument governed by this article.
(e) An instrument is a "note" if it is a promise and is a "draft" if it is an order. If an instrument falls within the definition of both "note" and "draft," a person entitled to enforce the instrument may treat it as either.
(f) "Check" means (i) a draft, other than a documentary draft, payable on demand and drawn on a bank or (ii) a cashier's check or teller's check. An instrument may be a check even though it is described on its face by another term, such as "money order."
(g) "Cashier's check" means a draft with respect to which the drawer and drawee are the same bank or branches of the same bank.
(h) "Teller's check" means a draft drawn by a bank (i) on another bank, or (ii) payable at or through a bank.
(i) "Traveler's check" means an instrument that (i) is payable on demand, (ii) is drawn on or payable at or through a bank, (iii) is designated by the term "traveler's check" or by a substantially similar term, and (iv) requires, as a condition to payment, a countersignature by a person whose specimen signature appears on the instrument.
(j) "Certificate of deposit" means an instrument containing an acknowledgment by a bank that a sum of money has been received by the bank and a promise by the bank to repay the sum of money. A certificate of deposit is a note of the bank.
(Acts 1965, No. 549, p. 811; repealed by Acts 1995, No. 95-668, p. 1381, §1; added by Acts 1995, No. 95-668, p. 1381, §1.)
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Justia›US Law›US Codes and Statutes›Code of Alabama›2023 Code of Alabama›Title 7 - Commercial Code.›Article 3 - Negotiable Instruments.›Part 1 - General Provisions and Definitions.›Section 7-3-105 - Issue of Instrument.
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2023 Code of Alabama › Title 7 - Commercial Code. › Article 3 - Negotiable Instruments. › Part 1 - General Provisions and Definitions. › Section 7-3-105 - Issue of Instrument.
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Section 7-3-105
Issue of instrument.
(a) "Issue" means the first delivery of an instrument by the maker or drawer, whether to a holder or nonholder, for the purpose of giving rights on the instrument to any person.
(b) An unissued instrument, or an unissued incomplete instrument that is completed, is binding on the maker or drawer, but nonissuance is a defense. An instrument that is conditionally issued or is issued for a special purpose is binding on the maker or drawer, but failure of the condition or special purpose to be fulfilled is a defense.
(c) "Issuer" applies to issued and unissued instruments and means a maker or drawer of an instrument.
(Acts 1995, No. 95-668, p. 1381, §1.)
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Justia›US Law›US Codes and Statutes›Code of Alabama›2023 Code of Alabama›Title 7 - Commercial Code.›Article 3 - Negotiable Instruments.›Part 1 - General Provisions and Definitions.›Section 7-3-106 - Unconditional Promise or Order.
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2023 Code of Alabama › Title 7 - Commercial Code. › Article 3 - Negotiable Instruments. › Part 1 - General Provisions and Definitions. › Section 7-3-106 - Unconditional Promise or Order.
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Section 7-3-106
Unconditional promise or order.
(a) Except as provided in this section, for the purposes of Section 7-3-104(a), a promise or order is unconditional unless it states (i) an express condition to payment, (ii) that the promise or order is subject to or governed by another writing, or (iii) that rights or obligations with respect to the promise or order are stated in another writing. A reference to another writing does not of itself make the promise or order conditional.
(b) A promise or order is not made conditional (i) by a reference to another writing for a statement of rights with respect to collateral, prepayment, or acceleration, or (ii) because payment is limited to resort to a particular fund or source.
(c) If a promise or order requires, as a condition to payment, a countersignature by a person whose specimen signature appears on the promise or order, the condition does not make the promise or order conditional for the purposes of Section 7-3-104(a). If the person whose specimen signature appears on an instrument fails to countersign the instrument, the failure to countersign is a defense to the obligation of the issuer, but the failure does not prevent a transferee of the instrument from becoming a holder of the instrument.
(d) If a promise or order at the time it is issued or first comes into possession of a holder contains a statement, required by applicable statutory or administrative law, to the effect that the rights of a holder or transferee are subject to claims or defenses that the issuer could assert against the original payee, the promise or order is not thereby made conditional for the purposes of Section 7-3-104(a); but if the promise or order is an instrument, there cannot be a holder in due course of the instrument.
(Acts 1995, No. 95-668, p. 1381, §1.)
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https://law.justia.com/codes/alabama/title-7/article-3/part-1/section-7-3-107/
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Justia›US Law›US Codes and Statutes›Code of Alabama›2023 Code of Alabama›Title 7 - Commercial Code.›Article 3 - Negotiable Instruments.›Part 1 - General Provisions and Definitions.›Section 7-3-107 - Instrument Payable in Foreign Money.
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2023 Code of Alabama › Title 7 - Commercial Code. › Article 3 - Negotiable Instruments. › Part 1 - General Provisions and Definitions. › Section 7-3-107 - Instrument Payable in Foreign Money.
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Section 7-3-107
Instrument payable in foreign money.
Unless the instrument otherwise provides, an instrument that states the amount payable in foreign money may be paid in the foreign money or in an equivalent amount in dollars calculated by using the current bank-offered spot rate at the place of payment for the purchase of dollars on the day on which the instrument is paid.
(Acts 1965, No. 549, p. 811; repealed by Acts 1995, No. 95-668, p. 1381, §1; added by Acts 1995, No. 95-668, p. 1381, §1.)
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https://law.justia.com/codes/alabama/title-7/article-3/part-1/section-7-3-108/
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Justia›US Law›US Codes and Statutes›Code of Alabama›2023 Code of Alabama›Title 7 - Commercial Code.›Article 3 - Negotiable Instruments.›Part 1 - General Provisions and Definitions.›Section 7-3-108 - Payable on Demand or at Definite Time.
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2023 Code of Alabama › Title 7 - Commercial Code. › Article 3 - Negotiable Instruments. › Part 1 - General Provisions and Definitions. › Section 7-3-108 - Payable on Demand or at Definite Time.
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Section 7-3-108
Payable on demand or at definite time.
(a) A promise or order is "payable on demand" if it (i) states that it is payable on demand or at sight, or otherwise indicates that it is payable at the will of the holder, or (ii) does not state any time of payment.
(b) A promise or order is "payable at a definite time" if it is payable on elapse of a definite period of time after sight or acceptance or at a fixed date or dates or at a time or times readily ascertainable at the time the promise or order is issued, subject to rights of (i) prepayment, (ii) acceleration, (iii) extension at the option of the holder, or (iv) extension to a further definite time at the option of the maker or acceptor or automatically upon or after a specified act or event.
(c) If an instrument, payable at a fixed date, is also payable upon demand made before the fixed date, the instrument is payable on demand until the fixed date and, if demand for payment is not made before that date, becomes payable at a definite time on the fixed date.
(Acts 1965, No. 549, p. 811; repealed by Acts 1995, No. 95-668, p. 1381, §1; added by Acts 1995, No. 95-668, p. 1381, §1.)
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Justia›US Law›US Codes and Statutes›Code of Alabama›2023 Code of Alabama›Title 7 - Commercial Code.›Article 3 - Negotiable Instruments.›Part 1 - General Provisions and Definitions.›Section 7-3-109 - Payable to Bearer or to Order.
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2023 Code of Alabama › Title 7 - Commercial Code. › Article 3 - Negotiable Instruments. › Part 1 - General Provisions and Definitions. › Section 7-3-109 - Payable to Bearer or to Order.
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Section 7-3-109
Payable to bearer or to order.
(a) A promise or order is payable to bearer if it:
(1) States that it is payable to bearer or to the order of bearer or otherwise indicates that the person in possession of the promise or order is entitled to payment;
(2) Does not state a payee; or
(3) States that it is payable to or to the order of cash or otherwise indicates that it is not payable to an identified person.
(b) A promise or order that is not payable to bearer is payable to order if it is payable (i) to the order of an identified person or (ii) to an identified person or order. A promise or order that is payable to order is payable to the identified person.
(c) An instrument payable to bearer may become payable to an identified person if it is specially indorsed pursuant to Section 7-3-205(a). An instrument payable to an identified person may become payable to bearer if it is indorsed in blank pursuant to Section 7-3-205(b).
(Acts 1995, No. 95-668, p. 1381, §1.)
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https://law.justia.com/codes/alabama/title-7/article-3/part-1/section-7-3-110/
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Justia›US Law›US Codes and Statutes›Code of Alabama›2023 Code of Alabama›Title 7 - Commercial Code.›Article 3 - Negotiable Instruments.›Part 1 - General Provisions and Definitions.›Section 7-3-110 - Identification of Person to Whom Instrument Is Payable.
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2023 Code of Alabama › Title 7 - Commercial Code. › Article 3 - Negotiable Instruments. › Part 1 - General Provisions and Definitions. › Section 7-3-110 - Identification of Person to Whom Instrument Is Payable.
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Section 7-3-110
Identification of person to whom instrument is payable.
(a) The person to whom an instrument is initially payable is determined by the intent of the person, whether or not authorized, signing as, or in the name or behalf of, the issuer of the instrument. The instrument is payable to the person intended by the signer even if that person is identified in the instrument by a name or other identification that is not that of the intended person. If more than one person signs in the name or behalf of the issuer of an instrument and all the signers do not intend the same person as payee, the instrument is payable to any person intended by one or more of the signers.
(b) If the signature of the issuer of an instrument is made by automated means, such as a check-writing machine, the payee of the instrument is determined by the intent of the person who supplied the name or identification of the payee, whether or not authorized to do so.
(c) A person to whom an instrument is payable may be identified in any way, including by name, identifying number, office, or account number. For the purpose of determining the holder of an instrument, the following rules apply:
(1) If an instrument is payable to an account and the account is identified only by number, the instrument is payable to the person to whom the account is payable. If an instrument is payable to an account identified by number and by the name of a person, the instrument is payable to the named person, whether or not that person is the owner of the account identified by number.
(2) If an instrument is payable to:
(i) A trust, an estate, or a person described as trustee or representative of a trust or estate, the instrument is payable to the trustee, the representative, or a successor of either, regardless of whether the beneficiary or estate is also named;
(ii) A person described as agent or similar representative of a named or identified person, the instrument is payable to the represented person, the representative, or a successor of the representative;
(iii) A fund or organization that is not a legal entity, the instrument is payable to a representative of the members of the fund or organization; or
(iv) An office or to a person described as holding an office, the instrument is payable to the named person, the incumbent of the office, or a successor to the incumbent.
(d) If an instrument is payable to two or more persons alternatively, it is payable to any of them and may be negotiated, discharged, or enforced by any or all of them in possession of the instrument. If an instrument is payable to two or more persons not alternatively, it is payable to all of them and may be negotiated, discharged, or enforced only by all of them. If an instrument payable to two or more persons is ambiguous as to whether it is payable to the persons alternatively, the instrument is payable to the persons alternatively.
(Acts 1965, No. 549, p. 811; repealed by Acts 1995, No. 95-668, p. 1381, §1; added by Acts 1995, No. 95-668, p. 1381, §1.)
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Justia›US Law›US Codes and Statutes›Code of Alabama›2023 Code of Alabama›Title 7 - Commercial Code.›Article 3 - Negotiable Instruments.›Part 1 - General Provisions and Definitions.›Section 7-3-111 - Place of Payment.
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2023 Code of Alabama › Title 7 - Commercial Code. › Article 3 - Negotiable Instruments. › Part 1 - General Provisions and Definitions. › Section 7-3-111 - Place of Payment.
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Section 7-3-111
Place of payment.
Except as otherwise provided for items in Article 4, an instrument is payable at the place of payment stated in the instrument. If no place of payment is stated, an instrument is payable at the address of the drawee or maker stated in the instrument. If no address is stated, the place of payment is the place of business of the drawee or maker. If a drawee or maker has more than one place of business, the place of payment is any place of business of the drawee or maker chosen by the person entitled to enforce the instrument. If the drawee or maker has no place of business, the place of payment is the residence of the drawee or maker.
(Acts 1995, No. 95-668, p. 1381, §1.)
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Justia›US Law›US Codes and Statutes›Code of Alabama›2023 Code of Alabama›Title 7 - Commercial Code.›Article 3 - Negotiable Instruments.›Part 1 - General Provisions and Definitions.›Section 7-3-112 - Interest.
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2023 Code of Alabama › Title 7 - Commercial Code. › Article 3 - Negotiable Instruments. › Part 1 - General Provisions and Definitions. › Section 7-3-112 - Interest.
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Section 7-3-112
Interest.
(a) Unless otherwise provided in the instrument, (i) an instrument is not payable with interest until dishonor, and (ii) interest on an interest-bearing instrument is payable from the date of the instrument.
(b) Interest may be stated in an instrument as a fixed or variable amount of money or it may be expressed as a fixed or variable rate or rates. The amount or rate of interest may be stated or described in the instrument in any manner and may require reference to information not contained in the instrument. If an instrument provides for interest, but the amount of interest payable cannot be ascertained from the description, interest is payable at the judgment rate in effect at the place of payment of the instrument and at the time interest first accrues.
(Acts 1995, No. 95-668, p. 1381, §1.)
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https://law.justia.com/codes/alabama/title-7/article-3/part-1/section-7-3-113/
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Justia›US Law›US Codes and Statutes›Code of Alabama›2023 Code of Alabama›Title 7 - Commercial Code.›Article 3 - Negotiable Instruments.›Part 1 - General Provisions and Definitions.›Section 7-3-113 - Date of Instrument.
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2023 Code of Alabama › Title 7 - Commercial Code. › Article 3 - Negotiable Instruments. › Part 1 - General Provisions and Definitions. › Section 7-3-113 - Date of Instrument.
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Section 7-3-113
Date of instrument.
(a) An instrument may be antedated or postdated. The date stated determines the time of payment if the instrument is payable at a fixed period after date. Except as provided in Section 7-4-401(c), an instrument payable on demand is not payable before the date of the instrument.
(b) If an instrument is undated, its date is the date of its issue or, in the case of an unissued instrument, the date it first comes into possession of a holder.
(Acts 1995, No. 95-668, p. 1381, §1.)
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Justia›US Law›US Codes and Statutes›Code of Alabama›2023 Code of Alabama›Title 7 - Commercial Code.›Article 3 - Negotiable Instruments.›Part 1 - General Provisions and Definitions.›Section 7-3-114 - Contradictory Terms of Instrument.
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2023 Code of Alabama › Title 7 - Commercial Code. › Article 3 - Negotiable Instruments. › Part 1 - General Provisions and Definitions. › Section 7-3-114 - Contradictory Terms of Instrument.
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Section 7-3-114
Contradictory terms of instrument.
If an instrument contains contradictory terms, typewritten terms prevail over printed terms, handwritten terms prevail over both, and words prevail over numbers.
(Acts 1995, No. 95-668, p. 1381, §1.)
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https://law.justia.com/codes/alabama/title-7/article-3/part-1/section-7-3-115/
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Justia›US Law›US Codes and Statutes›Code of Alabama›2023 Code of Alabama›Title 7 - Commercial Code.›Article 3 - Negotiable Instruments.›Part 1 - General Provisions and Definitions.›Section 7-3-115 - Incomplete Instrument.
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2023 Code of Alabama › Title 7 - Commercial Code. › Article 3 - Negotiable Instruments. › Part 1 - General Provisions and Definitions. › Section 7-3-115 - Incomplete Instrument.
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Section 7-3-115
Incomplete instrument.
(a) "Incomplete instrument" means a signed writing, whether or not issued by the signer, the contents of which show at the time of signing that it is incomplete but that the signer intended it to be completed by the addition of words or numbers.
(b) Subject to subsection (c), if an incomplete instrument is an instrument under Section 7-3-104, it may be enforced according to its terms if it is not completed, or according to its terms as augmented by completion. If an incomplete instrument is not an instrument under Section 7-3-104, but, after completion, the requirements of Section 7-3-104 are met, the instrument may be enforced according to its terms as augmented by completion.
(c) If words or numbers are added to an incomplete instrument without authority of the signer, there is an alteration of the incomplete instrument under Section 7-3-407.
(d) The burden of establishing that words or numbers were added to an incomplete instrument without authority of the signer is on the person asserting the lack of authority.
(Acts 1965, No. 549, p. 811; repealed by Acts 1995, No. 95-668, p. 1381, §1; added by Acts 1995, No. 95-668, p. 1381, §1.)
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https://law.justia.com/codes/alabama/title-7/article-3/part-1/section-7-3-116/
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Justia›US Law›US Codes and Statutes›Code of Alabama›2023 Code of Alabama›Title 7 - Commercial Code.›Article 3 - Negotiable Instruments.›Part 1 - General Provisions and Definitions.›Section 7-3-116 - Joint and Several Liability; Contribution.
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2023 Code of Alabama › Title 7 - Commercial Code. › Article 3 - Negotiable Instruments. › Part 1 - General Provisions and Definitions. › Section 7-3-116 - Joint and Several Liability; Contribution.
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Section 7-3-116
Joint and several liability; contribution.
(a) Except as otherwise provided in the instrument, two or more persons who have the same liability on an instrument as makers, drawers, acceptors, indorsers who indorse as joint payees, or anomalous indorsers are jointly and severally liable in the capacity in which they sign.
(b) Except as provided in Section 7-3-419(e) or by agreement of the affected parties, a party having joint and several liability who pays the instrument is entitled to receive from any party having the same joint and several liability contribution in accordance with applicable law.
(c) Discharge of one party having joint and several liability by a person entitled to enforce the instrument does not affect the right under subsection (b) of a party having the same joint and several liability to receive contribution from the party discharged.
(Acts 1995, No. 95-668, p. 1381, §1.)
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https://law.justia.com/codes/alabama/title-7/article-3/part-1/section-7-3-117/
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Justia›US Law›US Codes and Statutes›Code of Alabama›2023 Code of Alabama›Title 7 - Commercial Code.›Article 3 - Negotiable Instruments.›Part 1 - General Provisions and Definitions.›Section 7-3-117 - Other Agreements Affecting Instrument.
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2023 Code of Alabama › Title 7 - Commercial Code. › Article 3 - Negotiable Instruments. › Part 1 - General Provisions and Definitions. › Section 7-3-117 - Other Agreements Affecting Instrument.
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Section 7-3-117
Other agreements affecting instrument.
Subject to applicable law regarding exclusion of proof of contemporaneous or previous agreements, the obligation of a party to an instrument to pay the instrument may be modified, supplemented, or nullified by a separate agreement of the obligor and a person entitled to enforce the instrument, if the instrument is issued or the obligation is incurred in reliance on the agreement or as part of the same transaction giving rise to the agreement. To the extent an obligation is modified, supplemented, or nullified by an agreement under this section, the agreement is a defense to the obligation.
(Acts 1995, No. 95-668, p. 1381, §1.)
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https://law.justia.com/codes/alabama/title-7/article-3/part-1/section-7-3-118/
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Justia›US Law›US Codes and Statutes›Code of Alabama›2023 Code of Alabama›Title 7 - Commercial Code.›Article 3 - Negotiable Instruments.›Part 1 - General Provisions and Definitions.›Section 7-3-118 - Statute of Limitations.
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2023 Code of Alabama › Title 7 - Commercial Code. › Article 3 - Negotiable Instruments. › Part 1 - General Provisions and Definitions. › Section 7-3-118 - Statute of Limitations.
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Section 7-3-118
Statute of limitations.
(a) Note payable at a definite time. Except as provided in subsection (e), an action to enforce the obligation of a party to pay a note payable at a definite time must be commenced within six years after the due date or dates stated in the note or, if a due date is accelerated, within six years after the accelerated due date.
(b) Note payable on demand. Except as provided in subsection (d) or (e), if demand for payment is made to the maker of a note payable on demand, an action to enforce the obligation of a party to pay the note must be commenced within six years after the demand. If no demand for payment is made to the maker, an action to enforce the note is barred if neither principal nor interest on the note has been paid for a continuous period of 10 years.
(c) Unaccepted draft. Except as provided in subsection (d), an action to enforce the obligation of a party to an unaccepted draft to pay the draft must be commenced within three years after dishonor of the draft or 10 years after the date of the draft, whichever period expires first.
(d) Certified check, teller's check, cashier's check and traveler's check. An action to enforce the obligation of the acceptor of a certified check or the issuer of a teller's check, cashier's check, or traveler's check must be commenced within three years after demand for payment is made to the acceptor or issuer, as the case may be.
(e) Certificate of deposit. An action to enforce the obligation of a party to a certificate of deposit to pay the instrument must be commenced within six years after demand for payment is made to the maker, but if the instrument states a due date and the maker is not required to pay before that date, the six-year period begins when a demand for payment is in effect and the due date has passed.
(f) Accepted draft. An action to enforce the obligation of a party to pay an accepted draft, other than a certified check, must be commenced (i) within six years after the due date or dates stated in the draft or acceptance if the obligation of the acceptor is payable at a definite time, or (ii) within six years after the date of the acceptance if the obligation of the acceptor is payable on demand.
(g) Conversion, breach of warranty and other Article 3 actions. Unless governed by other law regarding claims for indemnity or contribution, an action (i) for conversion of an instrument, for money had and received, or like action based on conversion, (ii) for breach of warranty, or (iii) to enforce an obligation, duty, or right arising under this article and not governed by this section must be commenced within three years after the cause of action accrues.
(Acts 1995, No. 95-668, p. 1381, §1.)
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Justia›US Law›US Codes and Statutes›Code of Alabama›2023 Code of Alabama›Title 7 - Commercial Code.›Article 3 - Negotiable Instruments.›Part 1 - General Provisions and Definitions.›Section 7-3-119 - Notice of Right to Defend Action.
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2023 Code of Alabama › Title 7 - Commercial Code. › Article 3 - Negotiable Instruments. › Part 1 - General Provisions and Definitions. › Section 7-3-119 - Notice of Right to Defend Action.
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Section 7-3-119
Notice of right to defend action.
In an action for breach of an obligation for which a third person is answerable over pursuant to this article or Article 4, the defendant may give the third person written notice of the litigation, and the person notified may then give similar notice to any other person who is answerable over. If the notice states (i) that the person notified may come in and defend and (ii) that failure to do so will bind the person notified in an action later brought by the person giving the notice as to any determination of fact common to the two litigations, the person notified is so bound unless after seasonable receipt of the notice the person notified does come in and defend.
(Acts 1995, No. 95-668, p. 1381, §1.)
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Justia›US Law›US Codes and Statutes›Code of Alabama›2023 Code of Alabama›Title 7 - Commercial Code.›Article 3 - Negotiable Instruments.›Part 2 - Negotiation, Transfer, and Indorsement.›Section 7-3-201 - Negotiation.
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2023 Code of Alabama › Title 7 - Commercial Code. › Article 3 - Negotiable Instruments. › Part 2 - Negotiation, Transfer, and Indorsement. › Section 7-3-201 - Negotiation.
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Section 7-3-201
Negotiation.
(a) "Negotiation" means a transfer of possession, whether voluntary or involuntary, of an instrument by a person other than the issuer to a person who thereby becomes its holder.
(b) Except for negotiation by a remitter, if an instrument is payable to an identified person, negotiation requires transfer of possession of the instrument and its indorsement by the holder. If an instrument is payable to bearer, it may be negotiated by transfer of possession alone.
(Acts 1995, No. 95-668, p. 1381, §1.)
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Justia›US Law›US Codes and Statutes›Code of Alabama›2023 Code of Alabama›Title 7 - Commercial Code.›Article 3 - Negotiable Instruments.›Part 2 - Negotiation, Transfer, and Indorsement.›Section 7-3-202 - Negotiation Subject to Rescission.
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2023 Code of Alabama › Title 7 - Commercial Code. › Article 3 - Negotiable Instruments. › Part 2 - Negotiation, Transfer, and Indorsement. › Section 7-3-202 - Negotiation Subject to Rescission.
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Section 7-3-202
Negotiation subject to rescission.
(a) Negotiation is effective even if obtained (i) from an infant, a corporation exceeding its powers, or a person without capacity, (ii) by fraud, duress, or mistake, or (iii) in breach of duty or as part of an illegal transaction.
(b) To the extent permitted by other law, negotiation may be rescinded or may be subject to other remedies, but those remedies may not be asserted against a subsequent holder in due course or a person paying the instrument in good faith and without knowledge of facts that are a basis for rescission or other remedy.
(Acts 1995, No. 95-668, p. 1381, §1.)
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Justia›US Law›US Codes and Statutes›Code of Alabama›2023 Code of Alabama›Title 7 - Commercial Code.›Article 3 - Negotiable Instruments.›Part 2 - Negotiation, Transfer, and Indorsement.›Section 7-3-203 - Transfer of Instrument; Rights Acquired by Transfer.
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2023 Code of Alabama › Title 7 - Commercial Code. › Article 3 - Negotiable Instruments. › Part 2 - Negotiation, Transfer, and Indorsement. › Section 7-3-203 - Transfer of Instrument; Rights Acquired by Transfer.
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Section 7-3-203
Transfer of instrument; rights acquired by transfer.
(a) An instrument is transferred when it is delivered by a person other than its issuer for the purpose of giving to the person receiving delivery the right to enforce the instrument.
(b) Transfer of an instrument, whether or not the transfer is a negotiation, vests in the transferee any right of the transferor to enforce the instrument, including any right as a holder in due course, but the transferee cannot acquire rights of a holder in due course by a transfer, directly or indirectly, from a holder in due course if the transferee engaged in fraud or illegality affecting the instrument.
(c) Unless otherwise agreed, if an instrument is transferred for value and the transferee does not become a holder because of lack of indorsement by the transferor, the transferee has a specifically enforceable right to the unqualified indorsement of the transferor, but negotiation of the instrument does not occur until the indorsement is made.
(d) If a transferor purports to transfer less than the entire instrument, negotiation of the instrument does not occur. The transferee obtains no rights under this article and has only the rights of a partial assignee.
(Acts 1995, No. 95-668, p. 1381, §1.)
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Justia›US Law›US Codes and Statutes›Code of Alabama›2023 Code of Alabama›Title 7 - Commercial Code.›Article 3 - Negotiable Instruments.›Part 2 - Negotiation, Transfer, and Indorsement.›Section 7-3-204 - Indorsement.
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2023 Code of Alabama › Title 7 - Commercial Code. › Article 3 - Negotiable Instruments. › Part 2 - Negotiation, Transfer, and Indorsement. › Section 7-3-204 - Indorsement.
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Section 7-3-204
Indorsement.
(a) "Indorsement" means a signature, other than that of a signer as maker, drawer, or acceptor, that alone or accompanied by other words is made on an instrument for the purpose of (i) negotiating the instrument, (ii) restricting payment of the instrument, or (iii) incurring indorser's liability on the instrument, but regardless of the intent of the signer, a signature and its accompanying words is an indorsement unless the accompanying words, terms of the instrument, place of the signature, or other circumstances unambiguously indicate that the signature was made for a purpose other than indorsement. For the purpose of determining whether a signature is made on an instrument, a paper affixed to the instrument is a part of the instrument.
(b) "Indorser" means a person who makes an indorsement.
(c) For the purpose of determining whether the transferee of an instrument is a holder, an indorsement that transfers a security interest in the instrument is effective as an unqualified indorsement of the instrument.
(d) If an instrument is payable to a holder under a name that is not the name of the holder, indorsement may be made by the holder in the name stated in the instrument or in the holder's name or both, but signature in both names may be required by a person paying or taking the instrument for value or collection.
(Acts 1995, No. 95-668, p. 1381, §1.)
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Justia›US Law›US Codes and Statutes›Code of Alabama›2023 Code of Alabama›Title 7 - Commercial Code.›Article 3 - Negotiable Instruments.›Part 2 - Negotiation, Transfer, and Indorsement.›Section 7-3-205 - Special Indorsement; Blank Indorsement; Anomalous Indorsement.
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2023 Code of Alabama › Title 7 - Commercial Code. › Article 3 - Negotiable Instruments. › Part 2 - Negotiation, Transfer, and Indorsement. › Section 7-3-205 - Special Indorsement; Blank Indorsement; Anomalous Indorsement.
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Section 7-3-205
Special indorsement; blank indorsement; anomalous indorsement.
(a) If an indorsement is made by the holder of an instrument, whether payable to an identified person or payable to bearer, and the indorsement identifies a person to whom it makes the instrument payable, it is a "special indorsement." When specially indorsed, an instrument becomes payable to the identified person and may be negotiated only by the indorsement of that person. The principles stated in Section 7-3-110 apply to special indorsements.
(b) If an indorsement is made by the holder of an instrument and it is not a special indorsement, it is a "blank indorsement." When indorsed in blank, an instrument becomes payable to bearer and may be negotiated by transfer of possession alone until specially indorsed.
(c) The holder may convert a blank indorsement that consists only of a signature into a special indorsement by writing, above the signature of the indorser, words identifying the person to whom the instrument is made payable.
(d) "Anomalous indorsement" means an indorsement made by a person who is not the holder of the instrument. An anomalous indorsement does not affect the manner in which the instrument may be negotiated.
(Acts 1995, No. 95-668, p. 1381, §1.)
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https://law.justia.com/codes/alabama/title-7/article-3/part-2/section-7-3-206/
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Justia›US Law›US Codes and Statutes›Code of Alabama›2023 Code of Alabama›Title 7 - Commercial Code.›Article 3 - Negotiable Instruments.›Part 2 - Negotiation, Transfer, and Indorsement.›Section 7-3-206 - Restrictive Indorsement.
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2023 Code of Alabama › Title 7 - Commercial Code. › Article 3 - Negotiable Instruments. › Part 2 - Negotiation, Transfer, and Indorsement. › Section 7-3-206 - Restrictive Indorsement.
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Section 7-3-206
Restrictive indorsement.
(a) An indorsement limiting payment to a particular person or otherwise prohibiting further transfer or negotiation of the instrument is not effective to prevent further transfer or negotiation of the instrument.
(b) An indorsement stating a condition to the right of the indorsee to receive payment does not affect the right of the indorsee to enforce the instrument. A person paying the instrument or taking it for value or collection may disregard the condition, and the rights and liabilities of that person are not affected by whether the condition has been fulfilled.
(c) If an instrument bears an indorsement (i) described in Section 7-4-201(b), or (ii) in blank or to a particular bank using the words "for deposit," "for collection," or other words indicating a purpose of having the instrument collected by a bank for the indorser or for a particular account, the following rules apply:
(1) A person, other than a bank, who purchases the instrument when so indorsed converts the instrument unless the amount paid for the instrument is received by the indorser or applied consistently with the indorsement.
(2) A depositary bank that purchases the instrument or takes it for collection when so indorsed converts the instrument unless the amount paid by the bank with respect to the instrument is received by the indorser or applied consistently with the indorsement.
(3) A payor bank that is also the depositary bank or that takes the instrument for immediate payment over the counter from a person other than a collecting bank converts the instrument unless the proceeds of the instrument are received by the indorser or applied consistently with the indorsement.
(4) Except as otherwise provided in subdivision (3), a payor bank or intermediary bank may disregard the indorsement and is not liable if the proceeds of the instrument are not received by the indorser or applied consistently with the indorsement.
(d) Except for an indorsement covered by subsection (c), if an instrument bears an indorsement using words to the effect that payment is to be made to the indorsee as agent, trustee, or other fiduciary for the benefit of the indorser or another person, the following rules apply:
(1) Unless there is notice of breach of fiduciary duty as provided in Section 7-3-307, a person who purchases the instrument from the indorsee or takes the instrument from the indorsee for collection or payment may pay the proceeds of payment or the value given for the instrument to the indorsee without regard to whether the indorsee violates a fiduciary duty to the indorser.
(2) A subsequent transferee of the instrument or person who pays the instrument is neither given notice nor otherwise affected by the restriction in the indorsement unless the transferee or payor knows that the fiduciary dealt with the instrument or its proceeds in breach of fiduciary duty.
(e) The presence on an instrument of an indorsement to which this section applies does not prevent a purchaser of the instrument from becoming a holder in due course of the instrument unless the purchaser is a converter under subsection (c) or has notice or knowledge of breach of fiduciary duty as stated in subsection (d).
(f) In an action to enforce the obligation of a party to pay the instrument, the obligor has a defense if payment would violate an indorsement to which this section applies and the payment is not permitted by this section.
(Acts 1965, No. 549, p. 811; repealed by Acts 1995, No. 95-668, §1; added by Acts 1995, No. 95-668, p. 1381, §1.)
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Justia›US Law›US Codes and Statutes›Code of Alabama›2023 Code of Alabama›Title 7 - Commercial Code.›Article 3 - Negotiable Instruments.›Part 2 - Negotiation, Transfer, and Indorsement.›Section 7-3-207 - Reacquisition.
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2023 Code of Alabama › Title 7 - Commercial Code. › Article 3 - Negotiable Instruments. › Part 2 - Negotiation, Transfer, and Indorsement. › Section 7-3-207 - Reacquisition.
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Section 7-3-207
Reacquisition.
Reacquisition of an instrument occurs if it is transferred to a former holder, by negotiation or otherwise. A former holder who reacquires the instrument may cancel indorsements made after the reacquirer first became a holder of the instrument. If the cancellation causes the instrument to be payable to the reacquirer or to bearer, the reacquirer may negotiate the instrument. An indorser whose indorsement is canceled is discharged, and the discharge is effective against any subsequent holder.
(Acts 1995, No. 95-668, p. 1381, §1.)
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Justia›US Law›US Codes and Statutes›Code of Alabama›2023 Code of Alabama›Title 7 - Commercial Code.›Article 3 - Negotiable Instruments.›Part 3 - Enforcement of Instruments.›Section 7-3-301 - Person Entitled to Enforce Instrument.
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2023 Code of Alabama › Title 7 - Commercial Code. › Article 3 - Negotiable Instruments. › Part 3 - Enforcement of Instruments. › Section 7-3-301 - Person Entitled to Enforce Instrument.
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Section 7-3-301
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 7-3-309 or 7-3-418(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.
(Acts 1995, No. 95-668, p. 1381, §1.)
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Justia›US Law›US Codes and Statutes›Code of Alabama›2023 Code of Alabama›Title 7 - Commercial Code.›Article 3 - Negotiable Instruments.›Part 3 - Enforcement of Instruments.›Section 7-3-302 - Holder in Due Course.
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2023 Code of Alabama › Title 7 - Commercial Code. › Article 3 - Negotiable Instruments. › Part 3 - Enforcement of Instruments. › Section 7-3-302 - Holder in Due Course.
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Section 7-3-302
Holder in due course.
(a) Subject to subsection (c) and Section 7-3-106(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 7-3-306, and (vi) without notice that any party has a defense or claim in recoupment described in Section 7-3-305(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 in an execution, bankruptcy, or creditor's sale or similar proceeding, (ii) by purchase as part of a bulk transaction not in ordinary course of business of the transferor, or (iii) as the successor in interest to an estate or other organization.
(d) If, under Section 7-3-303(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.
(Acts 1965, No. 549, p. 811; repealed by Acts 1995, No. 95-668, p. 1381, §1; added by Acts 1995, No. 95-668, p. 1381, §1.)
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Justia›US Law›US Codes and Statutes›Code of Alabama›2023 Code of Alabama›Title 7 - Commercial Code.›Article 3 - Negotiable Instruments.›Part 3 - Enforcement of Instruments.›Section 7-3-303 - Value and Consideration.
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2023 Code of Alabama › Title 7 - Commercial Code. › Article 3 - Negotiable Instruments. › Part 3 - Enforcement of Instruments. › Section 7-3-303 - Value and Consideration.
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Section 7-3-303
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.
(Acts 1965, No. 549, p. 811; repealed by Acts 1995, No. 95-668, p. 1381, §1; added by Acts 1995, No. 95-668, p. 1381, §1.)
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Justia›US Law›US Codes and Statutes›Code of Alabama›2023 Code of Alabama›Title 7 - Commercial Code.›Article 3 - Negotiable Instruments.›Part 3 - Enforcement of Instruments.›Section 7-3-306 - Claims to an Instrument.
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2023 Code of Alabama › Title 7 - Commercial Code. › Article 3 - Negotiable Instruments. › Part 3 - Enforcement of Instruments. › Section 7-3-306 - Claims to an Instrument.
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Section 7-3-306
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.
(Acts 1965, No. 549, p. 811; repealed by Acts 1995, No. 95-668, p. 1381, §1; added by Acts 1995, No. 95-668, p. 1381, §1.)
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Justia›US Law›US Codes and Statutes›Code of Alabama›2023 Code of Alabama›Title 7 - Commercial Code.›Article 3 - Negotiable Instruments.›Part 3 - Enforcement of Instruments.›Section 7-3-304 - Overdue Instrument.
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2023 Code of Alabama › Title 7 - Commercial Code. › Article 3 - Negotiable Instruments. › Part 3 - Enforcement of Instruments. › Section 7-3-304 - Overdue Instrument.
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Section 7-3-304
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 duly made;
(2) If the instrument is a check, 90 days after its date; or
(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.
(Acts 1965, No. 549, p. 811; repealed by Acts 1995, No. 95-668, p. 1381, §1; added by Acts 1995, No. 95-668, p. 1381, §1.)
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Justia›US Law›US Codes and Statutes›Code of Alabama›2023 Code of Alabama›Title 7 - Commercial Code.›Article 3 - Negotiable Instruments.›Part 3 - Enforcement of Instruments.›Section 7-3-305 - Defenses and Claims in Recoupment.
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2023 Code of Alabama › Title 7 - Commercial Code. › Article 3 - Negotiable Instruments. › Part 3 - Enforcement of Instruments. › Section 7-3-305 - Defenses and Claims in Recoupment.
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Section 7-3-305
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 other 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 gave 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 7-3-306) 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, and lack of legal capacity.
(Acts 1965, No. 549, p. 811; repealed by Acts 1995, No. 95-668, p. 1381, §1; added by Acts 1995, No. 95-668, p. 1381, §1.)
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Justia›US Law›US Codes and Statutes›Code of Alabama›2023 Code of Alabama›Title 7 - Commercial Code.›Article 3 - Negotiable Instruments.›Part 3 - Enforcement of Instruments.›Section 7-3-307 - Notice of Breach of Fiduciary Duty.
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2023 Code of Alabama › Title 7 - Commercial Code. › Article 3 - Negotiable Instruments. › Part 3 - Enforcement of Instruments. › Section 7-3-307 - Notice of Breach of Fiduciary Duty.
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Section 7-3-307
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 subdivision (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, or (ii) taken in a transaction known by the taker to be for the personal benefit of the fiduciary.
(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, or (ii) taken in a transaction known by the taker to be for the personal benefit of the fiduciary.
(Acts 1995, No. 95-668, p. 1381, §1.)
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Justia›US Law›US Codes and Statutes›Code of Alabama›2023 Code of Alabama›Title 7 - Commercial Code.›Article 3 - Negotiable Instruments.›Part 3 - Enforcement of Instruments.›Section 7-3-308 - Proof of Signatures and Status as Holder in Due Course.
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2023 Code of Alabama › Title 7 - Commercial Code. › Article 3 - Negotiable Instruments. › Part 3 - Enforcement of Instruments. › Section 7-3-308 - Proof of Signatures and Status as Holder in Due Course.
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Section 7-3-308
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 under Section 7-3-402(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 7-3-301, 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.
(Acts 1995, No. 95-668, p. 1381, §1.)
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Justia›US Law›US Codes and Statutes›Code of Alabama›2023 Code of Alabama›Title 7 - Commercial Code.›Article 3 - Negotiable Instruments.›Part 3 - Enforcement of Instruments.›Section 7-3-309 - Enforcement of Lost, Destroyed, or Stolen Instrument.
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2023 Code of Alabama › Title 7 - Commercial Code. › Article 3 - Negotiable Instruments. › Part 3 - Enforcement of Instruments. › Section 7-3-309 - Enforcement of Lost, Destroyed, or Stolen Instrument.
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Section 7-3-309
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 seeking to enforce the instrument: (A) was entitled to enforce it when loss of possession occurred, or (B) has directly or indirectly acquired ownership of the instrument from a person who was entitled to enforce the instrument when the loss of possession occurred; and (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 7-3-308 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.
(Acts 1995, No. 95-668, p. 1381, §1; Act 2009-758, p. 2292, §1.)
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Justia›US Law›US Codes and Statutes›Code of Alabama›2023 Code of Alabama›Title 7 - Commercial Code.›Article 3 - Negotiable Instruments.›Part 3 - Enforcement of Instruments.›Section 7-3-310 - Effect of Instrument on Obligation for Which Taken.
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2023 Code of Alabama › Title 7 - Commercial Code. › Article 3 - Negotiable Instruments. › Part 3 - Enforcement of Instruments. › Section 7-3-310 - Effect of Instrument on Obligation for Which Taken.
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Section 7-3-310
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 subdivision (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.
(Acts 1995, No. 95-668, p. 1381, §1.)
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Justia›US Law›US Codes and Statutes›Code of Alabama›2023 Code of Alabama›Title 7 - Commercial Code.›Article 3 - Negotiable Instruments.›Part 3 - Enforcement of Instruments.›Section 7-3-311 - Accord and Satisfaction by Use of Instrument.
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2023 Code of Alabama › Title 7 - Commercial Code. › Article 3 - Negotiable Instruments. › Part 3 - Enforcement of Instruments. › Section 7-3-311 - Accord and Satisfaction by Use of Instrument.
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Section 7-3-311
Accord and satisfaction by use of instrument.
(a) If a person against whom a claim is asserted proves that (i) that person in good faith tendered an instrument to the claimant as full satisfaction of the claim, (ii) the amount of the claim was unliquidated or subject to a bona fide dispute, and (iii) the claimant obtained payment of the instrument, the following subsections apply.
(b) Unless subsection (c) applies, the 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 of the claim.
(c) Subject to subsection (d), a claim is not discharged under subsection (b) if either of the following applies:
(1) The claimant, if an organization, proves that (i) within a reasonable time before the tender, the claimant sent a conspicuous statement to the person against whom the claim is asserted that communications concerning disputed debts, including an instrument tendered as full satisfaction of a debt, are to be sent to a designated person, office, or place, and (ii) the instrument or accompanying communication was not received by that designated person, office, or place.
(2) The claimant, whether or not an organization, proves that within 90 days after payment of the instrument, the claimant tendered repayment of the amount of the instrument to the person against whom the claim is asserted. This subdivision does not apply if the claimant is an organization that sent a statement complying with subdivision (1) (i).
(d) A claim is discharged if the person against whom the claim is asserted proves that within a reasonable time before collection of the instrument was initiated, the claimant, or an agent of the claimant having direct responsibility with respect to the disputed obligation, knew that the instrument was tendered in full satisfaction of the claim.
(Acts 1995, No. 95-668, p. 1381, §1.)
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Justia›US Law›US Codes and Statutes›Code of Alabama›2023 Code of Alabama›Title 7 - Commercial Code.›Article 3 - Negotiable Instruments.›Part 3 - Enforcement of Instruments.›Section 7-3-312 - Lost, Destroyed, or Stolen Cashier's Check, Teller's Check, or Certified Check.
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2023 Code of Alabama › Title 7 - Commercial Code. › Article 3 - Negotiable Instruments. › Part 3 - Enforcement of Instruments. › Section 7-3-312 - Lost, Destroyed, or Stolen Cashier's Check, Teller's Check, or Certified Check.
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Section 7-3-312
Lost, destroyed, or stolen cashier's check, teller's check, or certified check.
(a) In this section:
(1) "Check" means a cashier's check, teller's check, or certified check.
(2) "Claimant" means a person who claims the right to receive the amount of a cashier's check, teller's check, or certified check that was lost, destroyed, or stolen.
(3) "Declaration of loss" means a written statement, made under penalty of perjury, to the effect that (i) the declarer lost possession of a check, (ii) the declarer is the drawer or payee of the check, in the case of a certified check, or the remitter or payee of the check, in the case of a cashier's check or teller's check, (iii) the loss of possession was not the result of a transfer by the declarer or a lawful seizure, and (iv) the declarer cannot reasonably obtain possession of the check because the check 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.
(4) "Obligated bank" means the issuer of a cashier's check or teller's check or the acceptor of a certified check.
(b) A claimant may assert a claim to the amount of a check by a communication to the obligated bank describing the check with reasonable certainty and requesting payment of the amount of the check, if (i) the claimant is the drawer or payee of a certified check or the remitter or payee of a cashier's check or teller's check, (ii) the communication contains or is accompanied by a declaration of loss of the claimant with respect to the check, (iii) the communication is received at a time and in a manner affording the bank a reasonable time to act on it before the check is paid, and (iv) the claimant provides reasonable identification if requested by the obligated bank. Delivery of a declaration of loss is a warranty of the truth of the statements made in the declaration. If a claim is asserted in compliance with this subsection, the following rules apply:
(1) The claim becomes enforceable at the later of (i) the time the claim is asserted, or (ii) the 90th day following the date of the check, in the case of a cashier's check or teller's check, or the 90th day following the date of the acceptance, in the case of a certified check.
(2) Until the claim becomes enforceable, it has no legal effect and the obligated bank may pay the check or, in the case of a teller's check, may permit the drawee to pay the check. Payment to a person entitled to enforce the check discharges all liability of the obligated bank with respect to the check.
(3) If the claim becomes enforceable before the check is presented for payment, the obligated bank is not obliged to pay the check.
(4) When the claim becomes enforceable, the obligated bank becomes obliged to pay the amount of the check to the claimant if payment of the check has not been made to a person entitled to enforce the check. Subject to Section 7-4-302(a) (1), payment to the claimant discharges all liability of the obligated bank with respect to the check.
(c) If the obligated bank pays the amount of a check to a claimant under subsection (b) (4) and the check is presented for payment by a person having rights of a holder in due course, the claimant is obliged to (i) refund the payment to the obligated bank if the check is paid, or (ii) pay the amount of the check to the person having rights of a holder in due course if the check is dishonored.
(d) If a claimant has the right to assert a claim under subsection (b) and is also a person entitled to enforce a cashier's check, teller's check, or certified check which is lost, destroyed, or stolen, the claimant may assert rights with respect to the check either under this section or Section 7-3-309.
(Acts 1995, No. 95-668, p. 1381, §1.)
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Justia›US Law›US Codes and Statutes›Code of Alabama›2023 Code of Alabama›Title 7 - Commercial Code.›Article 3 - Negotiable Instruments.›Part 4 - Liability of Parties.›Section 7-3-401 - Signature.
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2023 Code of Alabama › Title 7 - Commercial Code. › Article 3 - Negotiable Instruments. › Part 4 - Liability of Parties. › Section 7-3-401 - Signature.
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Section 7-3-401
Signature.
(a) A person is not liable on an instrument unless (i) the person signed the instrument, or (ii) the person is represented by an agent or representative who signed the instrument and the signature is binding on the represented person under Section 7-3-402.
(b) A signature may be made (i) manually or by means of a device or machine, and (ii) by the use of any name, including a trade or assumed name, or by a word, mark, or symbol executed or adopted by a person with present intention to authenticate a writing.
(Acts 1965, No. 549, p. 811; repealed by Acts 1995, No. 95-668, p. 1381, §1; added by Acts 1995, No. 95-668, p. 1381, §1.)
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Justia›US Law›US Codes and Statutes›Code of Alabama›2023 Code of Alabama›Title 7 - Commercial Code.›Article 3 - Negotiable Instruments.›Part 4 - Liability of Parties.›Section 7-3-402 - Signature by Representative.
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2023 Code of Alabama › Title 7 - Commercial Code. › Article 3 - Negotiable Instruments. › Part 4 - Liability of Parties. › Section 7-3-402 - Signature by Representative.
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Section 7-3-402
Signature by representative.
(a) If a person acting, or purporting to act, as a representative signs an instrument by signing either the name of the represented person or the name of the signer, the represented person is bound by the signature to the same extent the represented person would be bound if the signature were on a simple contract. If the represented person is bound, the signature of the representative is the "authorized signature of the represented person" and the represented person is liable on the instrument, whether or not identified in the instrument.
(b) If a representative signs the name of the representative to an instrument and the signature is an authorized signature of the represented person, the following rules apply:
(1) If the form of the signature shows unambiguously that the signature is made on behalf of the represented person who is identified in the instrument, the representative is not liable on the instrument.
(2) Subject to subsection (c), if (i) the form of the signature does not show unambiguously that the signature is made in a representative capacity or (ii) the represented person is not identified in the instrument, the representative is liable on the instrument to a holder in due course that took the instrument without notice that the representative was not intended to be liable on the instrument. With respect to any other person, the representative is liable on the instrument unless the representative proves that the original parties did not intend the representative to be liable on the instrument.
(c) If a representative signs the name of the representative as drawer of a check without indication of the representative status and the check is payable from an account of the represented person who is identified on the check, the signer is not liable on the check if the signature is an authorized signature of the represented person.
(Acts 1995, No. 95-668, p. 1381, §1.)
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Justia›US Law›US Codes and Statutes›Code of Alabama›2023 Code of Alabama›Title 7 - Commercial Code.›Article 3 - Negotiable Instruments.›Part 4 - Liability of Parties.›Section 7-3-403 - Unauthorized Signature.
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2023 Code of Alabama › Title 7 - Commercial Code. › Article 3 - Negotiable Instruments. › Part 4 - Liability of Parties. › Section 7-3-403 - Unauthorized Signature.
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Section 7-3-403
Unauthorized signature.
(a) Unless otherwise provided in this article or Article 4, an unauthorized signature is ineffective except as the signature of the unauthorized signer in favor of a person who in good faith pays the instrument or takes it for value. An unauthorized signature may be ratified for all purposes of this article.
(b) If the signature of more than one person is required to constitute the authorized signature of an organization, the signature of the organization is unauthorized if one of the required signatures is lacking.
(c) The civil or criminal liability of a person who makes an unauthorized signature is not affected by any provision of this article which makes the unauthorized signature effective for the purposes of this article.
(Acts 1995, No. 95-668, p. 1381, §1.)
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Justia›US Law›US Codes and Statutes›Code of Alabama›2023 Code of Alabama›Title 7 - Commercial Code.›Article 3 - Negotiable Instruments.›Part 4 - Liability of Parties.›Section 7-3-404 - Impostors; Fictitious Payees.
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2023 Code of Alabama › Title 7 - Commercial Code. › Article 3 - Negotiable Instruments. › Part 4 - Liability of Parties. › Section 7-3-404 - Impostors; Fictitious Payees.
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Section 7-3-404
Impostors; fictitious payees.
(a) If an impostor, by use of the mails or otherwise, induces the issuer of an instrument to issue the instrument to the impostor, or to a person acting in concert with the impostor, by impersonating the payee of the instrument or a person authorized to act for the payee, an indorsement of the instrument by any person in the name of the payee is effective as the indorsement of the payee in favor of a person who, in good faith, pays the instrument or takes it for value or for collection.
(b) If (i) a person whose intent determines to whom an instrument is payable (Section 7-3-110(a) or (b)) does not intend the person identified as payee to have any interest in the instrument, or (ii) the person identified as payee of an instrument is a fictitious person, the following rules apply until the instrument is negotiated by special indorsement:
(1) Any person in possession of the instrument is its holder.
(2) An indorsement by any person in the name of the payee stated in the instrument is effective as the indorsement of the payee in favor of a person who, in good faith, pays the instrument or takes it for value or for collection.
(c) Under subsection (a) or (b), an indorsement is made in the name of a payee if (i) it is made in a name substantially similar to that of the payee or (ii) the instrument, whether or not indorsed, is deposited in a depositary bank to an account in a name substantially similar to that of the payee.
(d) With respect to an instrument to which subsection (a) or (b) applies, if a person paying the instrument or taking it for value or for collection fails to exercise ordinary care in paying or taking the instrument and that failure substantially contributes to loss resulting from payment of the instrument, the person bearing the loss may recover from the person failing to exercise ordinary care to the extent the failure to exercise ordinary care contributed to the loss.
(e) The adoption of a comparative fault approach in subsection (d) and in Sections 7-3-405 and 7-3-406 is limited to transactions treated under this article and Section 7-4-406 of Article 4 of the Uniform Commercial Code - Bank Deposits and Collections.
(Acts 1995, No. 95-668, p. 1381, §1.)
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Justia›US Law›US Codes and Statutes›Code of Alabama›2023 Code of Alabama›Title 7 - Commercial Code.›Article 3 - Negotiable Instruments.›Part 4 - Liability of Parties.›Section 7-3-405 - Employer's Responsibility for Fraudulent Indorsement by Employee.
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2023 Code of Alabama › Title 7 - Commercial Code. › Article 3 - Negotiable Instruments. › Part 4 - Liability of Parties. › Section 7-3-405 - Employer's Responsibility for Fraudulent Indorsement by Employee.
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Section 7-3-405
Employer's responsibility for fraudulent indorsement by employee.
(a) This section applies to fraudulent indorsements of instruments with respect to which an employer has entrusted an employee with responsibility as part of the employee's duties. The following definitions apply to this section:
(1) "Employee" includes an independent contractor and employee of an independent contractor retained by the employer.
(2) "Fraudulent indorsement" means (i) in the case of an instrument payable to the employer, a forged indorsement purporting to be that of the employer, or (ii) in the case of an instrument with respect to which the employer is the issuer, a forged indorsement purporting to be that of the person identified as payee.
(3) "Responsibility" with respect to instruments means authority (i) to sign or indorse instruments on behalf of the employer, (ii) to process instruments received by the employer for bookkeeping purposes, for deposit to an account, or for other disposition, (iii) to prepare or process instruments for issue in the name of the employer, (iv) to supply information determining the names or addresses of payees of instruments to be issued in the name of the employer, (v) to control the disposition of instruments to be issued in the name of the employer, or (vi) to act otherwise with respect to instruments in a responsible capacity. "Responsibility" does not include authority that merely allows an employee to have access to instruments or blank or incomplete instrument forms that are being stored or transported or are part of incoming or outgoing mail, or similar access.
(b) For the purpose of determining the rights and liabilities of a person who, in good faith, pays an instrument or takes it for value or for collection, if an employer entrusted an employee with responsibility with respect to the instrument and the employee or a person acting in concert with the employee makes a fraudulent indorsement of the instrument, the indorsement is effective as the indorsement of the person to whom the instrument is payable if it is made in the name of that person. If the person paying the instrument or taking it for value or for collection fails to exercise ordinary care in paying or taking the instrument and that failure substantially contributes to loss resulting from the fraud, the person bearing the loss may recover from the person failing to exercise ordinary care to the extent the failure to exercise ordinary care contributed to the loss.
(c) Under subsection (b), an indorsement is made in the name of the person to whom an instrument is payable if (i) it is made in a name substantially similar to the name of that person or (ii) the instrument, whether or not indorsed, is deposited in a depositary bank to an account in a name substantially similar to the name of that person.
(Acts 1965, No. 549, p. 811; repealed by Acts 1995, No. 95-668, p. 1381, §1; added by Acts 1995, No. 95-668, p. 1381, §1.)
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Justia›US Law›US Codes and Statutes›Code of Alabama›2023 Code of Alabama›Title 7 - Commercial Code.›Article 3 - Negotiable Instruments.›Part 4 - Liability of Parties.›Section 7-3-406 - Negligence Contributing to Forged Signature or Alteration of Instrument.
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2023 Code of Alabama › Title 7 - Commercial Code. › Article 3 - Negotiable Instruments. › Part 4 - Liability of Parties. › Section 7-3-406 - Negligence Contributing to Forged Signature or Alteration of Instrument.
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Section 7-3-406
Negligence contributing to forged signature or alteration of instrument.
(a) A person whose failure to exercise ordinary care substantially contributes to an alteration of an instrument or to the making of a forged signature on an instrument is precluded from asserting the alteration or the forgery against a person who, in good faith, pays the instrument or takes it for value or for collection.
(b) Under subsection (a), if the person asserting the preclusion fails to exercise ordinary care in paying or taking the instrument and that failure substantially contributes to loss, the loss is allocated between the person precluded and the person asserting the preclusion according to the extent to which the failure of each to exercise ordinary care contributed to the loss.
(c) Under subsection (a), the burden of proving failure to exercise ordinary care is on the person asserting the preclusion. Under subsection (b), the burden of proving failure to exercise ordinary care is on the person precluded.
(Acts 1965, No. 549, p. 811; repealed by Acts 1995, No. 95-668, p. 1381, §1; added by Acts 1995, No. 95-668, p. 1381, §1.)
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https://law.justia.com/codes/alabama/title-7/article-3/part-4/section-7-3-407/
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Justia›US Law›US Codes and Statutes›Code of Alabama›2023 Code of Alabama›Title 7 - Commercial Code.›Article 3 - Negotiable Instruments.›Part 4 - Liability of Parties.›Section 7-3-407 - Alteration.
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2023 Code of Alabama › Title 7 - Commercial Code. › Article 3 - Negotiable Instruments. › Part 4 - Liability of Parties. › Section 7-3-407 - Alteration.
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Section 7-3-407
Alteration.
(a) "Alteration" means (i) an unauthorized change in an instrument that purports to modify in any respect the obligation of a party, or (ii) an unauthorized addition of words or numbers or other change to an incomplete instrument relating to the obligation of a party.
(b) Except as provided in subsection (c), an alteration fraudulently made discharges a party whose obligation is affected by the alteration unless that party assents or is precluded from asserting the alteration. No other alteration discharges a party, and the instrument may be enforced according to its original terms.
(c) A payor bank or drawee paying a fraudulently altered instrument or a person taking it for value, in good faith and without notice of the alteration, may enforce rights with respect to the instrument (i) according to its original terms, or (ii) in the case of an incomplete instrument altered by unauthorized completion, according to its terms as completed.
(Acts 1965, No. 549, p. 811; repealed by Acts 1995, No. 95-668, p. 1381, §1; added by Acts 1995, No. 95-668, p. 1381, §1.)
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https://law.justia.com/codes/alabama/title-7/article-3/part-4/section-7-3-408/
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Justia›US Law›US Codes and Statutes›Code of Alabama›2023 Code of Alabama›Title 7 - Commercial Code.›Article 3 - Negotiable Instruments.›Part 4 - Liability of Parties.›Section 7-3-408 - Drawee Not Liable on Unaccepted Draft.
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2023 Code of Alabama › Title 7 - Commercial Code. › Article 3 - Negotiable Instruments. › Part 4 - Liability of Parties. › Section 7-3-408 - Drawee Not Liable on Unaccepted Draft.
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Section 7-3-408
Drawee not liable on unaccepted draft.
A check or other draft does not of itself operate as an assignment of funds in the hands of the drawee available for its payment, and the drawee is not liable on the instrument until the drawee accepts it.
(Acts 1995, No. 95-668, p. 1381, §1.)
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https://law.justia.com/codes/alabama/title-7/article-3/part-4/section-7-3-409/
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Justia›US Law›US Codes and Statutes›Code of Alabama›2023 Code of Alabama›Title 7 - Commercial Code.›Article 3 - Negotiable Instruments.›Part 4 - Liability of Parties.›Section 7-3-409 - Acceptance of Draft; Certified Check.
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2023 Code of Alabama › Title 7 - Commercial Code. › Article 3 - Negotiable Instruments. › Part 4 - Liability of Parties. › Section 7-3-409 - Acceptance of Draft; Certified Check.
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Section 7-3-409
Acceptance of draft; certified check.
(a) "Acceptance" means the drawee's signed agreement to pay a draft as presented. It must be written on the draft and may consist of the drawee's signature alone. Acceptance may be made at any time and becomes effective when notification pursuant to instructions is given or the accepted draft is delivered for the purpose of giving rights on the acceptance to any person.
(b) A draft may be accepted although it has not been signed by the drawer, is otherwise incomplete, is overdue, or has been dishonored.
(c) If a draft is payable at a fixed period after sight and the acceptor fails to date the acceptance, the holder may complete the acceptance by supplying a date in good faith.
(d) "Certified check" means a check accepted by the bank on which it is drawn. Acceptance may be made as stated in subsection (a) or by a writing on the check which indicates that the check is certified. The drawee of a check has no obligation to certify the check, and refusal to certify is not dishonor of the check.
(Acts 1995, No. 95-668, p. 1381, §1.)
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Justia›US Law›US Codes and Statutes›Code of Alabama›2023 Code of Alabama›Title 7 - Commercial Code.›Article 3 - Negotiable Instruments.›Part 4 - Liability of Parties.›Section 7-3-410 - Acceptance Varying Draft.
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2023 Code of Alabama › Title 7 - Commercial Code. › Article 3 - Negotiable Instruments. › Part 4 - Liability of Parties. › Section 7-3-410 - Acceptance Varying Draft.
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Section 7-3-410
Acceptance varying draft.
(a) If the terms of a drawee's acceptance vary from the terms of the draft as presented, the holder may refuse the acceptance and treat the draft as dishonored. In that case, the drawee may cancel the acceptance.
(b) The terms of a draft are not varied by an acceptance to pay at a particular bank or place in the United States, unless the acceptance states that the draft is to be paid only at that bank or place.
(c) If the holder assents to an acceptance varying the terms of a draft, the obligation of each drawer and indorser that does not expressly assent to the acceptance is discharged.
(Acts 1995, No. 95-668, p. 1381, §1.)
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Justia›US Law›US Codes and Statutes›Code of Alabama›2023 Code of Alabama›Title 7 - Commercial Code.›Article 3 - Negotiable Instruments.›Part 4 - Liability of Parties.›Section 7-3-411 - Refusal to Pay Cashier's Checks, Teller's Checks, and Certified Checks.
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2023 Code of Alabama › Title 7 - Commercial Code. › Article 3 - Negotiable Instruments. › Part 4 - Liability of Parties. › Section 7-3-411 - Refusal to Pay Cashier's Checks, Teller's Checks, and Certified Checks.
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Section 7-3-411
Refusal to pay cashier's checks, teller's checks, and certified checks.
(a) In this section, "obligated bank" means the acceptor of a certified check or the issuer of a cashier's check or teller's check bought from the issuer.
(b) If the obligated bank wrongfully (i) refuses to pay a cashier's check or certified check, (ii) stops payment of a teller's check, or (iii) refuses to pay a dishonored teller's check, the person asserting the right to enforce the check is entitled to compensation for expenses and loss of interest resulting from the nonpayment and may recover consequential damages if the obligated bank refuses to pay after receiving notice of particular circumstances giving rise to the damages.
(c) Expenses or consequential damages under subsection (b) are not recoverable if the refusal of the obligated bank to pay occurs because (i) the bank suspends payments, (ii) the obligated bank asserts a claim or defense of the bank that it has reasonable grounds to believe is available against the person entitled to enforce the instrument, (iii) the obligated bank has a reasonable doubt whether the person demanding payment is the person entitled to enforce the instrument, or (iv) payment is prohibited by law.
(Acts 1995, No. 95-668, p. 1381, §1.)
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Justia›US Law›US Codes and Statutes›Code of Alabama›2023 Code of Alabama›Title 7 - Commercial Code.›Article 3 - Negotiable Instruments.›Part 4 - Liability of Parties.›Section 7-3-412 - Obligation of Issuer of Note or Cashier's Check.
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2023 Code of Alabama › Title 7 - Commercial Code. › Article 3 - Negotiable Instruments. › Part 4 - Liability of Parties. › Section 7-3-412 - Obligation of Issuer of Note or Cashier's Check.
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Section 7-3-412
Obligation of issuer of note or cashier's check.
The issuer of a note or cashier's check or other draft drawn on the drawer is obliged to pay the instrument (i) according to its terms at the time it was issued or, if not issued, at the time it first came into possession of a holder, or (ii) if the issuer signed an incomplete instrument, according to its terms when completed, to the extent stated in Sections 7-3-115 and 7-3-407. The obligation is owed to a person entitled to enforce the instrument or to an indorser who paid the instrument under Section 7-3-415.
(Acts 1995, No. 95-668, p. 1381, §1.)
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Justia›US Law›US Codes and Statutes›Code of Alabama›2023 Code of Alabama›Title 7 - Commercial Code.›Article 3 - Negotiable Instruments.›Part 4 - Liability of Parties.›Section 7-3-413 - Obligation of Acceptor.
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2023 Code of Alabama › Title 7 - Commercial Code. › Article 3 - Negotiable Instruments. › Part 4 - Liability of Parties. › Section 7-3-413 - Obligation of Acceptor.
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Section 7-3-413
Obligation of acceptor.
(a) The acceptor of a draft is obliged to pay the draft (i) according to its terms at the time it was accepted, even though the acceptance states that the draft is payable "as originally drawn" or equivalent terms, (ii) if the acceptance varies the terms of the draft, according to the terms of the draft as varied, or (iii) if the acceptance is of a draft that is an incomplete instrument, according to its terms when completed, to the extent stated in Sections 7-3-115 and 7-3-407. The obligation is owed to a person entitled to enforce the draft or to the drawer or an indorser who paid the draft under Section 7-3-414 or 7-3-415.
(b) If the certification of a check or other acceptance of a draft states the amount certified or accepted, the obligation of the acceptor is that amount. If (i) the certification or acceptance does not state an amount, (ii) the amount of the instrument is subsequently raised, and (iii) the instrument is then negotiated to a holder in due course, the obligation of the acceptor is the amount of the instrument at the time it was taken by the holder in due course.
(Acts 1965, No. 549, p. 811; repealed by Acts 1995, No. 95-668, §1; added by Acts 1995, No. 95-668, p. 1381, §1.)
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Justia›US Law›US Codes and Statutes›Code of Alabama›2023 Code of Alabama›Title 7 - Commercial Code.›Article 3 - Negotiable Instruments.›Part 4 - Liability of Parties.›Section 7-3-414 - Obligation of Drawer.
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2023 Code of Alabama › Title 7 - Commercial Code. › Article 3 - Negotiable Instruments. › Part 4 - Liability of Parties. › Section 7-3-414 - Obligation of Drawer.
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Section 7-3-414
Obligation of drawer.
(a) This section does not apply to cashier's checks or other drafts drawn on the drawer.
(b) If an unaccepted draft is dishonored, the drawer is obliged to pay the draft (i) according to its terms at the time it was issued or, if not issued, at the time it first came into possession of a holder, or (ii) if the drawer signed an incomplete instrument, according to its terms when completed, to the extent stated in Sections 7-3-115 and 7-3-407. The obligation is owed to a person entitled to enforce the draft or to an indorser who paid the draft under Section 7-3-415.
(c) If a draft is accepted by a bank, the drawer is discharged, regardless of when or by whom acceptance was obtained.
(d) If a draft is accepted and the acceptor is not a bank, the obligation of the drawer to pay the draft if the draft is dishonored by the acceptor is the same as the obligation of an indorser under Section 7-3-415(a) and (c).
(e) If a draft states that it is drawn "without recourse" or otherwise disclaims liability of the drawer to pay the draft, the drawer is not liable under subsection (b) to pay the draft if the draft is not a check. A disclaimer of the liability stated in subsection (b) is not effective if the draft is a check.
(f) If (i) a check is not presented for payment or given to a depositary bank for collection within 30 days after its date, (ii) the drawee suspends payments after expiration of the 30-day period without paying the check, and (iii) because of the suspension of payments, the drawer is deprived of funds maintained with the drawee to cover payment of the check, the drawer to the extent deprived of funds may discharge its obligation to pay the check by assigning to the person entitled to enforce the check the rights of the drawer against the drawee with respect to the funds.
(Acts 1995, No. 95-668, p. 1381, §1.)
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Justia›US Law›US Codes and Statutes›Code of Alabama›2023 Code of Alabama›Title 7 - Commercial Code.›Article 3 - Negotiable Instruments.›Part 4 - Liability of Parties.›Section 7-3-415 - Obligation of Indorser.
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2023 Code of Alabama › Title 7 - Commercial Code. › Article 3 - Negotiable Instruments. › Part 4 - Liability of Parties. › Section 7-3-415 - Obligation of Indorser.
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Section 7-3-415
Obligation of indorser.
(a) Subject to subsections (b), (c), and (d) and to Section 7-3-419(d), if an instrument is dishonored, an indorser is obliged to pay the amount due on the instrument (i) according to the terms of the instrument at the time it was indorsed, or (ii) if the indorser indorsed an incomplete instrument, according to its terms when completed, to the extent stated in Sections 7-3-115 and 7-3-407. The obligation of the indorser is owed to a person entitled to enforce the instrument or to a subsequent indorser who paid the instrument under this section.
(b) If an indorsement states that it is made "without recourse" or otherwise disclaims liability of the indorser, the indorser is not liable under subsection (a) to pay the instrument.
(c) If notice of dishonor of an instrument is required by Section 7-3-503 and notice of dishonor complying with that section is not given to an indorser, the liability of the indorser under subsection (a) is discharged.
(d) If a draft is accepted by a bank after an indorsement is made, the liability of the indorser under subsection (a) is discharged.
(e) If an indorser of a check is liable under subsection (a) and the check is not presented for payment, or given to a depositary bank for collection, within 30 days after the day the indorsement was made, the liability of the indorser under subsection (a) is discharged.
(Acts 1995, No. 95-668, p. 1381, §1.)
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Justia›US Law›US Codes and Statutes›Code of Alabama›2023 Code of Alabama›Title 7 - Commercial Code.›Article 3 - Negotiable Instruments.›Part 4 - Liability of Parties.›Section 7-3-416 - Transfer Warranties.
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2023 Code of Alabama › Title 7 - Commercial Code. › Article 3 - Negotiable Instruments. › Part 4 - Liability of Parties. › Section 7-3-416 - Transfer Warranties.
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Section 7-3-416
Transfer warranties.
(a) A person who transfers an instrument for consideration warrants to the transferee and, if the transfer is by indorsement, to any subsequent transferee that:
(1) The warrantor is a person entitled to enforce the instrument;
(2) All signatures on the instrument are authentic and authorized;
(3) The instrument has not been altered;
(4) The instrument is not subject to a defense or claim in recoupment of any party which can be asserted against the warrantor; and
(5) The warrantor has no knowledge of any insolvency proceeding commenced with respect to the maker or acceptor or, in the case of an unaccepted draft, the drawer.
(b) A person to whom the warranties under subsection (a) are made and who took the instrument in good faith may recover from the warrantor as damages for breach of warranty an amount equal to the loss suffered as a result of the breach, but not more than the amount of the instrument plus expenses and loss of interest incurred as a result of the breach.
(c) The warranties stated in subsection (a) cannot be disclaimed with respect to checks. Unless notice of a claim for breach of warranty is given to the warrantor within 30 days after the claimant has reason to know of the breach and the identity of the warrantor, the liability of the warrantor under subsection (b) is discharged to the extent of any loss caused by the delay in giving notice of the claim.
(d) A cause of action for breach of warranty under this section accrues when the claimant has reason to know of the breach.
(Acts 1995, No. 95-668, p. 1381, §1.)
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Justia›US Law›US Codes and Statutes›Code of Alabama›2023 Code of Alabama›Title 7 - Commercial Code.›Article 3 - Negotiable Instruments.›Part 4 - Liability of Parties.›Section 7-3-417 - Presentment Warranties.
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2023 Code of Alabama › Title 7 - Commercial Code. › Article 3 - Negotiable Instruments. › Part 4 - Liability of Parties. › Section 7-3-417 - Presentment Warranties.
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Section 7-3-417
Presentment warranties.
(a) If an unaccepted draft is presented to the drawee for payment or acceptance and the drawee pays or accepts the draft, (i) the person obtaining payment or acceptance, at the time of presentment, and (ii) a previous transferor of the draft, at the time of transfer, warrant to the drawee making payment or accepting the draft in good faith that:
(1) The warrantor is, or was, at the time the warrantor transferred the draft, a person entitled to enforce the draft or authorized to obtain payment or acceptance of the draft on behalf of a person entitled to enforce the draft;
(2) The draft has not been altered; and
(3) The warrantor has no knowledge that the signature of the drawer of the draft is unauthorized.
(b) A drawee making payment may recover from any warrantor damages for breach of warranty equal to the amount paid by the drawee less the amount the drawee received or is entitled to receive from the drawer because of the payment. In addition, the drawee is entitled to compensation for expenses and loss of interest resulting from the breach. The right of the drawee to recover damages under this subsection is not affected by any failure of the drawee to exercise ordinary care in making payment. If the drawee accepts the draft, breach of warranty is a defense to the obligation of the acceptor. If the acceptor makes payment with respect to the draft, the acceptor is entitled to recover from any warrantor for breach of warranty the amounts stated in this subsection.
(c) If a drawee asserts a claim for breach of warranty under subsection (a) based on an unauthorized indorsement of the draft or an alteration of the draft, the warrantor may defend by proving that the indorsement is effective under Section 7-3-404 or 7-3-405 or the drawer is precluded under Section 7-3-406 or 7-4-406 from asserting against the drawee the unauthorized indorsement or alteration.
(d) If (i) a dishonored draft is presented for payment to the drawer or an indorser or (ii) any other instrument is presented for payment to a party obliged to pay the instrument, and (iii) payment is received, the following rules apply:
(1) The person obtaining payment and a prior transferor of the instrument warrant to the person making payment in good faith that the warrantor is, or was, at the time the warrantor transferred the instrument, a person entitled to enforce the instrument or authorized to obtain payment on behalf of a person entitled to enforce the instrument.
(2) The person making payment may recover from any warrantor for breach of warranty an amount equal to the amount paid plus expenses and loss of interest resulting from the breach.
(e) The warranties stated in subsections (a) and (d) cannot be disclaimed with respect to checks. Unless notice of a claim for breach of warranty is given to the warrantor within 30 days after the claimant has reason to know of the breach and the identity of the warrantor, the liability of the warrantor under subsection (b) or (d) is discharged to the extent of any loss caused by the delay in giving notice of the claim.
(f) A cause of action for breach of warranty under this section accrues when the claimant has reason to know of the breach.
(Acts 1965, No. 549, p. 811; repealed by Acts 1995, No. 95-668, p. 1381, §1; added by Acts 1995, No. 95-668, p. 1381, §1.)
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Justia›US Law›US Codes and Statutes›Code of Alabama›2023 Code of Alabama›Title 7 - Commercial Code.›Article 3 - Negotiable Instruments.›Part 4 - Liability of Parties.›Section 7-3-418 - Payment or Acceptance by Mistake.
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2023 Code of Alabama › Title 7 - Commercial Code. › Article 3 - Negotiable Instruments. › Part 4 - Liability of Parties. › Section 7-3-418 - Payment or Acceptance by Mistake.
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Section 7-3-418
Payment or acceptance by mistake.
(a) Except as provided in subsection (c), if the drawee of a draft pays or accepts the draft and the drawee acted on the mistaken belief that (i) payment of the draft had not been stopped pursuant to Section 7-4-403 or (ii) the signature of the drawer of the draft was authorized, the drawee may recover the amount of the draft from the person to whom or for whose benefit payment was made or, in the case of acceptance, may revoke the acceptance. Rights of the drawee under this subsection are not affected by failure of the drawee to exercise ordinary care in paying or accepting the draft.
(b) Except as provided in subsection (c), if an instrument has been paid or accepted by mistake and the case is not covered by subsection (a), the person paying or accepting may, to the extent permitted by the law governing mistake and restitution, (i) recover the payment from the person to whom or for whose benefit payment was made or (ii) in the case of acceptance, may revoke the acceptance.
(c) The remedies provided by subsection (a) or (b) may not be asserted against a person who took the instrument in good faith and for value or who in good faith changed position in reliance on the payment or acceptance. This subsection does not limit remedies provided by Section 7-3-417 or 7-4-407.
(d) Notwithstanding Section 7-4-215, if an instrument is paid or accepted by mistake and the payor or acceptor recovers payment or revokes acceptance under subsection (a) or (b), the instrument is deemed not to have been paid or accepted and is treated as dishonored, and the person from whom payment is recovered has rights as a person entitled to enforce the dishonored instrument.
(Acts 1965, No. 549, p. 811; repealed by Acts 1995, No. 95-668, p. 1381, §1; added by Acts 1995, No. 95-668, p. 1381, §1.)
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Justia›US Law›US Codes and Statutes›Code of Alabama›2023 Code of Alabama›Title 7 - Commercial Code.›Article 3 - Negotiable Instruments.›Part 4 - Liability of Parties.›Section 7-3-419 - Instruments Signed for Accommodation.
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2023 Code of Alabama › Title 7 - Commercial Code. › Article 3 - Negotiable Instruments. › Part 4 - Liability of Parties. › Section 7-3-419 - Instruments Signed for Accommodation.
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Section 7-3-419
Instruments signed for accommodation.
(a) If an instrument is issued for value given for the benefit of a party to the instrument ("accommodated party") and another party to the instrument ("accommodation party") signs the instrument for the purpose of incurring liability on the instrument without being a direct beneficiary of the value given for the instrument, the instrument is signed by the accommodation party "for accommodation."
(b) An accommodation party may sign the instrument as maker, drawer, acceptor, or indorser and, subject to subsection (d), is obliged to pay the instrument in the capacity in which the accommodation party signs. The obligation of an accommodation party may be enforced notwithstanding any statute of frauds and whether or not the accommodation party receives consideration for the accommodation.
(c) A person signing an instrument is presumed to be an accommodation party and there is notice that the instrument is signed for accommodation if the signature is an anomalous indorsement or is accompanied by words indicating that the signer is acting as surety or guarantor with respect to the obligation of another party to the instrument. Except as provided in Section 7-3-605, the obligation of an accommodation party to pay the instrument is not affected by the fact that the person enforcing the obligation had notice when the instrument was taken by that person that the accommodation party signed the instrument for accommodation.
(d) If the signature of a party to an instrument is accompanied by words indicating unambiguously that the party is guaranteeing collection rather than payment of the obligation of another party to the instrument, the signer is obliged to pay the amount due on the instrument to a person entitled to enforce the instrument only if (i) execution of judgment against the other party has been returned unsatisfied, (ii) the other party is insolvent or in an insolvency proceeding, (iii) the other party cannot be served with process, or (iv) it is otherwise apparent that payment cannot be obtained from the other party.
(e) An accommodation party who pays the instrument is entitled to reimbursement from the accommodated party and is entitled to enforce the instrument against the accommodated party. An accommodated party who pays the instrument has no right of recourse against, and is not entitled to contribution from, an accommodation party.
(Acts 1995, No. 95-668, p. 1381, §1.)
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Justia›US Law›US Codes and Statutes›Code of Alabama›2023 Code of Alabama›Title 7 - Commercial Code.›Article 3 - Negotiable Instruments.›Part 4 - Liability of Parties.›Section 7-3-420 - Conversion of Instrument.
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2023 Code of Alabama › Title 7 - Commercial Code. › Article 3 - Negotiable Instruments. › Part 4 - Liability of Parties. › Section 7-3-420 - Conversion of Instrument.
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Section 7-3-420
Conversion of instrument.
(a) An instrument is converted under circumstances which would constitute conversion under personal property law. An instrument is also converted if it is taken by transfer, other than a negotiation, from a person not entitled to enforce the instrument or a bank makes or obtains payment with respect to the instrument for a person not entitled to enforce the instrument or receive payment. An action for conversion of an instrument may not be brought by (i) the issuer or acceptor of the instrument or (ii) a payee or indorsee who did not receive delivery of the instrument either directly or through delivery to an agent or a co-payee.
(b) In an action under subsection (a), the measure of liability is presumed to be the amount payable on the instrument, but recovery may not exceed the amount of the plaintiff's interest in the instrument.
(c) A representative, other than a depositary bank, who has in good faith dealt with an instrument or its proceeds on behalf of one who was not the person entitled to enforce the instrument is not liable in conversion to that person beyond the amount of any proceeds that it has not paid out.
(Acts 1995, No. 95-668, p. 1381, §1.)
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https://law.justia.com/codes/alabama/title-7/article-3/part-5/section-7-3-502/
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Justia›US Law›US Codes and Statutes›Code of Alabama›2023 Code of Alabama›Title 7 - Commercial Code.›Article 3 - Negotiable Instruments.›Part 5 - Dishonor.›Section 7-3-502 - Dishonor.
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2023 Code of Alabama › Title 7 - Commercial Code. › Article 3 - Negotiable Instruments. › Part 5 - Dishonor. › Section 7-3-502 - Dishonor.
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Section 7-3-502
Dishonor.
(a) Dishonor of a note is governed by the following rules:
(1) If the note is payable on demand, the note is dishonored if presentment is duly made to the maker and the note is not paid on the day of presentment.
(2) If the note is not payable on demand and is payable at or through a bank or the terms of the note require presentment, the note is dishonored if presentment is duly made and the note is not paid on the day it becomes payable or the day of presentment, whichever is later.
(3) If the note is not payable on demand and paragraph (2) does not apply, the note is dishonored if it is not paid on the day it becomes payable.
(b) Dishonor of an unaccepted draft other than a documentary draft is governed by the following rules:
(1) If a check is duly presented for payment to the payor bank otherwise than for immediate payment over the counter, the check is dishonored if the payor bank makes timely return of the check or sends timely notice of dishonor or nonpayment under Section 7-4-301 or 7-4-302, or becomes accountable for the amount of the check under Section 7-4-302.
(2) If a draft is payable on demand and paragraph (1) does not apply, the draft is dishonored if presentment for payment is duly made to the drawee and the draft is not paid on the day of presentment.
(3) If a draft is payable on a date stated in the draft, the draft is dishonored if (i) presentment for payment is duly made to the drawee and payment is not made on the day the draft becomes payable or the day of presentment, whichever is later, or (ii) presentment for acceptance is duly made before the day the draft becomes payable and the draft is not accepted on the day of presentment.
(4) If a draft is payable on elapse of a period of time after sight or acceptance, the draft is dishonored if presentment for acceptance is duly made and the draft is not accepted on the day of presentment.
(c) Dishonor of an unaccepted documentary draft occurs according to the rules stated in subsection (b) (2), (3), and (4), except that payment or acceptance may be delayed without dishonor until no later than the close of the third business day of the drawee following the day on which payment or acceptance is required by those paragraphs.
(d) Dishonor of an accepted draft is governed by the following rules:
(1) 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.
(2) 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 it becomes payable or the day of presentment, whichever is later.
(e) In any case in which presentment is otherwise required for dishonor under this section and presentment is excused under Section 7-3-504, dishonor occurs without presentment if the instrument is not duly accepted or paid.
(f) 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.
(Acts 1995, No. 95-668, p. 1381, §1.)
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https://law.justia.com/codes/alabama/title-7/article-3/part-5/section-7-3-503/
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Justia›US Law›US Codes and Statutes›Code of Alabama›2023 Code of Alabama›Title 7 - Commercial Code.›Article 3 - Negotiable Instruments.›Part 5 - Dishonor.›Section 7-3-503 - Notice of Dishonor.
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2023 Code of Alabama › Title 7 - Commercial Code. › Article 3 - Negotiable Instruments. › Part 5 - Dishonor. › Section 7-3-503 - Notice of Dishonor.
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Section 7-3-503
Notice of dishonor.
(a) The obligation of an indorser stated in Section 7-3-415(a) and the obligation of a drawer stated in Section 7-3-414(d) may not be enforced unless (i) the indorser or drawer is given notice of dishonor of the instrument complying with this section or (ii) notice of dishonor is excused under Section 7-3-504(b).
(b) 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.
(c) Subject to Section 7-3-504(c), with respect to an instrument taken for collection by a collecting bank, notice of dishonor must be given (i) 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 (ii) 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 must be given within 30 days following the day on which dishonor occurs.
(Acts 1995, No. 95-668, p. 1381, §1.)
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https://law.justia.com/codes/alabama/title-7/article-3/part-5/section-7-3-501/
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Justia›US Law›US Codes and Statutes›Code of Alabama›2023 Code of Alabama›Title 7 - Commercial Code.›Article 3 - Negotiable Instruments.›Part 5 - Dishonor.›Section 7-3-501 - Presentment.
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2023 Code of Alabama › Title 7 - Commercial Code. › Article 3 - Negotiable Instruments. › Part 5 - Dishonor. › Section 7-3-501 - Presentment.
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Section 7-3-501
Presentment.
(a) "Presentment" means a demand made by or on behalf of a person entitled to enforce an instrument (i) to pay the instrument made to the drawee or a party obliged to pay the instrument or, in the case of a note or accepted draft payable at a bank, to the bank, or (ii) to accept a draft made to the drawee.
(b) The following rules are subject to Article 4, agreement of the parties, and clearing-house rules and the like:
(1) Presentment may be made at the place of payment of the instrument and must be made at the place of payment if the instrument is payable at a bank in the United States; may be made by any commercially reasonable means, including an oral, written, or electronic communication; is effective when the demand for payment or acceptance is received by the person to whom presentment is made; and is effective if made to any one of two or more makers, acceptors, drawees, or other payors.
(2) Upon demand of the person to whom presentment is made, the person making presentment must (i) exhibit the instrument, (ii) give reasonable identification and, if presentment is made on behalf of another person, reasonable evidence of authority to do so, and (iii) sign a receipt on the instrument for any payment made or surrender the instrument if full payment is made.
(3) Without dishonoring the instrument, the party to whom presentment is made may (i) return the instrument for lack of a necessary indorsement, or (ii) refuse payment or acceptance for failure of the presentment to comply with the terms of the instrument, an agreement of the parties, or other applicable law or rule.
(4) The party to whom presentment is made may treat presentment as occurring on the next business day after the day of presentment if the party to whom presentment is made has established a cutoff hour not earlier than 2 p.m. for the receipt and processing of instruments presented for payment or acceptance and presentment is made after the cutoff hour.
(Acts 1995, No. 95-668, p. 1381, §1.)
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https://law.justia.com/codes/alabama/title-7/article-3/part-5/section-7-3-504/
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Justia›US Law›US Codes and Statutes›Code of Alabama›2023 Code of Alabama›Title 7 - Commercial Code.›Article 3 - Negotiable Instruments.›Part 5 - Dishonor.›Section 7-3-504 - Excused Presentment and Notice of Dishonor.
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2023 Code of Alabama › Title 7 - Commercial Code. › Article 3 - Negotiable Instruments. › Part 5 - Dishonor. › Section 7-3-504 - Excused Presentment and Notice of Dishonor.
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Section 7-3-504
Excused presentment and notice of dishonor.
(a) Presentment for payment or acceptance of an instrument is excused if (i) the person entitled to present the instrument cannot with reasonable diligence make presentment, (ii) the maker or acceptor has repudiated an obligation to pay the instrument or is dead or in insolvency proceedings, (iii) by the terms of the instrument presentment is not necessary to enforce the obligation of indorsers or the drawer, (iv) the drawer or indorser 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, or (v) 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.
(b) Notice of dishonor is excused if (i) by the terms of the instrument notice of dishonor is not necessary to enforce the obligation of a party to pay the instrument, or (ii) the party whose obligation is being enforced waived notice of dishonor. A waiver of presentment is also a waiver of notice of dishonor.
(c) 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.
(Acts 1995, No. 95-668, p. 1381, §1.)
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https://law.justia.com/codes/alabama/title-7/article-3/part-5/section-7-3-505/
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Justia›US Law›US Codes and Statutes›Code of Alabama›2023 Code of Alabama›Title 7 - Commercial Code.›Article 3 - Negotiable Instruments.›Part 5 - Dishonor.›Section 7-3-505 - Evidence of Dishonor.
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2023 Code of Alabama › Title 7 - Commercial Code. › Article 3 - Negotiable Instruments. › Part 5 - Dishonor. › Section 7-3-505 - Evidence of Dishonor.
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Section 7-3-505
Evidence of dishonor.
(a) The following are admissible as evidence and create a presumption of dishonor and of any notice of dishonor stated:
(1) A document regular in form as provided in subsection (b) which purports to be a protest;
(2) A purported stamp or writing of the drawee, payor 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;
(3) A book or record of the drawee, payor 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.
(b) A protest is a certificate of dishonor made by a United States consul or vice consul, or a notary public or other person authorized to administer oaths by the law of the place where dishonor occurs. It may be made upon information satisfactory to that person. The protest must 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.
(Acts 1995, No. 95-668, p. 1381, §1.)
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https://law.justia.com/codes/alabama/title-7/article-3/part-6/section-7-3-601/
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Justia›US Law›US Codes and Statutes›Code of Alabama›2023 Code of Alabama›Title 7 - Commercial Code.›Article 3 - Negotiable Instruments.›Part 6 - Discharge and Payment.›Section 7-3-601 - Discharge and Effect of Discharge.
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2023 Code of Alabama › Title 7 - Commercial Code. › Article 3 - Negotiable Instruments. › Part 6 - Discharge and Payment. › Section 7-3-601 - Discharge and Effect of Discharge.
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Section 7-3-601
Discharge and effect of discharge.
(a) The obligation of a party to pay the instrument is discharged as stated in this article or by an act or agreement with the party which would discharge an obligation to pay money under a simple contract.
(b) 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.
(Acts 1965, No. 549, p. 811; repealed by Acts 1995, No. 95-668, p. 1381, §1; added by Acts 1995, No. 95-668, p. 1381, §1.)
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https://law.justia.com/codes/alabama/title-7/article-3/part-6/section-7-3-602/
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Justia›US Law›US Codes and Statutes›Code of Alabama›2023 Code of Alabama›Title 7 - Commercial Code.›Article 3 - Negotiable Instruments.›Part 6 - Discharge and Payment.›Section 7-3-602 - Payment.
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2023 Code of Alabama › Title 7 - Commercial Code. › Article 3 - Negotiable Instruments. › Part 6 - Discharge and Payment. › Section 7-3-602 - Payment.
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Section 7-3-602
Payment.
(a) Subject to subsection (b), an instrument is paid to the extent payment is made (i) by or on behalf of a party obliged to pay the instrument, and (ii) 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 Section 7-3-306 by another person.
(b) The obligation of a party to pay the instrument is not discharged under subsection (a) if:
(1) A claim to the instrument under Section 7-3-306 is enforceable against the party receiving payment and (i) payment is made with knowledge by the payor that payment is prohibited by injunction or similar process of a court of competent jurisdiction, or (ii) 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; or
(2) The person making payment knows that the instrument is a stolen instrument and pays a person it knows is in wrongful possession of the instrument.
(Acts 1995, No. 95-668, p. 1381, §1.)
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https://law.justia.com/codes/alabama/title-7/article-3/part-6/section-7-3-603/
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Justia›US Law›US Codes and Statutes›Code of Alabama›2023 Code of Alabama›Title 7 - Commercial Code.›Article 3 - Negotiable Instruments.›Part 6 - Discharge and Payment.›Section 7-3-603 - Tender of Payment.
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2023 Code of Alabama › Title 7 - Commercial Code. › Article 3 - Negotiable Instruments. › Part 6 - Discharge and Payment. › Section 7-3-603 - Tender of Payment.
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Section 7-3-603
Tender of payment.
(a) If tender of payment of an amount due on 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 and by subsections (b), (c) and (d).
(b) If tender of payment of an amount due on 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 indorser or accommodation party having a right of recourse with respect to the obligation to which the tender relates.
(c) 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 deemed to have made tender of payment on the due date to the person entitled to enforce the instrument.
(d) Acceptance of partial payment by a person entitled to enforce an instrument does not prejudice such person's rights or remedies with respect to the remaining amount due on the instrument or otherwise.
(Acts 1995, No. 95-668, p. 1381, §1.)
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https://law.justia.com/codes/alabama/title-7/article-3/part-6/section-7-3-604/
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Justia›US Law›US Codes and Statutes›Code of Alabama›2023 Code of Alabama›Title 7 - Commercial Code.›Article 3 - Negotiable Instruments.›Part 6 - Discharge and Payment.›Section 7-3-604 - Discharge by Cancellation or Renunciation.
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2023 Code of Alabama › Title 7 - Commercial Code. › Article 3 - Negotiable Instruments. › Part 6 - Discharge and Payment. › Section 7-3-604 - Discharge by Cancellation or Renunciation.
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Section 7-3-604
Discharge by cancellation or renunciation.
(a) A person entitled to enforce an instrument, with or without consideration, may discharge the obligation of a party to pay the instrument (i) by 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, or (ii) by agreeing not to sue or otherwise renouncing rights against the party by a signed writing.
(b) Cancellation or striking out of an indorsement pursuant to subsection (a) does not affect the status and rights of a party derived from the indorsement.
(Acts 1995, No. 95-668, p. 1381, §1.)
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https://law.justia.com/codes/alabama/title-7/article-3/part-6/section-7-3-605/
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AL
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Justia›US Law›US Codes and Statutes›Code of Alabama›2023 Code of Alabama›Title 7 - Commercial Code.›Article 3 - Negotiable Instruments.›Part 6 - Discharge and Payment.›Section 7-3-605 - Discharge of Indorsers and Accommodation Parties.
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2023 Code of Alabama › Title 7 - Commercial Code. › Article 3 - Negotiable Instruments. › Part 6 - Discharge and Payment. › Section 7-3-605 - Discharge of Indorsers and Accommodation Parties.
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Section 7-3-605
Discharge of indorsers and accommodation parties.
(a) In this section, the term "indorser" includes a drawer having the obligation described in Section 7-3-414(d).
(b) Discharge, under Section 7-3-604, of the obligation of a party to pay an instrument does not discharge the obligation of an indorser or accommodation party having a right of recourse against the discharged party.
(c) 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 indorser or accommodation party having a right of recourse against the party whose obligation is extended to the extent the indorser or accommodation party proves that the extension caused loss to the indorser or accommodation party with respect to the right of recourse.
(d) 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 indorser or accommodation party having a right of recourse against the person whose obligation is modified to the extent the modification causes loss to the indorser or accommodation party with respect to the right of recourse. The loss suffered by the indorser 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.
(e) 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 indorser 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 (i) 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 (ii) 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.
(f) 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 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 subsection (e), the party is deemed 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.
(g) Under subsection (e) or (f), impairing value of an interest in collateral includes (i) failure to obtain or maintain perfection or recordation of the interest in collateral, (ii) release of collateral without substitution of collateral of equal value, (iii) failure to perform a duty to preserve the value of collateral owed, under Article 9 or other law, to a debtor or surety or other person secondarily liable, or (iv) failure to comply with applicable law in disposing of collateral.
(h) An accommodation party is not discharged under subsection (c), (d), or (e) unless the person entitled to enforce the instrument knows of the accommodation or has notice under Section 7-3-419(c) that the instrument was signed for accommodation.
(i) A party is not discharged under this section if (i) the party asserting discharge consents to the event or conduct that is the basis of the discharge, or (ii) 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.
(Acts 1995, No. 95-668, p. 1381, §1.)
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