Ask Reggi Your Question Now
Can you summarize IACO 554.3414?
UNIFORM COMMERCIAL CODE > Obligation of drawer.
Short Summary
This section of the Iowa Code, specifically under the Uniform Commercial Code, governs the obligation of the drawer in relation to drafts. It applies to drawers of drafts, except for cashier’s checks or other drafts drawn on the drawer. If an unaccepted draft is dishonored, the drawer is obliged to pay the draft according to its terms at the time it was issued or when it first came into possession of a holder. The obligation is owed to a person entitled to enforce the draft or to an endorser who paid the draft. If a draft is accepted by a bank, the drawer is discharged from the obligation. However, if the acceptor is not a bank, the drawer’s obligation to pay the dishonored draft is the same as that of an endorser. If a draft states that it is drawn ‘without recourse’ or disclaims liability of the drawer, the drawer is not liable to pay the draft, except in the case of a check. Additionally, if a check is not presented for payment within thirty days and the drawee suspends payments, the drawer may discharge its obligation by assigning the rights against the drawee to the person entitled to enforce the check.
Whom does it apply to?
Drawers of drafts
What does it govern?
Obligation of drawer
What are exemptions?
Cashier's checks or other drafts drawn on the drawer
What are the Penalties?
No specific penalties mentioned
Jurisdiction
Iowa