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Can you summarize KYRS 355.3-414?
Negotiable Instruments > Obligation of drawer.
Short Summary
This section of the Kentucky Revised Statutes governs the obligation of the drawer of unaccepted drafts. It applies to drawers who issue or possess such drafts. However, it does not apply to 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. If the drawer signed an incomplete instrument, the obligation is based on its terms when completed, as stated in KRS 355.3-115 and 355.3-407. The obligation is owed to a person entitled to enforce the draft or to an indorser who paid the draft under KRS 355.3-415. If a draft is accepted by a bank, the drawer is discharged from the obligation. If a draft is accepted by a non-bank entity and subsequently dishonored, the drawer’s obligation is the same as that of an indorser under KRS 355.3-415(1) and (3). However, 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 under subsection (2) of this section, except if the draft is a check. Additionally, if a check is not presented for payment within thirty days after its date, the drawee suspends payments, and the drawer is deprived of funds maintained with the drawee, 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 unaccepted drafts
What does it govern?
Obligation of drawer
What are exemptions?
This section does not apply to cashier's checks or other drafts drawn on the drawer.
What are the Penalties?
No specific penalties mentioned.
Jurisdiction
Kentucky