Question

Harold Burton writes a check "payable to Debra or Kelsey." On this instrument, Debra and Kelsey are . When an instrument is made payable to two or more persons jointly (by use of the word "and"), all of the payee's' endorsements are necessary for negotiation. Whenever an instrument payable to two or more persons does not clearly indicate whether it is payable in the alternative or payable jointly, then the instrument is payable jointly. When a drawer gives one alternative or joint payee a check, the drawer's obligation on the check to other payees is .

Answer 1

Answer:

When a drawer gives one alternative or joint payee a check, the drawer's obligation on the check to other payees is suspended.

Explanation:

According to the Uniform Commercial Code, UCC 3–310(b)(1), the suspension of the drawer´s obligation according to the law is when the payee who possesses the check holds it for the benefit of all the payees. This is in regards the effect of instrument on obligation for which taken:

§ 3-310.

"(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:

(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. "