HRS 0490-0004-0401 ANNOTATIONS

Prior Uniform Statutory Provision: None.

Purposes:

1. It is fundamental that upon proper payment of a draft the drawee may charge the account of the drawer. This is true even though the draft is an overdraft since the draft itself authorizes the payment for the drawer's account and carries an implied promise to reimburse the drawee.

2. Subsection (2) parallels the provision which protects a holder in due course against discharge by reason of alteration and permits him to enforce the instrument according to its original tenor. Section 3-407(3). It adopts the rule of cases extending the same protection to a drawee who pays in good faith. The subsection also follows the policy of Sections 3-115 and 3-407(3) by protecting the drawee who pays a completed instrument in good faith according to the instrument as completed.

Cross References:

Sections 3-115 and 3-407.

Definitional Cross References:

"Account". Section 4-104.

"Bank". Section 1-201.

"Customer". Section 4-104.

"Good faith". Section 1-201.

"Holder". Section 1-201.

"Item". Section 4-104.

"Properly payable". Section 4-104.

Overdraft as constituting authorization to pay amount and to charge account of drawer. 52 H. 51, 469 P.2d 816.