(a) The obligation of a party to pay the instrument is discharged as stated in this division 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.

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Terms Used In California Commercial Code 3601

  • agreement: means the total legal obligation that results from the parties' agreement as determined by this code and as supplemented by any other applicable laws. See California Commercial Code 1201
  • Holder: means :

    California Commercial Code 1201

  • Money: means a medium of exchange that is currently authorized or adopted by a domestic or foreign government. See California Commercial Code 1201
  • Obligation: An order placed, contract awarded, service received, or similar transaction during a given period that will require payments during the same or a future period.
  • Person: means an individual, corporation, business trust, estate, trust, partnership, limited liability company, association, joint venture, government, governmental subdivision, agency, or instrumentality, or any other legal or commercial entity. See California Commercial Code 1201

(Repealed and added by Stats. 1992, Ch. 914, Sec. 6. Effective January 1, 1993.)