On March 1 Donna wrote a check for $296 to Sun Services. When will the check be overdue? What is the effect of the check's being overdue? What is the effect if the check is stamped "Insufficient Funds" by Donna's bank?

Answer 1

A check is overdue 90 days after its date. When an instrument is overdue, a recipient is on notice that it may have a defect. Under UCC Section 3-302, a holder in due course is a holder who has given value for the instrument, in good faith, without notice of outstanding claims or other defects. If a check is marked "Insufficient Funds" by a bank, it has been dishonored. No one who obtains it afterward can be a holder in due course.