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UCC 3-603(b) does not forgive debts, but it discharges the obligation of an endorser (i.e. NOT the debtor) if the payment is refused.
There is not much litigation on this subsection but it has been held that (1) payment must be tendered, meaning that the money itself must be presented -- not a document containing an offer or a proposed compromise or some form of funny money. Davis v. Dillard National Bank (MD NC 6/4/03) 50 UCC Rptg Serv.2d 877; and (2) the debtor, the signer of the promissory note or whatever document was obligation, remains liable for the amount which was refused even though intermediaries like endorsers are freed of liability. Guaranty Bank & Trust Co. v. Dowling (1985) 4 Conn.App 376, 494 A2d 1216, 59 ALR4th 605, 41 UCC Rptg Serv 1353 app.denied 197 Conn 808, 499 A2d 58.
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