Uniform Commercial Code UCC Article 3

7/30/2019 Uniform Commercial Code UCC Article 3

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UNIFORM COMMERCIAL CODE

U.C.C. - ARTICLE 3 - NEGOTIABLE INSTRUMENTS

PART 1. GENERAL PROVISIONS AND DEFINITIONS [Table of Conen!"

3-1#1. SHORT TITLE.

This Article may be cited as Uniform Commercial Code -- Negotiable

Instruments.

3-1#$. SUBJECT MATTER.

(a) This Article applies to negotiable instruments. It does not applyto money, to payment orders goerned by Article !A, or to securitiesgoerned by Article ".

(b) If there is conflict bet#een this Article and Article ! or $,Articles ! and $ goern.

(c) %egulations of the &oard of 'oernors of the ederal %esereystem and operating circulars of the ederal %esere &an*s

supersede any inconsistent proision of this Article to the e+tent ofthe inconsistency.

3-1#3. DEFINITIONS.

(a) In this Article

%1& 'Acceptor' (ean! a )*a+ee+,o ,a! aee) a )*af.

%$& 'Consumer ccount' (ean! an ao/n e!abl0!,e) b an 0n)020)/al*0(a*0l fo* e*!onal fa(0l o* ,o/!e,ol) /*o!e!.

%3& 'Consumer trnsct!on' (ean! a *an!a0on 0n +,0, an 0n)020)/al0n/*! an obl04a0on *0(a*0l fo* e*!onal fa(0l o* ,o/!e,ol) /*o!e!.

%5& 'Dr"ee' (ean! a e*!on o*)e*e) 0n a )*af o (a6e a(en.

%7& 'Dr"er' (ean! a e*!on +,o !04n! o* 0! 0)en0f0e) 0n a )*afa! ae*!on o*)e*0n4 a(en.

%8& [*e!e*2e)"
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%9& 'M#er' (ean! a e*!on +,o !04n! o* 0! 0)en0f0e) 0n a noea! a e*!on/n)e*a60n4 o a.

%:& 'Or$er' (ean! a +*0en 0n!*/0on o a (one !04ne) b ,e e*!on4020n4 ,e 0n!*/0on. T,e 0n!*/0on (a be a))*e!!e) o an e*!on0nl/)0n4 ,e e*!on 4020n4 ,e 0n!*/0on o* o one o* (o*e e*!on! ;o0nl

o* 0n ,e ale*na02e b/ no 0n !/e!!0on. An a/,o*0


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(b) ther definitions applying to this Article and the sections in#hich they appear are

'Aeane' Se0on 3-5#=

'Ao((o)ae) a*' Se0on 3-51=

'Ao((o)a0on a*' Se0on 3-51=

'Ao/n' Se0on 5-1#5

'Ale*a0on' Se0on 3-5#9

'Ano(alo/! 0n)o*!e(en' Se0on 3-$#7

'Blan6 0n)o*!e(en' Se0on 3-$#7

'Ca!,0e*@! ,e6' Se0on 3-1#5

'Ce*0f0ae of )eo!0' Se0on 3-1#5

'Ce*0f0e) ,e6' Se0on 3-5#=

'C,e6' Se0on3-1#5

'Con!0)e*a0on' Se0on 3-3#3

'D*af' Se0on 3-1#5

'ol)e* 0n )/e o/*!e' Se0on 3-3#$

'Ino(lee 0n!*/(en' Se0on 3-117

'In)o*!e(en' Se0on3-$#5

'In)o*!e*' Se0on 3-$#5

'In!*/(en' Se0on 3-1#5

'I!!/e' Se0on 3-1#7

'I!!/e*' Se0on 3-1#7

'Ne4o0able 0n!*/(en' Se0on3-1#5

'Ne4o0a0on' Se0on 3-$#1

'Noe' Se0on3-1#5
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'Paable a a )ef0n0e 0(e' Se0on 3-1#:

'Paable on )e(an)' Se0on 3-1#:

'Paable o bea*e*' Se0on 3-1#=

'Paable o o*)e*' Se0on 3-1#=

'Pa(en' Se0on 3-8#$

'Pe*!on en0le) o enfo*e' Se0on 3-3#1

'P*e!en(en' Se0on 3-7#1

'Rea>/0!00on' Se0on3-$#9

'Se0al 0n)o*!e(en' Se0on 3-$#7

'Telle*@! ,e6' Se0on 3-1#5

'T*an!fe* of 0n!*/(en' Se0on 3-$#3

'T*a2ele*@! ,e6' Se0on 3-1#5

'Val/e' Se0on3-3#3

(c) The follo#ing definitions in other Articles apply to this Article

'Ban60n4 )a' Se0on 5-1#5

'Clea*0n4 ,o/!e' Se0on 5-1#5

'Colle0n4 ban6' Se0on5-1#7

'Deo!0a* ban6' Se0on 5-1#7

'Do/(ena* )*af' Se0on 5-1#5

'Ine*(e)0a* ban6' Se0on5-1#7

'Ie(' Se0on 5-1#5

'Pao* ban6' Se0on 5-1#7

'S/!en)! a(en!' Se0on 5-1#5

(d) In addition, Article contains general definitions and principlesof construction and interpretation applicable throughout this Article.
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3-1#5. NE+OTIABLE INSTRUMENT.

(a) /+cept as proided in subsections (c) and (d), 0negotiableinstrument0 means an unconditional promiseor orderto pay a

fi+ed amount of money, #ith or #ithout interest or other charges

described in the promise or order, if it

%1& 0! aable o bea*e* o* o o*)e*a ,e 0(e 0 0!0!!/e)o* f0*! o(e! 0noo!!e!!0on of a ,ol)e*

%$& 0! aable on )e(an) o* a a )ef0n0e 0(e an)

%3& )oe! no !ae an o,e* /n)e*a60n4 o* 0n!*/0on b ,e e*!on*o(0!0n4 o* o*)e*0n4 a(en o )o an a 0n a))00on o ,e a(en of(one b/ ,e *o(0!eo*o*)e*(a ona0n %0& an /n)e*a60n4 o* o+e* o402e (a0na0n o* *oe ollae*al o !e/*e a(en %00& an a/,o*0


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(i) 0Traveler's check0 means an instrumentthat (i) is payable ondemand, (ii) is dra#n on or payable at or through a ban*, (iii) is

designated by the term 0traeler2s chec*0 or by a substantiallysimilar term, and (i) re1uires, as a condition to payment, acountersignature by a person #hose specimen signature appears onthe instrument.

(3) 0Certificate of deposit0 means an instrumentcontaining anac*no#ledgment by a ban* that a sum of money has been receied

by the ban* and a promiseby the ban* to repay the sum of money.A certificate of deposit is a noteof the ban*.

3-1#7. ISSUE OF INSTRUMENT.

(a) 0Issue0 means the first deliery of an instrumentby the ma*eror dra#er, #hether to a holder or nonholder, for the purpose of

giing rights on the instrument to any person.

(b) An unissued instrument, or an unissued incomplete instrument

that is completed, is binding on the ma*eror dra#er, butnonissuance is a defense. An instrument that is conditionally issuedor is issued for a special purpose is binding on the ma*er or dra#er,but failure of the condition or special purpose to be fulfilled is a

defense.

(c) 0Issuer0 applies to issuedand unissued instrumentsand means

a ma*eror dra#erof an instrument.

3-1#8. UNCONDITIONAL &ROMISE OR ORDER.

(a) /+cept as proided in this section, for the purposes of ection

4-5!(a), a promiseor orderis unconditional unless it states (i) ane+press condition to payment, (ii) that the promise or order is

sub3ect to or goerned by another record, or (iii) that rights orobligations #ith respect to the promise or order are stated inanother record. A reference to another record does not of itselfma*e the promise or order conditional.

(b) A promiseor orderis not made conditional (i) by a reference to

another record for a statement of rights #ith respect to collateral,prepayment, or acceleration, or (ii) because payment is limited toresort to a particular fund or source.

(c) If a promiseor orderre1uires, as a condition to payment, acountersignature by a person #hose specimen signature appears on

the promise or order, the condition does not ma*e the promise ororder conditional for the purposes of ection 4-5!(a). If the

person #hose specimen signature appears on an instrumentfails to
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countersign the instrument, the failure to countersign is a defense tothe obligation of the issuer, but the failure does not preent a

transferee of the instrument from becoming a holder of theinstrument.

(d) If a promiseor orderat the time it is issuedor first comes intopossession of a holder contains a statement, re1uired by applicablestatutory or administratie la#, to the effect that the rights of aholder or transferee are sub3ect to claims or defenses that the issuer

could assert against the original payee, the promise or order is notthereby made conditional for the purposes of ection 4-5!(a)6 but

if the promise or order is an instrument, there cannot be a holder indue courseof the instrument.

3-1#9. INSTRUMENT &A,ABLE IN FOREI+N MONE,.

Unless the instrumentother#ise proides, an instrument that states

the amount payable in foreign money may be paid in the foreignmoney or in an e1uialent amount in dollars calculated by using thecurrent ban*-offered spot rate at the place of payment for the

purchase of dollars on the day on #hich the instrument is paid.

3-1#:. &A,ABLE ON DEMAND OR AT DEFINITE TIME.

(a) A promiseor orderis 0payable on demand0 if it (i) states that

it is payable on demand or at sight, or other#ise indicates that it ispayable at the #ill of the holder, or (ii) does not state any time of

payment.

(b) A promiseor orderis 0payable at a definite time0 if it is

payable on elapse of a definite period of time after sight oracceptanceor at a fi+ed date or dates or at a time or times readilyascertainable at the time the promise or order is issued, sub3ect torights of (i) prepayment, (ii) acceleration, (iii) e+tension at the

option of the holder, or (i) e+tension to a further definite time atthe option of the ma*eror acceptoror automatically upon or after a

specified act or eent.

(c) If an instrument, payable at a fi+ed date, is also payable upon

demand made before the fi+ed date, the instrument is payable ondemand until the fi+ed date and, if demand for payment is not made

before that date, becomes payable at a definite time on the fi+eddate.

3-1#=. &A,ABLE TO BEARER OR TO ORDER.

(a) A promiseor orderis payable to bearer if it
http://www.law.cornell.edu/ucc/3/article3.htm#Issuer%23Issuerhttp://www.law.cornell.edu/ucc/3/article3.htm#Promise%23Promisehttp://www.law.cornell.edu/ucc/3/article3.htm#Order%23Orderhttp://www.law.cornell.edu/ucc/3/article3.htm#Issue%23Issuehttp://www.law.cornell.edu/ucc/3/article3.htm#Issuer%23Issuerhttp://www.law.cornell.edu/ucc/3/article3.htm#s3-104a%23s3-104ahttp://www.law.cornell.edu/ucc/3/article3.htm#Instrument%23Instrumenthttp://www.law.cornell.edu/ucc/3/article3.htm#holderinduecourse%23holderinduecoursehttp://www.law.cornell.edu/ucc/3/article3.htm#holderinduecourse%23holderinduecoursehttp://www.law.cornell.edu/ucc/3/article3.htm#Instrument%23Instrumenthttp://www.law.cornell.edu/ucc/3/article3.htm#Promise%23Promisehttp://www.law.cornell.edu/ucc/3/article3.htm#Order%23Orderhttp://www.law.cornell.edu/ucc/3/article3.htm#Promise%23Promisehttp://www.law.cornell.edu/ucc/3/article3.htm#Order%23Orderhttp://www.law.cornell.edu/ucc/3/article3.htm#Acceptance%23Acceptancehttp://www.law.cornell.edu/ucc/3/article3.htm#Issue%23Issuehttp://www.law.cornell.edu/ucc/3/article3.htm#Maker%23Makerhttp://www.law.cornell.edu/ucc/3/article3.htm#Acceptor%23Acceptorhttp://www.law.cornell.edu/ucc/3/article3.htm#Instrument%23Instrumenthttp://www.law.cornell.edu/ucc/3/article3.htm#Promise%23Promisehttp://www.law.cornell.edu/ucc/3/article3.htm#Order%23Orderhttp://www.law.cornell.edu/ucc/3/article3.htm#Issuer%23Issuerhttp://www.law.cornell.edu/ucc/3/article3.htm#Promise%23Promisehttp://www.law.cornell.edu/ucc/3/article3.htm#Order%23Orderhttp://www.law.cornell.edu/ucc/3/article3.htm#Issue%23Issuehttp://www.law.cornell.edu/ucc/3/article3.htm#Issuer%23Issuerhttp://www.law.cornell.edu/ucc/3/article3.htm#s3-104a%23s3-104ahttp://www.law.cornell.edu/ucc/3/article3.htm#Instrument%23Instrumenthttp://www.law.cornell.edu/ucc/3/article3.htm#holderinduecourse%23holderinduecoursehttp://www.law.cornell.edu/ucc/3/article3.htm#holderinduecourse%23holderinduecoursehttp://www.law.cornell.edu/ucc/3/article3.htm#Instrument%23Instrumenthttp://www.law.cornell.edu/ucc/3/article3.htm#Promise%23Promisehttp://www.law.cornell.edu/ucc/3/article3.htm#Order%23Orderhttp://www.law.cornell.edu/ucc/3/article3.htm#Promise%23Promisehttp://www.law.cornell.edu/ucc/3/article3.htm#Order%23Orderhttp://www.law.cornell.edu/ucc/3/article3.htm#Acceptance%23Acceptancehttp://www.law.cornell.edu/ucc/3/article3.htm#Issue%23Issuehttp://www.law.cornell.edu/ucc/3/article3.htm#Maker%23Makerhttp://www.law.cornell.edu/ucc/3/article3.htm#Acceptor%23Acceptorhttp://www.law.cornell.edu/ucc/3/article3.htm#Instrument%23Instrumenthttp://www.law.cornell.edu/ucc/3/article3.htm#Promise%23Promisehttp://www.law.cornell.edu/ucc/3/article3.htm#Order%23Order


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%1& !ae! ,a 0 0! aable o bea*e* o* o ,eo*)e*of bea*e* o* o,e*+0!e0n)0ae! ,a ,e e*!on 0n o!!e!!0on of ,e *o(0!eo* o*)e* 0! en0le) oa(en

%$& )oe! no !ae a aee o*

%3& !ae! ,a 0 0! aable o o* o ,e o*)e*of a!, o* o,e*+0!e 0n)0ae!,a 0 0! no aable o an 0)en0f0e) e*!on.

(b) A promiseor orderthat is not payable to bearer is payable toorder if it is payable (i) to the order of an identified person or (ii) to

an identified person or order. A promise or order that is payable toorder is payable to the identified person.

(c) An instrumentpayable to bearer may become payable to anidentified person if it is specially indorsed pursuant to ection 4-

758(a). An instrument payable to an identified person may become

payable to bearer if it is indorsed in blan* pursuant to ection 4-758(b).

3-11#. IDENTIFICATION OF &ERSON TO HOM INSTRUMENT IS&A,ABLE.

(a) The person to #hom an instrumentis initially payable isdetermined by the intent of the person, #hether or not authori9ed,signing as, or in the name or behalf of, the issuerof the instrument.The instrument is payable to the person intended by the signer een

if that person is identified in the instrument by a name or other

identification that is not that of the intended person. If more thanone person signs in the name or behalf of the issuer of aninstrument and all the signers do not intend the same person as

payee, the instrument is payable to any person intended by one ormore of the signers.

(b) If the signature of the issuerof an instrument is made byautomated means, such as a chec*-#riting machine, the payee ofthe instrument is determined by the intent of the person #hosupplied the name or identification of the payee, #hether or not

authori9ed to do so.

(c) A person to #hom an instrumentis payable may be identified inany #ay, including by name, identifying number, office, or accountnumber. or the purpose of determining the holder of an

instrument, the follo#ing rules apply

%1& If an 0n!*/(en0! aable o an ao/n an) ,e ao/n 0! 0)en0f0e)onl b n/(be* ,e 0n!*/(en 0! aable o ,e e*!on o +,o( ,eao/n 0! aable. If an 0n!*/(en 0! aable o an ao/n 0)en0f0e) b
http://www.law.cornell.edu/ucc/3/article3.htm#Order%23Orderhttp://www.law.cornell.edu/ucc/3/article3.htm#Order%23Orderhttp://www.law.cornell.edu/ucc/3/article3.htm#Order%23Orderhttp://www.law.cornell.edu/ucc/3/article3.htm#Promise%23Promisehttp://www.law.cornell.edu/ucc/3/article3.htm#Order%23Orderhttp://www.law.cornell.edu/ucc/3/article3.htm#Promise%23Promisehttp://www.law.cornell.edu/ucc/3/article3.htm#Order%23Orderhttp://www.law.cornell.edu/ucc/3/article3.htm#Instrument%23Instrumenthttp://www.law.cornell.edu/ucc/3/article3.htm#s3-205a%23s3-205ahttp://www.law.cornell.edu/ucc/3/article3.htm#s3-205a%23s3-205ahttp://www.law.cornell.edu/ucc/3/article3.htm#s3-205b%23s3-205bhttp://www.law.cornell.edu/ucc/3/article3.htm#s3-205b%23s3-205bhttp://www.law.cornell.edu/ucc/3/article3.htm#Instrument%23Instrumenthttp://www.law.cornell.edu/ucc/3/article3.htm#Issuer%23Issuerhttp://www.law.cornell.edu/ucc/3/article3.htm#Issuer%23Issuerhttp://www.law.cornell.edu/ucc/3/article3.htm#Instrument%23Instrumenthttp://www.law.cornell.edu/ucc/3/article3.htm#Instrument%23Instrumenthttp://www.law.cornell.edu/ucc/3/article3.htm#Order%23Orderhttp://www.law.cornell.edu/ucc/3/article3.htm#Promise%23Promisehttp://www.law.cornell.edu/ucc/3/article3.htm#Order%23Orderhttp://www.law.cornell.edu/ucc/3/article3.htm#Promise%23Promisehttp://www.law.cornell.edu/ucc/3/article3.htm#Order%23Orderhttp://www.law.cornell.edu/ucc/3/article3.htm#Instrument%23Instrumenthttp://www.law.cornell.edu/ucc/3/article3.htm#s3-205a%23s3-205ahttp://www.law.cornell.edu/ucc/3/article3.htm#s3-205a%23s3-205ahttp://www.law.cornell.edu/ucc/3/article3.htm#s3-205b%23s3-205bhttp://www.law.cornell.edu/ucc/3/article3.htm#s3-205b%23s3-205bhttp://www.law.cornell.edu/ucc/3/article3.htm#Instrument%23Instrumenthttp://www.law.cornell.edu/ucc/3/article3.htm#Issuer%23Issuerhttp://www.law.cornell.edu/ucc/3/article3.htm#Issuer%23Issuerhttp://www.law.cornell.edu/ucc/3/article3.htm#Instrument%23Instrumenthttp://www.law.cornell.edu/ucc/3/article3.htm#Instrument%23Instrument


9/48

n/(be* an) b ,e na(e of a e*!on ,e 0n!*/(en 0! aable o ,ena(e) e*!on +,e,e* o* no ,a e*!on 0! ,e o+ne* of ,e ao/n0)en0f0e) b n/(be*.

%$& If an 0n!*/(en0! aable o

%0& a */! an e!ae o* a e*!on )e!*0be) a! */!ee o* *e*e!ena02e ofa */! o* e!ae ,e 0n!*/(en0! aable o ,e */!ee ,e*e*e!ena02e o* a !/e!!o* of e0,e* +,e,e* o* no ,e benef00a* o*e!ae 0! al!o na(e)

%00& a e*!on )e!*0be) a! a4en o* !0(0la* *e*e!ena02e of a na(e) o*0)en0f0e) e*!on ,e 0n!*/(en0! aable o ,e *e*e!ene) e*!on,e *e*e!ena02e o* a !/e!!o* of ,e *e*e!ena02e

%000& a f/n) o* o*4an0


10/48

(a) Unless other#ise proided in the instrument, (i) an instrumentis not payable #ith interest, and (ii) interest on an interest-bearing

instrument is payable from the date of the instrument.

(b) Interest may be stated in an instrumentas a fi+ed or ariable

amount of money or it may be e+pressed as a fi+ed or ariable rateor rates. The amount or rate of interest may be stated or describedin the instrument in any manner and may re1uire reference toinformation not contained in the instrument. If an instrument

proides for interest, but the amount of interest payable cannot beascertained from the description, interest is payable at the 3udgment

rate in effect at the place of payment of the instrument and at thetime interest first accrues.

3-113. DATE OF INSTRUMENT.

(a) An instrumentmay be antedated or postdated. The date stated

determines the time of payment if the instrument is payable at afi+ed period after date. /+cept as proided in ection !-!5(c), aninstrument payable on demand is not payable before the date of the

instrument.

(b) If an instrumentis undated, its date is the date of its issueor,

in the case of an unissued instrument, the date it first comes intopossession of a holder.

3-115. CONTRADICTOR, TERMS OF INSTRUMENT.

If an instrumentcontains contradictory terms, type#ritten termspreail oer printed terms, hand#ritten terms preail oer both, and

#ords preail oer numbers.

3-117. INCOM&LETE INSTRUMENT.

(a) 0Incomplete instrument0 means a signed #riting, #hether ornot issuedby the signer, the contents of #hich sho# at the time ofsigning that it is incomplete but that the signer intended it to be

completed by the addition of #ords or numbers.

(b) ub3ect to subsection (c), if an incomplete instrument is aninstrumentunder ection 4-5!, it may be enforced according to itsterms if it is not completed, or according to its terms as augmented

by completion. If an incomplete instrument is not an instrumentunder ection 4-5!, but, after completion, the re1uirements of

ection 4-5!are met, the instrument may be enforced accordingto its terms as augmented by completion.
http://www.law.cornell.edu/ucc/3/article3.htm#Instrument%23Instrumenthttp://www.law.cornell.edu/ucc/3/article3.htm#Instrument%23Instrumenthttp://www.law.cornell.edu/ucc/3/article3.htm#Instrument%23Instrumenthttp://www.law.cornell.edu/ucc/4/article4.htm#s4-401chttp://www.law.cornell.edu/ucc/3/article3.htm#Instrument%23Instrumenthttp://www.law.cornell.edu/ucc/3/article3.htm#Issue%23Issuehttp://www.law.cornell.edu/ucc/3/article3.htm#Instrument%23Instrumenthttp://www.law.cornell.edu/ucc/3/article3.htm#Issue%23Issuehttp://www.law.cornell.edu/ucc/3/article3.htm#Instrument%23Instrumenthttp://www.law.cornell.edu/ucc/3/article3.htm#s3-104%23s3-104http://www.law.cornell.edu/ucc/3/article3.htm#s3-104%23s3-104http://www.law.cornell.edu/ucc/3/article3.htm#s3-104%23s3-104http://www.law.cornell.edu/ucc/3/article3.htm#Instrument%23Instrumenthttp://www.law.cornell.edu/ucc/3/article3.htm#Instrument%23Instrumenthttp://www.law.cornell.edu/ucc/3/article3.htm#Instrument%23Instrumenthttp://www.law.cornell.edu/ucc/4/article4.htm#s4-401chttp://www.law.cornell.edu/ucc/3/article3.htm#Instrument%23Instrumenthttp://www.law.cornell.edu/ucc/3/article3.htm#Issue%23Issuehttp://www.law.cornell.edu/ucc/3/article3.htm#Instrument%23Instrumenthttp://www.law.cornell.edu/ucc/3/article3.htm#Issue%23Issuehttp://www.law.cornell.edu/ucc/3/article3.htm#Instrument%23Instrumenthttp://www.law.cornell.edu/ucc/3/article3.htm#s3-104%23s3-104http://www.law.cornell.edu/ucc/3/article3.htm#s3-104%23s3-104http://www.law.cornell.edu/ucc/3/article3.htm#s3-104%23s3-104


11/48

(c) If #ords or numbers are added to an incomplete instrument#ithout authority of the signer, there is an alterationof the

incomplete instrument under ection 4-!5:.

(d) The burden of establishing that #ords or numbers #ere added

to an incomplete instrument #ithout authority of the signer is on theperson asserting the lac* of authority.

3-118. JOINT AND SEERAL LIABILIT,/ CONTRIBUTION.

(a) /+cept as other#ise proided in the instrument, t#o or morepersons #ho hae the same liability on an instrument as ma*ers,

dra#ers, acceptors, indorsers#ho indorse as 3oint payees, oranomalous indorsersare 3ointly and seerally liable in the capacity

in #hich they sign.

(b) /+cept as proided in ection 4-!$(e)or by agreement of the

affected parties, a partyhaing 3oint and seeral liability #ho paysthe instrumentis entitled to receie from any party haing the same

3oint and seeral liability contribution in accordance #ith applicablela#.

3-119. OTHER A+REEMENTS AFFECTIN+ INSTRUMENT.

ub3ect to applicable la# regarding e+clusion of proof ofcontemporaneous or preious agreements, the obligation of a party

to an instrumentto pay the instrument may be modified,supplemented, or nullified by a separate agreement of the obligor

and a person entitled to enforcethe instrument, if the instrument isissuedor the obligation is incurred in reliance on the agreement or

as part of the same transaction giing rise to the agreement. To thee+tent an obligation is modified, supplemented, or nullified by anagreement under this section, the agreement is a defense to theobligation.

3-11:. STATUTE OF LIMITATIONS.

(a) /+cept as proided in subsection (e), an action to enforce theobligation of a partyto pay a notepayable at a definite time must

be commenced #ithin si+ years after the due date or dates stated inthe note or, if a due date is accelerated, #ithin si+ years after the

accelerated due date.

(b) /+cept as proided in subsection (d) or (e), if demand for

payment is made to the ma*erof a notepayable on demand, anaction to enforce the obligation of a partyto pay the note must becommenced #ithin si+ years after the demand. If no demand forpayment is made to the ma*er, an action to enforce the note is
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12/48

barred if neither principal nor interest on the note has been paid fora continuous period of 5 years.

(c) /+cept as proided in subsection (d), an action to enforce theobligation of a partyto an unaccepted draftto pay the draft must be

commenced #ithin three years after dishonor of the draft or 5years after the date of the draft, #hicheer period e+pires first.

(d) An action to enforce the obligation of the acceptorof a certifiedchec*or the issuerof a teller2s chec*, cashier2s chec*, or traeler2schec*must be commenced #ithin three years after demand forpayment is made to the acceptor or issuer, as the case may be.

(e) An action to enforce the obligation of a partyto a certificate ofdepositto pay the instrumentmust be commenced #ithin si+ years

after demand for payment is made to the ma*er, but if theinstrument states a due date and the ma*er is not re1uired to pay

before that date, the si+-year period begins #hen a demand forpayment is in effect and the due date has passed.

(f) An action to enforce the obligation of a partyto pay an accepteddraft, other than a certified chec*, must be commenced (i) #ithin si+years after the due date or dates stated in the draft or acceptanceifthe obligation of the acceptoris payable at a definite time, or (ii)

#ithin si+ years after the date of the acceptance if the obligation ofthe acceptor is payable on demand.

(g) Unless goerned by other la# regarding claims for indemnity or

contribution, an action (i) for conersion of an instrument, formoney had and receied, or li*e action based on conersion, (ii) forbreach of #arranty, or (iii) to enforce an obligation, duty, or right

arising under this Article and not goerned by this section must becommenced #ithin three years after the ;cause of action< accrues.

3-11=. NOTICE OF RI+HT TO DEFEND ACTION.

In an action for breach of an obligation for #hich a third person isans#erable oer pursuant to this Article or Article !, the defendant

may gie the third person notice of the litigation in a record, and theperson notified may then gie similar notice to any other person

#ho is ans#erable oer. If the notice states (i) that the personnotified may come in and defend and (ii) that failure to do so #ill

bind the person notified in an action later brought by the persongiing the notice as to any determination of fact common to the t#olitigations, the person notified is so bound unless after seasonablereceipt of the notice the person notified does come in and defend.

PART $. NEGOTIATION TRANSFER AND INDORSEMENT [Table of Conen!"
http://www.law.cornell.edu/ucc/3/article3.htm#Party%23Partyhttp://www.law.cornell.edu/ucc/3/article3.htm#Draft%23Drafthttp://www.law.cornell.edu/ucc/3/article3.htm#Acceptor%23Acceptorhttp://www.law.cornell.edu/ucc/3/article3.htm#Certifiedcheck%23Certifiedcheckhttp://www.law.cornell.edu/ucc/3/article3.htm#Certifiedcheck%23Certifiedcheckhttp://www.law.cornell.edu/ucc/3/article3.htm#Issuer%23Issuerhttp://www.law.cornell.edu/ucc/3/article3.htm#Tellerscheck%23Tellerscheckhttp://www.law.cornell.edu/ucc/3/article3.htm#Cashierscheck%23Cashierscheckhttp://www.law.cornell.edu/ucc/3/article3.htm#Travelerscheck%23Travelerscheckhttp://www.law.cornell.edu/ucc/3/article3.htm#Travelerscheck%23Travelerscheckhttp://www.law.cornell.edu/ucc/3/article3.htm#Party%23Partyhttp://www.law.cornell.edu/ucc/3/article3.htm#Certificateofdeposit%23Certificateofdeposithttp://www.law.cornell.edu/ucc/3/article3.htm#Certificateofdeposit%23Certificateofdeposithttp://www.law.cornell.edu/ucc/3/article3.htm#Instrument%23Instrumenthttp://www.law.cornell.edu/ucc/3/article3.htm#Maker%23Makerhttp://www.law.cornell.edu/ucc/3/article3.htm#Party%23Partyhttp://www.law.cornell.edu/ucc/3/article3.htm#Draft%23Drafthttp://www.law.cornell.edu/ucc/3/article3.htm#Certifiedcheck%23Certifiedcheckhttp://www.law.cornell.edu/ucc/3/article3.htm#Acceptance%23Acceptancehttp://www.law.cornell.edu/ucc/3/article3.htm#Acceptor%23Acceptorhttp://www.law.cornell.edu/ucc/3/article3.htm#Instrument%23Instrumenthttp://www.law.cornell.edu/ucc/3/index.htm#part2http://www.law.cornell.edu/ucc/3/article3.htm#Party%23Partyhttp://www.law.cornell.edu/ucc/3/article3.htm#Draft%23Drafthttp://www.law.cornell.edu/ucc/3/article3.htm#Acceptor%23Acceptorhttp://www.law.cornell.edu/ucc/3/article3.htm#Certifiedcheck%23Certifiedcheckhttp://www.law.cornell.edu/ucc/3/article3.htm#Certifiedcheck%23Certifiedcheckhttp://www.law.cornell.edu/ucc/3/article3.htm#Issuer%23Issuerhttp://www.law.cornell.edu/ucc/3/article3.htm#Tellerscheck%23Tellerscheckhttp://www.law.cornell.edu/ucc/3/article3.htm#Cashierscheck%23Cashierscheckhttp://www.law.cornell.edu/ucc/3/article3.htm#Travelerscheck%23Travelerscheckhttp://www.law.cornell.edu/ucc/3/article3.htm#Travelerscheck%23Travelerscheckhttp://www.law.cornell.edu/ucc/3/article3.htm#Party%23Partyhttp://www.law.cornell.edu/ucc/3/article3.htm#Certificateofdeposit%23Certificateofdeposithttp://www.law.cornell.edu/ucc/3/article3.htm#Certificateofdeposit%23Certificateofdeposithttp://www.law.cornell.edu/ucc/3/article3.htm#Instrument%23Instrumenthttp://www.law.cornell.edu/ucc/3/article3.htm#Maker%23Makerhttp://www.law.cornell.edu/ucc/3/article3.htm#Party%23Partyhttp://www.law.cornell.edu/ucc/3/article3.htm#Draft%23Drafthttp://www.law.cornell.edu/ucc/3/article3.htm#Certifiedcheck%23Certifiedcheckhttp://www.law.cornell.edu/ucc/3/article3.htm#Acceptance%23Acceptancehttp://www.law.cornell.edu/ucc/3/article3.htm#Acceptor%23Acceptorhttp://www.law.cornell.edu/ucc/3/article3.htm#Instrument%23Instrumenthttp://www.law.cornell.edu/ucc/3/index.htm#part2


13/48

3-$#1. NE+OTIATION.

(a) 0Negotiation0 means a transfer of possession, #hetheroluntary or inoluntary, of an instrumentby a person other than

the issuerto a person #ho thereby becomes its holder.

(b) /+cept for negotiationby a remitter, if an instrumentis payableto an identified person, negotiation re1uires transfer of possessionof the instrument and its indorsementby the holder. If an

instrument is payable to bearer, it may be negotiated by transfer ofpossession alone.

3-$#$. NE+OTIATION SUBJECT TO RESCISSION.

(a) Negotiation is effectie een if obtained (i) from an infant, acorporation e+ceeding its po#ers, or a person #ithout capacity, (ii)

by fraud, duress, or mista*e, or (iii) in breach of duty or as part of

an illegal transaction.

(b) To the e+tent permitted by other la#, negotiationmay berescinded or may be sub3ect to other remedies, but those remediesmay not be asserted against a subse1uent holder in due courseor aperson paying the instrumentin good faithand #ithout *no#ledge

of facts that are a basis for rescission or other remedy.

3-$#3. TRANSFER OF INSTRUMENT/ RI+HTS AC0UIRED B,TRANSFER.

(a) An instrumentis transferred #hen it is deliered by a personother than its issuer for the purpose of giing to the person

receiing deliery the right to enforce the instrument.

(b) Transfer of an instrument, #hether or not the transfer is a

negotiation, ests in the transferee any right of the transferor toenforce the instrument, including any right as a holder in duecourse, but the transferee cannot ac1uire rights of a holder in duecourse by a transfer, directly or indirectly, from a holder in due

course if the transferee engaged in fraud or illegality affecting theinstrument.

(c) Unless other#ise agreed, if an instrumentis transferred foralue and the transferee does not become a holder because of lac*

of indorsementby the transferor, the transferee has a specificallyenforceable right to the un1ualified indorsement of the transferor,

but negotiationof the instrument does not occur until theindorsement is made.
http://www.law.cornell.edu/ucc/3/article3.htm#Instrument%23Instrumenthttp://www.law.cornell.edu/ucc/3/article3.htm#Issuer%23Issuerhttp://www.law.cornell.edu/ucc/3/article3.htm#Negotiation%23Negotiationhttp://www.law.cornell.edu/ucc/3/article3.htm#Remitter%23Remitterhttp://www.law.cornell.edu/ucc/3/article3.htm#Instrument%23Instrumenthttp://www.law.cornell.edu/ucc/3/article3.htm#Indorsement%23Indorsementhttp://www.law.cornell.edu/ucc/3/article3.htm#Negotiation%23Negotiationhttp://www.law.cornell.edu/ucc/3/article3.htm#holderinduecourse%23holderinduecoursehttp://www.law.cornell.edu/ucc/3/article3.htm#Instrument%23Instrumenthttp://www.law.cornell.edu/ucc/3/article3.htm#Goodfaith%23Goodfaithhttp://www.law.cornell.edu/ucc/3/article3.htm#Instrument%23Instrumenthttp://www.law.cornell.edu/ucc/3/article3.htm#Issue%23Issuehttp://www.law.cornell.edu/ucc/3/article3.htm#Instrument%23Instrumenthttp://www.law.cornell.edu/ucc/3/article3.htm#Negotiation%23Negotiationhttp://www.law.cornell.edu/ucc/3/article3.htm#holderinduecourse%23holderinduecoursehttp://www.law.cornell.edu/ucc/3/article3.htm#holderinduecourse%23holderinduecoursehttp://www.law.cornell.edu/ucc/3/article3.htm#Instrument%23Instrumenthttp://www.law.cornell.edu/ucc/3/article3.htm#Indorsement%23Indorsementhttp://www.law.cornell.edu/ucc/3/article3.htm#Negotiation%23Negotiationhttp://www.law.cornell.edu/ucc/3/article3.htm#Instrument%23Instrumenthttp://www.law.cornell.edu/ucc/3/article3.htm#Issuer%23Issuerhttp://www.law.cornell.edu/ucc/3/article3.htm#Negotiation%23Negotiationhttp://www.law.cornell.edu/ucc/3/article3.htm#Remitter%23Remitterhttp://www.law.cornell.edu/ucc/3/article3.htm#Instrument%23Instrumenthttp://www.law.cornell.edu/ucc/3/article3.htm#Indorsement%23Indorsementhttp://www.law.cornell.edu/ucc/3/article3.htm#Negotiation%23Negotiationhttp://www.law.cornell.edu/ucc/3/article3.htm#holderinduecourse%23holderinduecoursehttp://www.law.cornell.edu/ucc/3/article3.htm#Instrument%23Instrumenthttp://www.law.cornell.edu/ucc/3/article3.htm#Goodfaith%23Goodfaithhttp://www.law.cornell.edu/ucc/3/article3.htm#Instrument%23Instrumenthttp://www.law.cornell.edu/ucc/3/article3.htm#Issue%23Issuehttp://www.law.cornell.edu/ucc/3/article3.htm#Instrument%23Instrumenthttp://www.law.cornell.edu/ucc/3/article3.htm#Negotiation%23Negotiationhttp://www.law.cornell.edu/ucc/3/article3.htm#holderinduecourse%23holderinduecoursehttp://www.law.cornell.edu/ucc/3/article3.htm#holderinduecourse%23holderinduecoursehttp://www.law.cornell.edu/ucc/3/article3.htm#Instrument%23Instrumenthttp://www.law.cornell.edu/ucc/3/article3.htm#Indorsement%23Indorsementhttp://www.law.cornell.edu/ucc/3/article3.htm#Negotiation%23Negotiation


14/48

(d) If a transferor purports to transfer less than the entireinstrument, negotiationof the instrument does not occur. The

transferee obtains no rights under this Article and has only therights of a partial assignee.

3-$#5. INDORSEMENT.

(a) 0Indorsement0 means a signature, other than that of a signeras ma*er, dra#er, or acceptor, that alone or accompanied by other

#ords is made on an instrumentfor the purpose of (i) negotiatingthe instrument, (ii) restricting payment of the instrument, or (iii)

incurring indorser2sliability on the instrument, but regardless of theintent of the signer, a signature and its accompanying #ords is an

indorsement unless the accompanying #ords, terms of theinstrument, place of the signature, or other circumstancesunambiguously indicate that the signature #as made for a purpose

other than indorsement. or the purpose of determining #hether a

signature is made on an instrument, a paper affi+ed to theinstrument is a part of the instrument.

(b) 0Indorser0 means a person #ho ma*es an indorsement.

(c) or the purpose of determining #hether the transferee of an

instrumentis a holder, an indorsement that transfers a securityinterest in the instrument is effectie as an un1ualified indorsement

of the instrument.

(d) If an instrumentis payable to a holder under a name that is not

the name of the holder, indorsement may be made by the holder inthe name stated in the instrument or in the holder2s name or both,

but signature in both names may be re1uired by a person paying orta*ing the instrument for alue or collection.

3-$#7. S&ECIAL INDORSEMENT/ BLAN1 INDORSEMENT/ANOMALOUS INDORSEMENT.

(a) If an indorsementis made by the holder of an instrument,

#hether payable to an identified person or payable to bearer, andthe indorsement identifies a person to #hom it ma*es the

instrument payable, it is a 0special indorsement.0 =hen speciallyindorsed, an instrument becomes payable to the identified personand may be negotiated only by the indorsement of that person. Theprinciples stated in ection 4-5apply to special indorsements.

(b) If an indorsementis made by the holder of an instrumentand itis not a special indorsement, it is a 0blank indorsement.0 =hen

indorsed in blan*, an instrument becomes payable to bearer and
http://www.law.cornell.edu/ucc/3/article3.htm#Instrument%23Instrumenthttp://www.law.cornell.edu/ucc/3/article3.htm#Negotiation%23Negotiationhttp://www.law.cornell.edu/ucc/3/article3.htm#Maker%23Makerhttp://www.law.cornell.edu/ucc/3/article3.htm#Drawer%23Drawerhttp://www.law.cornell.edu/ucc/3/article3.htm#Acceptor%23Acceptorhttp://www.law.cornell.edu/ucc/3/article3.htm#Instrument%23Instrumenthttp://www.law.cornell.edu/ucc/3/article3.htm#Indorser%23Indorserhttp://www.law.cornell.edu/ucc/3/article3.htm#Indorsement%23Indorsementhttp://www.law.cornell.edu/ucc/3/article3.htm#Instrument%23Instrumenthttp://www.law.cornell.edu/ucc/3/article3.htm#Instrument%23Instrumenthttp://www.law.cornell.edu/ucc/3/article3.htm#Indorsement%23Indorsementhttp://www.law.cornell.edu/ucc/3/article3.htm#Instrument%23Instrumenthttp://www.law.cornell.edu/ucc/3/article3.htm#s3-110%23s3-110http://www.law.cornell.edu/ucc/3/article3.htm#Indorsement%23Indorsementhttp://www.law.cornell.edu/ucc/3/article3.htm#Instrument%23Instrumenthttp://www.law.cornell.edu/ucc/3/article3.htm#Instrument%23Instrumenthttp://www.law.cornell.edu/ucc/3/article3.htm#Negotiation%23Negotiationhttp://www.law.cornell.edu/ucc/3/article3.htm#Maker%23Makerhttp://www.law.cornell.edu/ucc/3/article3.htm#Drawer%23Drawerhttp://www.law.cornell.edu/ucc/3/article3.htm#Acceptor%23Acceptorhttp://www.law.cornell.edu/ucc/3/article3.htm#Instrument%23Instrumenthttp://www.law.cornell.edu/ucc/3/article3.htm#Indorser%23Indorserhttp://www.law.cornell.edu/ucc/3/article3.htm#Indorsement%23Indorsementhttp://www.law.cornell.edu/ucc/3/article3.htm#Instrument%23Instrumenthttp://www.law.cornell.edu/ucc/3/article3.htm#Instrument%23Instrumenthttp://www.law.cornell.edu/ucc/3/article3.htm#Indorsement%23Indorsementhttp://www.law.cornell.edu/ucc/3/article3.htm#Instrument%23Instrumenthttp://www.law.cornell.edu/ucc/3/article3.htm#s3-110%23s3-110http://www.law.cornell.edu/ucc/3/article3.htm#Indorsement%23Indorsementhttp://www.law.cornell.edu/ucc/3/article3.htm#Instrument%23Instrument


15/48

may be negotiated by transfer of possession alone until speciallyindorsed.

(c) The holder may conert a blan* indorsement that consists onlyof a signature into a special indorsement by #riting, aboe the

signature of the indorser, #ords identifying the person to #hom theinstrumentis made payable.

(d) 0Anomalous indorsement0 means an indorsementmade by aperson #ho is not the holder of the instrument. An anomalousindorsement does not affect the manner in #hich the instrumentmay be negotiated.

3-$#8. RESTRICTIE INDORSEMENT.

(a) An indorsementlimiting payment to a particular person orother#ise prohibiting further transfer or negotiationof the

instrumentis not effectie to preent further transfer or negotiationof the instrument.

(b) An indorsementstating a condition to the right of the indorseeto receie payment does not affect the right of the indorsee to

enforce the instrument. A person paying the instrument or ta*ing itfor alue or collection may disregard the condition, and the rightsand liabilities of that person are not affected by #hether thecondition has been fulfilled.

(c) If an instrumentbears an indorsement(i) described in ection

!-75(b), or (ii) in blan* or to a particular ban* using the #ords 0fordeposit,0 0for collection,0 or other #ords indicating a purpose ofhaing the instrument collected by a ban* for the indorseror for a

particular account, the follo#ing rules apply

%1& A e*!on o,e* ,an a ban6 +,o /*,a!e! ,e 0n!*/(en+,en !o0n)o*!e) on2e*! ,e 0n!*/(en /nle!! ,e a(o/n a0) fo* ,e 0n!*/(en0! *ee02e) b ,e 0n)o*!e*o* al0e) on!0!enl +0, ,e 0n)o*!e(en.

%$& A )eo!0a* ban6 ,a /*,a!e! ,e 0n!*/(eno* a6e! 0 fo*olle0on +,en !o 0n)o*!e) on2e*! ,e 0n!*/(en /nle!! ,e a(o/n a0)b ,e ban6 +0, *e!e o ,e 0n!*/(en 0! *ee02e) b ,e 0n)o*!e*o*

al0e) on!0!enl +0, ,e0n)o*!e(en.

%3& A ao* ban6 ,a 0! al!o ,e )eo!0a* ban6 o* ,a a6e! ,e0n!*/(enfo* 0((e)0ae a(en o2e* ,e o/ne* f*o( a e*!on o,e*,an a olle0n4 ban6 on2e*! ,e 0n!*/(en /nle!! ,e *oee)! of ,e0n!*/(en a*e *ee02e) b ,e 0n)o*!e*o* al0e) on!0!enl +0, ,e0n)o*!e(en.
http://www.law.cornell.edu/ucc/3/article3.htm#Indorser%23Indorserhttp://www.law.cornell.edu/ucc/3/article3.htm#Instrument%23Instrumenthttp://www.law.cornell.edu/ucc/3/article3.htm#Indorsement%23Indorsementhttp://www.law.cornell.edu/ucc/3/article3.htm#Instrument%23Instrumenthttp://www.law.cornell.edu/ucc/3/article3.htm#Indorsement%23Indorsementhttp://www.law.cornell.edu/ucc/3/article3.htm#Negotiation%23Negotiationhttp://www.law.cornell.edu/ucc/3/article3.htm#Instrument%23Instrumenthttp://www.law.cornell.edu/ucc/3/article3.htm#Indorsement%23Indorsementhttp://www.law.cornell.edu/ucc/3/article3.htm#Instrument%23Instrumenthttp://www.law.cornell.edu/ucc/3/article3.htm#Instrument%23Instrumenthttp://www.law.cornell.edu/ucc/3/article3.htm#Indorsement%23Indorsementhttp://www.law.cornell.edu/ucc/4/article4.htm#s4-201bhttp://www.law.cornell.edu/ucc/3/article3.htm#Indorser%23Indorserhttp://www.law.cornell.edu/ucc/3/article3.htm#Instrument%23Instrumenthttp://www.law.cornell.edu/ucc/3/article3.htm#Indorser%23Indorserhttp://www.law.cornell.edu/ucc/3/article3.htm#Indorsement%23Indorsementhttp://www.law.cornell.edu/ucc/3/article3.htm#Instrument%23Instrumenthttp://www.law.cornell.edu/ucc/3/article3.htm#Instrument%23Instrumenthttp://www.law.cornell.edu/ucc/3/article3.htm#Indorser%23Indorserhttp://www.law.cornell.edu/ucc/3/article3.htm#Indorsement%23Indorsementhttp://www.law.cornell.edu/ucc/3/article3.htm#Indorsement%23Indorsementhttp://www.law.cornell.edu/ucc/3/article3.htm#Instrument%23Instrumenthttp://www.law.cornell.edu/ucc/3/article3.htm#Indorser%23Indorserhttp://www.law.cornell.edu/ucc/3/article3.htm#Indorsement%23Indorsementhttp://www.law.cornell.edu/ucc/3/article3.htm#Indorser%23Indorserhttp://www.law.cornell.edu/ucc/3/article3.htm#Instrument%23Instrumenthttp://www.law.cornell.edu/ucc/3/article3.htm#Indorsement%23Indorsementhttp://www.law.cornell.edu/ucc/3/article3.htm#Instrument%23Instrumenthttp://www.law.cornell.edu/ucc/3/article3.htm#Indorsement%23Indorsementhttp://www.law.cornell.edu/ucc/3/article3.htm#Negotiation%23Negotiationhttp://www.law.cornell.edu/ucc/3/article3.htm#Instrument%23Instrumenthttp://www.law.cornell.edu/ucc/3/article3.htm#Indorsement%23Indorsementhttp://www.law.cornell.edu/ucc/3/article3.htm#Instrument%23Instrumenthttp://www.law.cornell.edu/ucc/3/article3.htm#Instrument%23Instrumenthttp://www.law.cornell.edu/ucc/3/article3.htm#Indorsement%23Indorsementhttp://www.law.cornell.edu/ucc/4/article4.htm#s4-201bhttp://www.law.cornell.edu/ucc/3/article3.htm#Indorser%23Indorserhttp://www.law.cornell.edu/ucc/3/article3.htm#Instrument%23Instrumenthttp://www.law.cornell.edu/ucc/3/article3.htm#Indorser%23Indorserhttp://www.law.cornell.edu/ucc/3/article3.htm#Indorsement%23Indorsementhttp://www.law.cornell.edu/ucc/3/article3.htm#Instrument%23Instrumenthttp://www.law.cornell.edu/ucc/3/article3.htm#Indorser%23Indorserhttp://www.law.cornell.edu/ucc/3/article3.htm#Indorsement%23Indorsementhttp://www.law.cornell.edu/ucc/3/article3.htm#Instrument%23Instrumenthttp://www.law.cornell.edu/ucc/3/article3.htm#Indorser%23Indorserhttp://www.law.cornell.edu/ucc/3/article3.htm#Indorsement%23Indorsement


16/48

%5& E?e a! o,e*+0!e *o20)e) 0n a*a4*a, %3& a ao* ban6 o*0ne*(e)0a* ban6 (a )0!*e4a*) ,e 0n)o*!e(enan) 0! no l0able 0f ,e*oee)! of ,e0n!*/(ena*e no *ee02e) b ,e 0n)o*!e*o* al0e)on!0!enl +0, ,e 0n)o*!e(en.

(d) /+cept for an indorsementcoered by subsection (c), if an

instrumentbears an indorsement using #ords to the effect thatpayment is to be made to the indorsee as agent, trustee, or otherfiduciaryfor the benefit of the indorseror another person, thefollo#ing rules apply

%1& Unle!! ,e*e 0! no0e of b*ea, off0)/0a*)/ a! *o20)e) 0n Se0on3-3#9 a e*!on +,o /*,a!e! ,e 0n!*/(enf*o( ,e 0n)o*!ee o* a6e!,e 0n!*/(en f*o( ,e 0n)o*!ee fo* olle0on o* a(en (a a ,e*oee)! of a(en o* ,e 2al/e 402en fo* ,e 0n!*/(en o ,e 0n)o*!ee+0,o/ *e4a*) o +,e,e* ,e 0n)o*!ee 20olae! a f0)/0a* )/ o ,e0n)o*!e*.

%$& A !/b!e>/en *an!fe*ee of ,e 0n!*/(eno* e*!on +,o a! ,e0n!*/(en 0! ne0,e* 402en no0e no* o,e*+0!e affee) b ,e *e!*00on 0n,e 0n)o*!e(en/nle!! ,e *an!fe*ee o* ao* 6no+! ,a ,e f0)/0a*)eal +0, ,e 0n!*/(en o* 0! *oee)! 0n b*ea, of f0)/0a* )/.

(e) The presence on an instrumentof an indorsementto #hich this

section applies does not preent a purchaser of the instrument frombecoming a holder in due courseof the instrument unless the

purchaser is a conerter under subsection (c) or has notice or*no#ledge of breach of fiduciaryduty as stated in subsection (d).

(f) In an action to enforce the obligation of a partyto pay theinstrument, the obligor has a defense if payment #ould iolate anindorsementto #hich this section applies and the payment is notpermitted by this section.

3-$#9. REAC0UISITION.

%eac1uisition of an instrumentoccurs if it is transferred to a formerholder, by negotiationor other#ise. A former holder #ho reac1uires

the instrument may cancel indorsementsmade after the reac1uirerfirst became a holder of the instrument. If the cancellation causes

the instrument to be payable to the reac1uirer or to bearer, thereac1uirer may negotiate the instrument. An indorser#hoseindorsement is canceled is discharged, and the discharge is effectieagainst any subse1uent holder.

PART 3. ENFORCEMENT OF INSTRUMENTS [Table of Conen!"

3-3#1. &ERSON ENTITLED TO ENFORCE INSTRUMENT.
http://www.law.cornell.edu/ucc/3/article3.htm#Indorsement%23Indorsementhttp://www.law.cornell.edu/ucc/3/article3.htm#Instrument%23Instrumenthttp://www.law.cornell.edu/ucc/3/article3.htm#Instrument%23Instrumenthttp://www.law.cornell.edu/ucc/3/article3.htm#Indorser%23Indorserhttp://www.law.cornell.edu/ucc/3/article3.htm#Indorsement%23Indorsementhttp://www.law.cornell.edu/ucc/3/article3.htm#Instrument%23Instrumenthttp://www.law.cornell.edu/ucc/3/article3.htm#Fiduciary%23Fiduciaryhttp://www.law.cornell.edu/ucc/3/article3.htm#Indorser%23Indorserhttp://www.law.cornell.edu/ucc/3/article3.htm#Fiduciary%23Fiduciaryhttp://www.law.cornell.edu/ucc/3/article3.htm#Fiduciary%23Fiduciaryhttp://www.law.cornell.edu/ucc/3/article3.htm#s3-307%23s3-307http://www.law.cornell.edu/ucc/3/article3.htm#Instrument%23Instrumenthttp://www.law.cornell.edu/ucc/3/article3.htm#Indorser%23Indorserhttp://www.law.cornell.edu/ucc/3/article3.htm#Instrument%23Instrumenthttp://www.law.cornell.edu/ucc/3/article3.htm#Indorsement%23Indorsementhttp://www.law.cornell.edu/ucc/3/article3.htm#Fiduciary%23Fiduciaryhttp://www.law.cornell.edu/ucc/3/article3.htm#Instrument%23Instrumenthttp://www.law.cornell.edu/ucc/3/article3.htm#Indorsement%23Indorsementhttp://www.law.cornell.edu/ucc/3/article3.htm#holderinduecourse%23holderinduecoursehttp://www.law.cornell.edu/ucc/3/article3.htm#Fiduciary%23Fiduciaryhttp://www.law.cornell.edu/ucc/3/article3.htm#Party%23Partyhttp://www.law.cornell.edu/ucc/3/article3.htm#Instrument%23Instrumenthttp://www.law.cornell.edu/ucc/3/article3.htm#Indorsement%23Indorsementhttp://www.law.cornell.edu/ucc/3/article3.htm#Instrument%23Instrumenthttp://www.law.cornell.edu/ucc/3/article3.htm#Negotiation%23Negotiationhttp://www.law.cornell.edu/ucc/3/article3.htm#Indorsement%23Indorsementhttp://www.law.cornell.edu/ucc/3/article3.htm#Indorser%23Indorserhttp://www.law.cornell.edu/ucc/3/index.htm#part3http://www.law.cornell.edu/ucc/3/index.htm#part3http://www.law.cornell.edu/ucc/3/article3.htm#Indorsement%23Indorsementhttp://www.law.cornell.edu/ucc/3/article3.htm#Instrument%23Instrumenthttp://www.law.cornell.edu/ucc/3/article3.htm#Indorser%23Indorserhttp://www.law.cornell.edu/ucc/3/article3.htm#Indorsement%23Indorsementhttp://www.law.cornell.edu/ucc/3/article3.htm#Instrument%23Instrumenthttp://www.law.cornell.edu/ucc/3/article3.htm#Fiduciary%23Fiduciaryhttp://www.law.cornell.edu/ucc/3/article3.htm#Indorser%23Indorserhttp://www.law.cornell.edu/ucc/3/article3.htm#Fiduciary%23Fiduciaryhttp://www.law.cornell.edu/ucc/3/article3.htm#s3-307%23s3-307http://www.law.cornell.edu/ucc/3/article3.htm#Instrument%23Instrumenthttp://www.law.cornell.edu/ucc/3/article3.htm#Indorser%23Indorserhttp://www.law.cornell.edu/ucc/3/article3.htm#Instrument%23Instrumenthttp://www.law.cornell.edu/ucc/3/article3.htm#Indorsement%23Indorsementhttp://www.law.cornell.edu/ucc/3/article3.htm#Fiduciary%23Fiduciaryhttp://www.law.cornell.edu/ucc/3/article3.htm#Instrument%23Instrumenthttp://www.law.cornell.edu/ucc/3/article3.htm#Indorsement%23Indorsementhttp://www.law.cornell.edu/ucc/3/article3.htm#holderinduecourse%23holderinduecoursehttp://www.law.cornell.edu/ucc/3/article3.htm#Fiduciary%23Fiduciaryhttp://www.law.cornell.edu/ucc/3/article3.htm#Party%23Partyhttp://www.law.cornell.edu/ucc/3/article3.htm#Instrument%23Instrumenthttp://www.law.cornell.edu/ucc/3/article3.htm#Indorsement%23Indorsementhttp://www.law.cornell.edu/ucc/3/article3.htm#Instrument%23Instrumenthttp://www.law.cornell.edu/ucc/3/article3.htm#Negotiation%23Negotiationhttp://www.law.cornell.edu/ucc/3/article3.htm#Indorsement%23Indorsementhttp://www.law.cornell.edu/ucc/3/article3.htm#Indorser%23Indorserhttp://www.law.cornell.edu/ucc/3/index.htm#part3


17/48

0Person entitled to enforce0 an instrumentmeans (i) the holderof the instrument, (ii) a nonholder in possession of the instrument

#ho has the rights of a holder, or (iii) a person not in possession ofthe instrument #ho is entitled to enforce the instrument pursuant toection 4-45$ or 4-!"(d). A person may be a person entitled toenforce the instrument een though the person is not the o#ner of

the instrument or is in #rongful possession of the instrument.

3-3#$. HOLDER IN DUE COURSE.

(a) ub3ect to subsection (c) and ection 4-5>(d), 0holder in due

course0 means the holder of an instrumentif

%1& ,e0n!*/(en+,en 0!!/e)o* ne4o0ae) o ,e ,ol)e* )oe! no bea*!/, aa*en e20)ene of fo*4e* o* ale*a0ono* 0! no o,e*+0!e !o0**e4/la* o* 0no(lee a! o all 0no >/e!0on 0! a/,en00 an)

%$& ,e ,ol)e* oo6 ,e 0n!*/(en%0& fo* 2al/e %00& 0n 4oo) fa0, %000& +0,o/no0e ,a ,e 0n!*/(en 0! o2e*)/e o* ,a! been )0!,ono*e) o* ,a ,e*e 0!an /n/*e) )efa/l +0, *e!e o a(en of ano,e* 0n!*/(en 0!!/e)a!a* of ,e !a(e !e*0e! %02& +0,o/ no0e ,a ,e 0n!*/(en ona0n! an/na/,o*0


18/48

(e) If (i) the person entitled to enforcean instrumenthas only asecurity interest in the instrument and (ii) the person obliged to pay

the instrument has a defense, claim in recoupment, or claim to theinstrument that may be asserted against the person #ho grantedthe security interest, the person entitled to enforce the instrumentmay assert rights as a holder in due courseonly to an amount

payable under the instrument #hich, at the time of enforcement ofthe instrument, does not e+ceed the amount of the unpaid obligation

secured.

(f) To be effectie, notice must be receied at a time and in a

manner that gies a reasonable opportunity to act on it.

(g) This section is sub3ect to any la# limiting status as a holder in

due coursein particular classes of transactions.

3-3#3. ALUE AND CONSIDERATION.

(a) An instrumentis issuedor transferred for alue if

%1& ,e0n!*/(en0! 0!!/e)o* *an!fe**e) fo* a *o(0!eof e*fo*(ane o,e e?en ,e *o(0!e ,a! been e*fo*(e)

%$& ,e *an!fe*ee a>/0*e! a !e/*0 0ne*e! o* o,e* l0en 0n ,e 0n!*/(eno,e* ,an a l0en oba0ne) b ;/)00al *oee)0n4

%3& ,e0n!*/(en0! 0!!/e)o* *an!fe**e) a! a(en of o* a! !e/*0 fo*an anee)en la0( a4a0n! an e*!on +,e,e* o* no ,e la0( 0! )/e

%5& ,e0n!*/(en0! 0!!/e)o* *an!fe**e) 0n e?,an4e fo* a ne4o0able0n!*/(en o*

%7& ,e0n!*/(en0! 0!!/e)o* *an!fe**e) 0n e?,an4e fo* ,e 0n/**0n4 of an0**e2oable obl04a0on o a ,0*) a*b ,e e*!on a60n4 ,e 0n!*/(en.

(b) 0Consideration0 means any consideration sufficient to supporta simple contract. The dra#eror ma*erof an instrumenthas a

defense if the instrument is issued#ithout consideration. If aninstrument is issued for a promiseof performance, the issuerhas adefense to the e+tent performance of the promise is due and the

promise has not been performed. If an instrument is issued foralue as stated in subsection (a), the instrument is also issued forconsideration.

3-3#5. OERDUE INSTRUMENT.

(a) An instrumentpayable on demand becomes oerdue at theearliest of the follo#ing times
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19/48

%1& on ,e )a afe* ,e )a )e(an) fo* a(en 0! )/l (a)e

%$& 0f ,e 0n!*/(en0! a ,e6 =# )a! afe* 0! )ae o*

%3& 0f ,e 0n!*/(en0! no a ,e6 +,en ,e 0n!*/(en ,a! beeno/!an)0n4 fo* a e*0o) of 0(e afe* 0! )ae +,0, 0! /n*ea!onabl lon4/n)e* ,e 0*/(!ane! of ,e a*0/la* a!e 0n l04, of ,e na/*e of ,e0n!*/(en an) /!a4e of ,e *a)e.

(b) =ith respect to an instrumentpayable at a definite time thefollo#ing rules apply

%1& If ,e *0n0al 0! aable 0n 0n!all(en! an) a )/e )ae ,a! no beenaele*ae) ,e 0n!*/(enbeo(e! o2e*)/e /on )efa/l /n)e* ,e0n!*/(en fo* nona(en of an 0n!all(en an) ,e 0n!*/(en *e(a0n!o2e*)/e /n0l ,e )efa/l 0! /*e).

%$& If ,e *0n0al 0! no aable 0n 0n!all(en! an) ,e )/e )ae ,a! nobeen aele*ae) ,e0n!*/(enbeo(e! o2e*)/e on ,e )a afe* ,e )/e)ae.

%3& If a )/e )ae +0, *e!e o *0n0al ,a! been aele*ae) ,e0n!*/(enbeo(e! o2e*)/e on ,e )a afe* ,e aele*ae) )/e )ae.

(c) Unless the due date of principal has been accelerated, an

instrumentdoes not become oerdue if there is default in paymentof interest but no default in payment of principal.

3-3#7. DEFENSES AND CLAIMS IN RECOU&MENT.

(a) /+cept as other#ise proided in this section, the right to enforcethe obligation of a partyto pay an instrumentis sub3ect to the

follo#ing

%1& a )efen!e of ,e obl04o* ba!e) on %0& 0nfan of ,e obl04o* o ,e e?en 00! a )efen!e o a !0(le on*a %00& )/*e!! la6 of le4al aa0 o*0lle4al0 of ,e *an!a0on +,0, /n)e* o,e* la+ n/ll0f0e! ,e obl04a0on of,e obl04o* %000& f*a/) ,a 0n)/e) ,e obl04o* o !04n ,e 0n!*/(en+0,ne0,e* 6no+le)4e no* *ea!onable oo*/n0 o lea*n of 0! ,a*ae* o* 0!e!!en0al e*(! o* %02& )0!,a*4e of ,e obl04o* 0n 0n!ol2en *oee)0n4!

%$& a )efen!e of ,e obl04o* !ae) 0n ano,e* !e0on of ,0! A*0le o* a)efen!e of ,e obl04o* ,a +o/l) be a2a0lable 0f ,e e*!on en0le) oenfo*e,e 0n!*/(en+e*e enfo*0n4 a *04, o a(en /n)e* a !0(leon*a an)

%3& a la0( 0n *eo/(en of ,e obl04o* a4a0n! ,e o*040nal aee of ,e0n!*/(en0f ,e la0( a*o!e f*o( ,e *an!a0on ,a 4a2e *0!e o ,e0n!*/(en b/ ,e la0( of ,e obl04o* (a be a!!e*e) a4a0n! a
http://www.law.cornell.edu/ucc/3/article3.htm#Instrument%23Instrumenthttp://www.law.cornell.edu/ucc/3/article3.htm#Check%23Checkhttp://www.law.cornell.edu/ucc/3/article3.htm#Instrument%23Instrumenthttp://www.law.cornell.edu/ucc/3/article3.htm#Check%23Checkhttp://www.law.cornell.edu/ucc/3/article3.htm#Instrument%23Instrumenthttp://www.law.cornell.edu/ucc/3/article3.htm#Instrument%23Instrumenthttp://www.law.cornell.edu/ucc/3/article3.htm#Instrument%23Instrumenthttp://www.law.cornell.edu/ucc/3/article3.htm#Instrument%23Instrumenthttp://www.law.cornell.edu/ucc/3/article3.htm#Instrument%23Instrumenthttp://www.law.cornell.edu/ucc/3/article3.htm#Instrument%23Instrumenthttp://www.law.cornell.edu/ucc/3/article3.htm#Party%23Partyhttp://www.law.cornell.edu/ucc/3/article3.htm#Instrument%23Instrumenthttp://www.law.cornell.edu/ucc/3/article3.htm#Instrument%23Instrumenthttp://www.law.cornell.edu/ucc/3/article3.htm#Personentitledtoenforce%23Personentitledtoenforcehttp://www.law.cornell.edu/ucc/3/article3.htm#Personentitledtoenforce%23Personentitledtoenforcehttp://www.law.cornell.edu/ucc/3/article3.htm#Personentitledtoenforce%23Personentitledtoenforcehttp://www.law.cornell.edu/ucc/3/article3.htm#Instrument%23Instrumenthttp://www.law.cornell.edu/ucc/3/article3.htm#Instrument%23Instrumenthttp://www.law.cornell.edu/ucc/3/article3.htm#Instrument%23Instrumenthttp://www.law.cornell.edu/ucc/3/article3.htm#Check%23Checkhttp://www.law.cornell.edu/ucc/3/article3.htm#Instrument%23Instrumenthttp://www.law.cornell.edu/ucc/3/article3.htm#Check%23Checkhttp://www.law.cornell.edu/ucc/3/article3.htm#Instrument%23Instrumenthttp://www.law.cornell.edu/ucc/3/article3.htm#Instrument%23Instrumenthttp://www.law.cornell.edu/ucc/3/article3.htm#Instrument%23Instrumenthttp://www.law.cornell.edu/ucc/3/article3.htm#Instrument%23Instrumenthttp://www.law.cornell.edu/ucc/3/article3.htm#Instrument%23Instrumenthttp://www.law.cornell.edu/ucc/3/article3.htm#Party%23Partyhttp://www.law.cornell.edu/ucc/3/article3.htm#Instrument%23Instrumenthttp://www.law.cornell.edu/ucc/3/article3.htm#Instrument%23Instrumenthttp://www.law.cornell.edu/ucc/3/article3.htm#Personentitledtoenforce%23Personentitledtoenforcehttp://www.law.cornell.edu/ucc/3/article3.htm#Personentitledtoenforce%23Personentitledtoenforcehttp://www.law.cornell.edu/ucc/3/article3.htm#Instrument%23Instrumenthttp://www.law.cornell.edu/ucc/3/article3.htm#Instrument%23Instrument


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*an!fe*ee of ,e 0n!*/(en onl o *e)/e ,e a(o/n o+0n4 on ,e0n!*/(en a ,e 0(e ,e a0on 0! b*o/4,.

(b) The right of a holder in due courseto enforce the obligation of apartyto pay the instrumentis sub3ect to defenses of the obligorstated in subsection (a)(), but is not sub3ect to defenses of theobligor stated in subsection (a)(7) or claims in recoupment stated in

subsection (a)(4) against a person other than the holder.

(c) /+cept as stated in subsection (d), in an action to enforce the

obligation of a partyto pay the instrument, the obligor may notassert against the person entitled to enforcethe instrument a

defense, claim in recoupment, or claim to the instrument (ection 4-45>) of another person, but the other person2s claim to theinstrument may be asserted by the obligor if the other person is

3oined in the action and personally asserts the claim against the

person entitled to enforce the instrument. An obligor is not obliged

to pay the instrument if the person see*ing enforcement of theinstrument does not hae rights of a holder in due courseand theobligor proesthat the instrument is a lost or stolen instrument.

(d) In an action to enforce the obligation of an accommodationpartyto pay an instrument, the accommodation party may assert

against the person entitled to enforcethe instrument any defense orclaim in recoupment under subsection (a) that the accommodatedparty could assert against the person entitled to enforce theinstrument, e+cept the defenses of discharge in insolency

proceedings, infancy, and lac* of legal capacity.

(e) In a consumer transaction, if la# other than this article re1uires

that an instrument include a statement to the effect that the rightsof a holder or transferee are sub3ect to a claim or defense that the

issuer could assert against the original payee, and the instrumentdoes not include such a statement () the instrument has the same

effect as if the instrument included such a statement6 (7) the issuermay assert against the holder or transferee all claims and defensesthat #ould hae been aailable if the instrument included such astatement6 and (4) the e+tent to #hich claims may be asserted

against the holder or transferee is determined as if the instrumentincluded such a statement.

(f) This section is sub3ect to la# other than this article thatestablishes a different rule for consumer transactions.

3-3#8. CLAIMS TO AN INSTRUMENT.

A person ta*ing an instrument, other than a person haing rights ofa holder in due course, is sub3ect to a claim of a property or
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possessory right in the instrument or its proceeds, including a claimto rescind a negotiationand to recoer the instrument or its

proceeds. A person haing rights of a holder in due course ta*esfree of the claim to the instrument.

3-3#9. NOTICE OF BREACH OF FIDUCIAR, DUT,.

(a) In this section

%1& 'F!$uc!r%' (ean! an a4en */!ee a*ne* o*o*ae off0e* o*)0*eo* o* o,e* *e*e!ena02e o+0n4 a f0)/0a* )/ +0, *e!e o an0n!*/(en.

%$& 'Represente$ person' (ean! ,e *0n0al benef00a* a*ne*!,0o*o*a0on o* o,e* e*!on o +,o( ,e )/ !ae) 0n a*a4*a, %1& 0!o+e).

(b) If (i) an instrumentis ta*en from a fiduciary for payment orcollection or for alue, (ii) the ta*er has *no#ledge of the fiduciarystatus of the fiduciary, and (iii) the represented person ma*es a

claim to the instrument or its proceeds on the basis that thetransaction of the fiduciary is a breach of fiduciary duty, the

follo#ing rules apply

%1& No0e of b*ea, of f0)/0a* )/ b ,e f0)/0a* 0! no0e of ,e la0(of ,e *e*e!ene) e*!on.

%$& In ,e a!e of an0n!*/(enaable o ,e *e*e!ene) e*!on o* ,ef0)/0a* a! !/, ,e a6e* ,a! no0e of ,e b*ea, of f0)/0a* )/ 0f ,e0n!*/(en 0! %0& a6en 0n a(en of o* a! !e/*0 fo* a )eb 6no+n b ,ea6e* o be ,e e*!onal )eb of ,e f0)/0a* %00& a6en 0n a *an!a0on6no+n b ,e a6e* o be fo* ,e e*!onal benef0 of ,e f0)/0a* o* %000&)eo!0e) o an ao/n o,e* ,an an ao/n of ,e f0)/0a* a! !/, o*an ao/n of ,e *e*e!ene) e*!on.

%3& If an 0n!*/(en0! 0!!/e)b ,e *e*e!ene) e*!on o* ,e f0)/0a* a!!/, an) (a)e aable o ,e f0)/0a* e*!onall ,e a6e* )oe! no ,a2eno0e of ,e b*ea, of f0)/0a* )/ /nle!! ,e a6e* 6no+! of ,e b*ea,of f0)/0a* )/.

%5& If an 0n!*/(en0! 0!!/e)b ,e *e*e!ene) e*!on o* ,e f0)/0a* a!!/, o ,e a6e* a! aee ,e a6e* ,a! no0e of ,e b*ea, of f0)/0a*)/ 0f ,e 0n!*/(en 0! %0& a6en 0n a(en of o* a! !e/*0 fo* a )eb6no+n b ,e a6e* o be ,e e*!onal )eb of ,e f0)/0a* %00& a6en 0n a*an!a0on 6no+n b ,e a6e* o be fo* ,e e*!onal benef0 of ,e f0)/0a*o* %000& )eo!0e) o an ao/n o,e* ,an an ao/n of ,e f0)/0a* a!!/, o* an ao/n of ,e *e*e!ene) e*!on.
http://www.law.cornell.edu/ucc/3/article3.htm#Negotiation%23Negotiationhttp://www.law.cornell.edu/ucc/3/article3.htm#Instrument%23Instrumenthttp://www.law.cornell.edu/ucc/3/article3.htm#Instrument%23Instrumenthttp://www.law.cornell.edu/ucc/3/article3.htm#Instrument%23Instrumenthttp://www.law.cornell.edu/ucc/3/article3.htm#Instrument%23Instrumenthttp://www.law.cornell.edu/ucc/3/article3.htm#Instrument%23Instrumenthttp://www.law.cornell.edu/ucc/3/article3.htm#Issue%23Issuehttp://www.law.cornell.edu/ucc/3/article3.htm#Instrument%23Instrumenthttp://www.law.cornell.edu/ucc/3/article3.htm#Issue%23Issuehttp://www.law.cornell.edu/ucc/3/article3.htm#Negotiation%23Negotiationhttp://www.law.cornell.edu/ucc/3/article3.htm#Instrument%23Instrumenthttp://www.law.cornell.edu/ucc/3/article3.htm#Instrument%23Instrumenthttp://www.law.cornell.edu/ucc/3/article3.htm#Instrument%23Instrumenthttp://www.law.cornell.edu/ucc/3/article3.htm#Instrument%23Instrumenthttp://www.law.cornell.edu/ucc/3/article3.htm#Issue%23Issuehttp://www.law.cornell.edu/ucc/3/article3.htm#Instrument%23Instrumenthttp://www.law.cornell.edu/ucc/3/article3.htm#Issue%23Issue


22/48

3-3#:. &ROOF OF SI+NATURES AND STATUS AS HOLDER IN DUECOURSE.

(a) In an action #ith respect to an instrument, the authenticity of,and authority to ma*e, each signature on the instrument is admittedunless specifically denied in the pleadings. If the alidity of a

signature is denied in the pleadings, the burden of establishingalidity is on the person claiming alidity, but the signature is

presumed to be authentic and authori9ed unless the action is toenforce the liability of the purported signer and the signer is dead or

incompetent at the time of trial of the issueof alidity of thesignature. If an action to enforce the instrument is brought againsta person as the undisclosed principal of a person #ho signed theinstrument as a partyto the instrument, the plaintiff has the burden

of establishing that the defendant is liable on the instrument as arepresented personunder ection 4-!57(a).

(b) If the alidity of signatures is admitted or proedand there iscompliance #ith subsection (a), a plaintiff producing the instrument

is entitled to payment if the plaintiff proes entitlement to enforcethe instrument under ection 4-45, unless the defendant proes a

defense or claim in recoupment. If a defense or claim inrecoupment is proed, the right to payment of the plaintiff is sub3ectto the defense or claim, e+cept to the e+tent the plaintiff proes thatthe plaintiff has rights of a holder in due course#hich are not

sub3ect to the defense or claim.

3-3#=. ENFORCEMENT OF LOST2 DESTRO,ED2 OR STOLEN

INSTRUMENT.

(a) A person not in possession of an instrumentis entitled toenforce the instrument if

%1& ,e e*!on !ee60n4 o enfo*e ,e 0n!*/(en

%A& +a! en0le) o enfo*e 0 ,e 0n!*/(en +,en lo!! of o!!e!!0ono/**e) o*

%B& ,a! )0*el o* 0n)0*el a>/0*e) o+ne*!,0 of ,e 0n!*/(en f*o( ae*!on +,o +a! en0le) o enfo*e ,e 0n!*/(en +,en lo!! of

o!!e!!0on o/**e)

%$& ,e lo!! of o!!e!!0on +a! no ,e *e!/l of a *an!fe* b ,e e*!on o* ala+f/l !e0


23/48

)ee*(0ne) o* 0 0! 0n ,e +*on4f/l o!!e!!0on of an /n6no+n e*!on o* ae*!on ,a anno be fo/n) o* 0! no a(enable o !e*20e of *oe!!.

(b) A person see*ing enforcement of an instrumentundersubsection (a) must proethe terms of the instrument and theperson2s right to enforce the instrument. If that proof is made,ection 4-45"applies to the case as if the person see*ing

enforcement had produced the instrument. The court may not enter3udgment in faor of the person see*ing enforcement unless it finds

that the person re1uired to pay the instrument is ade1uatelyprotected against loss that might occur by reason of a claim by

another person to enforce the instrument. Ade1uate protection maybe proided by any reasonable means.

3-31#. EFFECT OF INSTRUMENT ON OBLI+ATION FOR HICHTA1EN.

(a) Unless other#ise agreed, if a certified chec*, cashier2s chec*, orteller2s chec*is ta*en for an obligation, the obligation is dischargedto the same e+tent discharge #ould result if an amount of money

e1ual to the amount of the instrument#ere ta*en in payment of theobligation. @ischarge of the obligation does not affect any liabilitythat the obligor may hae as an indorserof the instrument.

(b) Unless other#ise agreed and e+cept as proided in subsection(a), if a noteor an uncertified chec*is ta*en for an obligation, theobligation is suspended to the same e+tent the obligation #ould be

discharged if an amount of money e1ual to the amount of the

instrument#ere ta*en, and the follo#ing rules apply

%1& In ,e a!e of an /ne*0f0e) ,e6 !/!en!0on of ,e obl04a0onon0n/e! /n0l )0!,ono* of ,e ,e6 o* /n0l 0 0! a0) o* e*0f0e). Pa(eno* e*0f0a0on of ,e ,e6 *e!/l! 0n )0!,a*4e of ,e obl04a0on o ,ee?en of ,e a(o/n of ,e ,e6.

%$& In ,e a!e of a noe !/!en!0on of ,e obl04a0on on0n/e! /n0l)0!,ono* of ,e noe o* /n0l 0 0! a0). Pa(en of ,e noe *e!/l! 0n)0!,a*4e of ,e obl04a0on o ,e e?en of ,e a(en.

%3& E?e a! *o20)e) 0n a*a4*a, %5& 0f ,e ,e6o* noe0! )0!,ono*e)

an) ,e obl04ee of ,e obl04a0on fo* +,0, ,e 0n!*/(en+a! a6en 0! ,ee*!on en0le) o enfo*e,e 0n!*/(en ,e obl04ee (a enfo*e e0,e* ,e0n!*/(en o* ,e obl04a0on. In ,e a!e of an 0n!*/(en of a ,0*) e*!on+,0, 0! ne4o0ae) o ,e obl04ee b ,e obl04o* )0!,a*4e of ,e obl04o* on,e 0n!*/(en al!o )0!,a*4e! ,e obl04a0on.

%5& If ,e e*!on en0le) o enfo*e,e 0n!*/(ena6en fo* an obl04a0on 0!a e*!on o,e* ,an ,e obl04ee ,e obl04ee (a no enfo*e ,e obl04a0ono ,e e?en ,e obl04a0on 0! !/!en)e). If ,e obl04ee 0! ,e e*!on
http://www.law.cornell.edu/ucc/3/article3.htm#Instrument%23Instrumenthttp://www.law.cornell.edu/ucc/3/article3.htm#Prove%23Provehttp://www.law.cornell.edu/ucc/3/article3.htm#s3-308%23s3-308http://www.law.cornell.edu/ucc/3/article3.htm#Certifiedcheck%23Certifiedcheckhttp://www.law.cornell.edu/ucc/3/article3.htm#Cashierscheck%23Cashierscheckhttp://www.law.cornell.edu/ucc/3/article3.htm#Tellerscheck%23Tellerscheckhttp://www.law.cornell.edu/ucc/3/article3.htm#Instrument%23Instrumenthttp://www.law.cornell.edu/ucc/3/article3.htm#Indorser%23Indorserhttp://www.law.cornell.edu/ucc/3/article3.htm#Note%23Notehttp://www.law.cornell.edu/ucc/3/article3.htm#Check%23Checkhttp://www.law.cornell.edu/ucc/3/article3.htm#Instrument%23Instrumenthttp://www.law.cornell.edu/ucc/3/article3.htm#Check%23Checkhttp://www.law.cornell.edu/ucc/3/article3.htm#Note%23Notehttp://www.law.cornell.edu/ucc/3/article3.htm#Check%23Checkhttp://www.law.cornell.edu/ucc/3/article3.htm#Note%23Notehttp://www.law.cornell.edu/ucc/3/article3.htm#Instrument%23Instrumenthttp://www.law.cornell.edu/ucc/3/article3.htm#Personentitledtoenforce%23Personentitledtoenforcehttp://www.law.cornell.edu/ucc/3/article3.htm#Personentitledtoenforce%23Personentitledtoenforcehttp://www.law.cornell.edu/ucc/3/article3.htm#Instrument%23Instrumenthttp://www.law.cornell.edu/ucc/3/article3.htm#Instrument%23Instrumenthttp://www.law.cornell.edu/ucc/3/article3.htm#Prove%23Provehttp://www.law.cornell.edu/ucc/3/article3.htm#s3-308%23s3-308http://www.law.cornell.edu/ucc/3/article3.htm#Certifiedcheck%23Certifiedcheckhttp://www.law.cornell.edu/ucc/3/article3.htm#Cashierscheck%23Cashierscheckhttp://www.law.cornell.edu/ucc/3/article3.htm#Tellerscheck%23Tellerscheckhttp://www.law.cornell.edu/ucc/3/article3.htm#Instrument%23Instrumenthttp://www.law.cornell.edu/ucc/3/article3.htm#Indorser%23Indorserhttp://www.law.cornell.edu/ucc/3/article3.htm#Note%23Notehttp://www.law.cornell.edu/ucc/3/article3.htm#Check%23Checkhttp://www.law.cornell.edu/ucc/3/article3.htm#Instrument%23I

Uniform Commercial Code UCC Article 3

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Transcript of Uniform Commercial Code UCC Article 3