Article 3 — Negotiable Instruments · Section 3-103
Investigate the fundamental principles surrounding negotiable instruments as laid out in UCC § 3-103.
Source: U.C.C. § 3-103
A 'negotiable instrument' means an unconditional promise or order to pay a fixed amount of money, with or without interest or other charges, if it is payable to bearer or to order at the time it is issued or first comes into possession of a holder. An instrument is a 'negotiable instrument' if it meets the requirements provided in this article.
UCC § 3-103 defines what constitutes a negotiable instrument, such as checks, promissory notes, and drafts. To qualify, these instruments must contain an unconditional promise to pay a specific amount of money and be payable to the order of a specific person or to bearer.
A written document guaranteeing the payment of a specific amount of money either on demand or at a set time.
The person who possesses the negotiable instrument and is entitled to payment.
Example 1
A check made out to John Doe, signed by Jane Smith, which promises the payment of $100.
Example 2
A promissory note stating that Alex will pay Taylor $500 on a specific date.