Article 3 — Negotiable Instruments · Section 3-110
This section addresses the transferability and enforceability of negotiable instruments.
Source: U.C.C. § 3-110
Instruments may be transferred by negotiation and transferred by delivery with or without indorsement. The rights of a transferee who receives an instrument by negotiation are subject to any defenses against the transferor.
UCC § 3-110 governs how negotiable instruments can be transferred or negotiated. It outlines that these instruments can be passed on through delivery, and any new holder’s rights are dependent on the validity of the transferor's claims.
A signed document that promises to pay a specific amount of money to a certain person or bearer.
The act of signing a negotiable instrument to transfer rights to another party.
Example 1
A checks drawn by a debtor is transferred to a creditor through delivery, constituting negotiation.
Example 2
A promissory note is endorsed by the original payee to a new holder, allowing the new holder to collect payment.