Article 3 — Negotiable Instruments · Section 3-115
Understanding UCC § 3-115 regarding the effect of indorsements on the instruments.
Source: U.C.C. § 3-115
A note is not rendered non-negotiable by a statement that it is "non-negotiable" or by a similar statement.
UCC § 3-115 states that if a negotiable instrument, such as a note, includes wording suggesting it is non-negotiable, it does not actually affect the instrument's status as negotiable. Essentially, parties cannot unilaterally alter the inherent negotiability of an instrument through such statements.
A signed document that promises a sum of payment to a specific entity or the bearer, which is transferable.
The signature or statement attached to a negotiable instrument that signifies the transfer of rights.
Example 1
If a borrower issues a promissory note stating 'This note is non-negotiable,' it remains a negotiable instrument and can still be transferred to others.
Example 2
A check marked with a statement like 'This check is not negotiable' can still be endorsed and cashed by the holder, as the note's terms don't affect its negotiability.