Article 3 — Negotiable Instruments · Section 3-201
Explore the foundational elements of negotiable instruments under UCC § 3-201, focusing on the requirements for creation and transferability.
Source: U.C.C. § 3-201
A negotiable instrument is a signed writing that orders the payment of a fixed amount of money either on demand or at a specified future date, and is payable to bearer or to order.
UCC § 3-201 defines what constitutes a negotiable instrument. To be negotiable, the instrument must be in writing, signed by the creator, and must include a clear promise to pay an exact amount of money at a specified time or on demand.
A written document that guarantees payment of a specific amount of money, either on demand or at a defined time.
An instruction to pay the amount specified to a specific person.
An instrument that can be cashed by anyone who possesses it, rather than a specific individual.
Example 1
A check written to 'Cash' allows any bearer of the check to cash it, thus qualifying as a negotiable instrument.
Example 2
A promissory note promising to pay $5,000 to John Doe on January 1, 2025, is a negotiable instrument.