Article 3 — Negotiable Instruments · Section 3-203
UCC § 3-203 addresses the issue of transfer of negotiable instruments and the rights of a transferee in such transactions.
Source: U.C.C. § 3-203
A transfer of negotiable instrument does not occur until the instrument is delivered, whether it is an endorsement or a transfer by mere delivery.
UCC § 3-203 establishes that a negotiable instrument is not considered transferred until it is delivered to the recipient. This means that for a transfer to be effective, the instrument must actually be handed over.
A written promise or order to pay a specific sum of money that meets the requirements laid out under UCC guidelines.
The voluntary transfer of possession of an instrument from one person to another.
Example 1
When Alice hands Bob a check and signs it over to him, the negotiable instrument is transferred at the moment of delivery.
Example 2
If Charlie endorses a note but does not deliver it to Dana, then the note remains with Charlie, and Dana does not have any rights to it.