Article 3 — Negotiable Instruments · Section 3-311
UCC § 3-311 addresses the conditions under which a negotiable instrument is considered to be negotiable despite a lack of consideration or a settlement of mutual accounts.
Source: U.C.C. § 3-311
UCC § 3-311 explains that an instrument is not rendered non-negotiable because the instrument is issued for a pre-existing obligation, or the consideration is past consideration. It specifies scenarios where a note or instrument might still qualify as negotiable even when consideration lacks.
UCC § 3-311 outlines the circumstances under which a negotiable instrument can retain its negotiability even without current or valid consideration at the time it is issued. This often applies to situations involving pre-existing debts or agreements.
A written document that promises a payment of a specific amount of money to designated bearer or assignee.
Something of value exchanged between parties, which is essential for the formation of a contract.
Example 1
A promissory note issued for the balance of a debt that has already been partially paid can still be negotiable under UCC § 3-311.
Example 2
If a party issues a check as a settlement for previous services rendered, the check remains a negotiable instrument even though the performance was completed in the past.