Title 13 — Uniform Commercial Code

(1) A special indorsement specifies the person to whom or to whose order it makes the instrument payable. Any instrument specially indorsed becomes payable to the order of the special indorsee and may be further negotiated only by his indorsement. (2) An indorsement in blank spec…

An indorsement is restrictive which either (a) Is conditional; or (b) Purports to prohibit further transfer of the instrument; or COL120106 (c) Includes the words Afor collection,@ Afor deposit,@ Apay any bank,@ or like terms signifying a purpose of deposit or collection; or (d) …

(1) No restrictive indorsement prevents further transfer or negotia- tion of the instrument. (2) An intermediary bank, or a payor bank which is not the depositary bank, is neither given notice nor otherwise affected by a restrictive indorsement of any person except the bank's imm…

(1) Negotiation is effective to transfer the instrument although the negotiation is (a) Made by an infant, a corporation exceeding its powers, or any other person without capacity; or COL120106 (b) Obtained by fraud, duress or mistake of any kind; or (c) Part of an illegal transa…

Where an instrument is returned to or reacquired by a prior party he may cancel any indorsement which is not necessary to his title and reissue or further negotiate the instrument, but any intervening party is discharged as against the reacquiring party and subsequent holders not…

The holder of an instrument whether or not he is the owner may transfer or negotiate it and, except as otherwise provided in Section 3603 on payment or satisfaction, discharge it or enforce payment in his own name.

(1) A holder in due course is a holder who takes the instrument (a) For value; and (b) In good faith; and COL120106 (c) Without notice that it is overdue or has been dishonored or of any defense against or claim to it on the part of any person. (2) A payee may be a holder in due …

A holder takes the instrument for value (a) To the extent that the agreed consideration has been performed or that he acquires a security interest in or a lien on the instrument otherwise than by legal process; or (b) When he takes the instrument in payment of or as security for …

(1) The purchaser has notice of a claim or defense if (a) The instrument is so incomplete, bears such visible evidence of forgery or alteration, or is otherwise so irregular as to call into question its validity, terms or ownership or to create an ambiguity as to the party to pay…

To the extent that a holder is a holder in due course he takes the instrument free from COL120106 (1) All claims to it on the part of any person; and (2) All defenses of any party to the instrument with whom the holder has not dealt except (a) Infancy, to the extent that it is a …

Unless he has the rights of a holder in due course any person takes the instrument subject to (1) All valid claims to it on the part of any person; and (2) All defenses of any party which would be available in an action on a simple contract; and (3) The defenses of want or failur…

Course. (1) Unless specifically denied in the pleading each signature on an instrument is admitted. When the effectiveness of a signature is put in issue COL120106 (a) The burden of establishing it is on the party claiming under the signature; but (b) The signature is presumed to…

(1) No person is liable on an instrument unless his signature appears thereon. (2) A signature is made by use of any name, including any trade or assumed name, upon an instrument, or by any word or mark used in lieu of a written signature.

Unless the instrument clearly indicates that a signature is made in some other capacity it is an indorsement.

(1) A signature may be made by an agent or other representative, and his authority to make it may be established as in other cases of representation. No particular form of appointment is necessary to establish such authority. (2) An authorized representative who signs his own nam…

(1) Any unauthorized signature is wholly inoperative as that of the person whose name is signed unless he ratifies it or is precluded from denying it; but it operates as the signature of the unauthorized signer in COL120106 favor of any person who in good faith pays the instrumen…

(1) An indorsement by any person in the name of a named payee is effective if (a) An imposter by use of the mails or otherwise has induced the maker or drawer to issue the instrument to him or his confederate in the name of the payee; or (b) A person signing as or on behalf of a …

Signature. Any person who by his negligence substantially contributes to a material alteration of the instrument or to the making of an unauthorized signature is precluded from asserting the alteration or lack of authority against a holder in due course or against a drawee or oth…

(1) Any alteration of an instrument is material which changes the contract of any party thereto in any respect, including any such change in (a) The number or relations of the parties; or (b) An incomplete instrument, by completing it otherwise than as authorized; or (c) The writ…

Want or failure of consideration is a defense as against any person not having the rights of a holder in due course (Section 3305), except that no consideration is necessary for an instrument or obligation thereon given in payment of or as security for an antecedent obligation of…

(1) A check or other draft does not of itself operate as an assignment of any funds in the hands of the drawee available for its payment, and the drawee is not liable on the instrument until he accepts it. (2) Nothing in this section shall affect any liability in contract, tort o…

(1) Acceptance is the drawee's signed engagement to honor the draft as presented. It must be written on the draft, and may consist of his signature alone. It becomes operative when completed by delivery or notification. (2) A draft may be accepted although it has not been signed …

(1) Certification of a check is acceptance. Where a holder procures certification the drawer and all prior indorsers are discharged. (2) Unless otherwise agreed a bank has no obligation to certify a check. (3) A bank may certify a check before returning it for lack of proper indo…

(1) Where the drawee's proffered acceptance in any manner varies the draft as presented the holder may refuse the acceptance and treat the draft as dishonored in which case the drawee is entitled to have his acceptance canceled. (2) The terms of the draft are not varied by an acc…

(1) The maker or acceptor engages that he will pay the instrument according to its tenor at the time of his engagement or as completed pursuant to Section 3115 on incomplete instruments. (2) The drawer engages that upon dishonor of the draft and any necessary notice of dishonor o…

COL120106 (1) Unless the indorsement otherwise specifies (as by such words as Awithout recourse@) every indorser engages that upon dishonor and any necessary notice of dishonor and protest he will pay the instrument according to its tenor at the time of his indorsement to the hol…

(1) An accommodation party is one who signs the instrument in any capacity for the purpose of lending his name to another party to it. (2) When the instrument has been taken for value before it is due the accommodation party is liable in the capacity in which he has signed even t…

(1) Payment guaranteed or equivalent words added to a signature mean that the signer engages that if the instrument is not paid when due he will pay it according to its tenor without resort by the holder to any other party. (2) Collection guaranteed or equivalent words added to a…

(1) Any person who obtains payment or acceptance and any prior transferor warrants to a person who in good faith pays or accepts that (a) He has a good title to the instrument or is authorized to obtain payment or acceptance on behalf of one who has a good title; and (b) He has n…

Except for recovery of bank payments as provided in the division on bank deposits and collections (Division 4) and except for liability for breach of warranty on presentment under the preceding section, payment or acceptance of any instrument is final in favor of a holder in due …

(1) An instrument is converted when (a) A drawee to whom it is delivered for acceptance refuses to return it on demand; or (b) Any person to whom it is delivered for payment refuses on demand either to pay or to return it; or (c) It is paid on a forged indorsement. (2) In any act…

Necessary or Permissible. (1) Unless excused (Section 3511) presentment is necessary to charge secondary parties as follows: (a) Presentment for acceptance is necessary to charge the draw- er and indorsers of a draft where the draft so provides, or is payable elsewhere than at th…

(1) Where without excuse any necessary presentment or notice of dishonor is delayed beyond the time when it is due (a) Any indorser is discharged; and (b) Any drawer or the acceptor of a draft payable at a bank or the maker of a note payable at a bank who because the drawee or pa…

(1) Unless a different time is expressed in the instrument the time for any presentment is determined as follows: (a) Where an instrument is payable at or a fixed period after a stated date any presentment for acceptance must be made on or before the date it is payable; (b) Where…

(1) Presentment is a demand for acceptance or payment made upon the maker, acceptor, drawee or other payor by or on behalf of the holder. (2) Presentment may be made (a) By mail, in which event the time of presentment is determined by the time of receipt of the mail; or (b) Throu…

(1) The party to whom presentment is made may without dishonor require (a) Exhibition of the instrument; and (b) Reasonable identification of the person making presentment and evidence of his authority to make it if made for another; and (c) That the instrument be produced for ac…

(1) Acceptance may be deferred without dishonor until the close of the next business day following presentment. The holder may also in a good faith effort to obtain acceptance and without either dishonor of the instrument or discharge of secondary parties allow postponement of ac…

Presentment. . (1) An instrument is dishonored when (a) A necessary or optional presentment is duly made and due acceptance or payment is refused or cannot be obtained within the prescribed time or in case of bank collections the instrument is seasonably returned by the midnight …

(1) Notice of dishonor may be given to any person who may be liable on the instrument by or on behalf of the holder or any party who has himself received notice, or any other party who can be compelled to pay the instrument. In addition an agent or bank in whose hands the instrum…

(1) A protest is a certificate of dishonor made under the hand and seal of a United States consul or vice consul or a notary public or other person authorized to certify dishonor by the law of the place where dishonor occurs. It may be made upon information satisfactory to such p…

The following are admissible as evidence and create a presumption of dishonor and of any notice of dishonor therein shown: COL120106 (a) A document regular in form as provided in the preceding section which purports to be a protest; (b) The purported stamp or writing of the drawe…

Dishonor or Delay Therein. (1) Delay in presentment, protest or notice of dishonor is excused when the party is without notice that it is due or when the delay is caused by circumstances beyond his control and he exercises reasonable diligence after the cause of the delay ceases …

(1) The extent of the discharge of any party from liability on an instrument is governed by the sections on (a) Payment or satisfaction (Section 3603); or (b) Tender of payment (Section 3604); or (c) Cancellation or renunciation (Section 3605); or (d) Impairment of right of recou…

No discharge of any party provided by this division is effective against a subsequent holder in due course unless he has notice thereof when he takes the instrument.

(1) The liability of any party is discharged to the extent of his payment or satisfaction to the holder even though it is made with knowledge of a claim of another person to the instrument unless prior to such payment or satisfaction the person making the claim either supplies in…

COL120106 (1) Any party making tender of full payment to a holder when or after it is due is discharged to the extent of all subsequent liability for interest, costs and attorney's fees. (2) The holder's refusal of such tender wholly discharges any party who has a right of recour…

(1) The holder of an instrument may even without consideration discharge any party (a) In any manner apparent on the face of the instrument or the indorsement, as by intentionally canceling the instrument or the party5s signature by destruction or mutilation, or by striking out t…

(1) The holder discharges any party to the instrument to the extent that without such party's consent the holder (a) Without express reservation of rights releases or agrees not to sue any person against whom the party has to the knowledge of the holder a right of recourse or agr…

(1) A letter of advice is a drawer's communication to the drawee that a described draft has been drawn. (2) Unless otherwise agreed when a bank receives from another bank a letter of advice of an international sight draft the drawee bank may immediately debit the drawer's account…

(1) Where a draft is drawn in a set of parts, each of which is numbered and expressed to be an order only if no other part has been honored, the whole of the parts constitutes one draft but a taker of any part may become a holder in due course of the draft. (2) Any person who neg…