Also known as: UCC 3-104 · U.C.C. § 3-104 · UCC §3-104 · Uniform Commercial Code 3-104 · negotiable instrument · UCC Article 3
Written by attorneys · grounded in primary & secondary sources — see below
A statutory definition that establishes when a promise or order qualifies as a negotiable instrument. The provision requires an unconditional promise or order to pay a fixed amount of money that is payable to bearer or to order at the time it is issued or first comes into possession of a holder, payable on demand or at a definite time, and free of other undertakings by the maker or drawer.
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Uma Underwood sold equipment to Umbra Technologies and delivered a promissory note that falsely stated the equipment was new. A later purchaser took the note in reliance on that statement and suffered loss when the equipment proved defective. The note met the formal requirements of an unconditional promise to pay a fixed sum on demand and payable to order.
Ugo Uberti owed payment on an account arising from services rendered to Unity Capital. The account was later evidenced by a separate negotiable note that Unity Capital transferred to a third party. The definition of account debtor excludes persons obligated on the note itself even though the note evidences the underlying account.
Umar Usmani executed a promissory note and mortgage in favor of Ulysses Maritime. After a merger the surviving entity lost the original note during a records transfer. The entity sought to foreclose and had to establish it was the person entitled to enforce the instrument under UCC Section 3-301 while also satisfying the lost-instrument requirements.
Uri Underwood signed a writing promising to pay a fixed sum to the order of Urban Logistics. The writing contained no additional undertakings and stated it was payable on demand. Because the writing satisfied the statutory criteria it qualified as a negotiable instrument subject to the rules governing transfer and enforcement.
Uriah Urban received a writing that met all criteria for negotiability under the statute. The writing therefore constituted an instrument that could be transferred by indorsement and delivery and enforced by a holder in due course free of most personal defenses.
The writing must contain an unconditional promise or order to pay a fixed amount of money. It must be payable to bearer or to order when issued or first possessed by a holder. It must also be payable on demand or at a definite time and must not contain other undertakings by the maker or drawer.
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When an obligation is evidenced by a negotiable instrument the person entitled to enforce it under UCC Section 3-301 may commence foreclosure. If the instrument is lost the enforcing party must additionally satisfy the requirements of Section 403 to prove terms, prior entitlement, and protection against double liability.
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A promise or order other than a check is not an instrument if it contains a conspicuous statement at issuance that it is not negotiable or not governed by Article 3. The presence of such language prevents the writing from qualifying as a negotiable instrument despite satisfying the other statutory elements.
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The exclusion prevents overlap between Article 9 secured-transaction rules and Article 3 negotiable-instrument rules. A person obligated on a negotiable instrument is governed by the enforcement and transfer provisions of Article 3 rather than the account-debtor rules of Article 9 even if the instrument also evidences chattel paper.
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