Texas Business And Commerce Code Title 1, Chapter 3 - Negotiable Instruments

SUBCHAPTER A GENERAL PROVISIONS AND DEFINITIONS

• Texas Section 3.101 - Short Title
  This chapter may be cited as Uniform Commercial Code-Negotiable Instruments. Amended by Acts 1995, 74th Leg., ch. 921, Sec. 1, eff. Jan. 1, 1996.
• Texas Section 3.102 - Subject Matter
  (a) This chapter applies to negotiable instruments. It does not apply to money, to payment orders governed by Chapter 4A, or to securities governed by...
• Texas Section 3.103 - Definitions
  (a) In this chapter: (1) "Acceptor" means a drawee who has accepted a draft. (2) Reserved. (3) "Consumer transaction" means a transaction in which an...
• Texas Section 3.104 - Negotiable Instrument
  (a) Except as provided in Subsections (c) and (d), "negotiable instrument" means an unconditional promise or order to pay a fixed amount of money, with...
• Texas Section 3.105 - Issue Of Instrument
  (a) "Issue" means the first delivery of an instrument by the maker or drawer, whether to a holder or nonholder, for the purpose of giving...
• Texas Section 3.106 - Unconditional Promise Or Order
  (a) Except as provided in this section, for the purposes of Section 3.104(a), a promise or order is unconditional unless it states (i) an express...
• Texas Section 3.107 - Instrument Payable In Foreign Money
  Unless the instrument otherwise provides, an instrument that states the amount payable in foreign money may be paid in the foreign money or in an...
• Texas Section 3.108 - Payable On Demand Or At Definite Time
  (a) A promise or order is "payable on demand" if it: (1) states that it is payable on demand or at sight, or otherwise indicates...
• Texas Section 3.109 - Payable To Bearer Or To Order
  (a) A promise or order is payable to bearer if it: (1) states that it is payable to bearer or to the order of bearer...
• Texas Section 3.110 - Identification Of Person To Whom Instrument Is Payable
  (a) The person to whom an instrument is initially payable is determined by the intent of the person, whether or not authorized, signing as, or...
• Texas Section 3.111 - Place Of Payment
  Except as otherwise provided for items in Chapter 4, an instrument is payable at the place of payment stated in the instrument. If no place...
• Texas Section 3.112 - Interest
  (a) Unless otherwise provided in the instrument: (1) an instrument is not payable with interest; and (2) interest on an interest-bearing instrument is payable from...
• Texas Section 3.113 - Date Of Instrument
  (a) An instrument may be antedated or postdated. The date stated determines the time of payment if the instrument is payable at a fixed period...
• Texas Section 3.114 - Contradictory Terms Of Instrument
  If an instrument contains contradictory terms, typewritten terms prevail over printed terms, handwritten terms prevail over both, and words prevail over numbers. Amended by Acts...
• Texas Section 3.115 - Incomplete Instrument
  (a) "Incomplete instrument" means a signed writing, whether or not issued by the signer, the contents of which show at the time of signing that...
• Texas Section 3.116 - Joint And Several Liability; Contribution
  (a) Except as otherwise provided in the instrument, two or more persons who have the same liability on an instrument as makers, drawers, acceptors, indorsers...
• Texas Section 3.117 - Other Agreements Affecting Instrument
  Subject to applicable law regarding exclusion of proof of contemporaneous or previous agreements, the obligation of a party to an instrument to pay the instrument...
• Texas Section 3.118 - Statute Of Limitations
  (a) Except as provided in Subsection (e), an action to enforce the obligation of a party to pay a note payable at a definite time...

SUBCHAPTER B NEGOTIATION, TRANSFER, AND INDORSEMENT

• Texas Section 3.119 - Notice Of Right To Defend Action
  In an action for breach of an obligation for which a third person is answerable over pursuant to this chapter or Chapter 4, the defendant...
• Texas Section 3.201 - Negotiation
  (a) "Negotiation" means a transfer of possession, whether voluntary or involuntary, of an instrument by a person other than the issuer to a person who...
• Texas Section 3.202 - Negotiation Subject To Rescission
  (a) Negotiation is effective even if obtained: (1) from an infant, a corporation exceeding its powers, or a person without capacity; (2) by fraud, duress,...
• Texas Section 3.203 - Transfer Of Instrument; Rights Acquired By Transfer
  (a) An instrument is transferred when it is delivered by a person other than its issuer for the purpose of giving to the person receiving...
• Texas Section 3.204 - Indorsement
  (a) "Indorsement" means a signature, other than that of a signer as maker, drawer, or acceptor, that alone or accompanied by other words is made...
• Texas Section 3.205 - Special Indorsement; Blank Indorsement; Anomalous Indorsement
  (a) If an indorsement is made by the holder of an instrument, whether payable to an identified person or payable to bearer, and the indorsement...
• Texas Section 3.206 - Restrictive Indorsement
  (a) An indorsement limiting payment to a particular person or otherwise prohibiting further transfer or negotiation of the instrument is not effective to prevent further...

SUBCHAPTER C ENFORCEMENT OF INSTRUMENTS

• Texas Section 3.207 - Reacquisition
  Reacquisition of an instrument occurs if it is transferred to a former holder, by negotiation or otherwise. A former holder who reacquires the instrument may...
• Texas Section 3.301 - Person Entitled To Enforce Instrument
  "Person entitled to enforce" an instrument means (i) the holder of the instrument, (ii) a nonholder in possession of the instrument who has the rights...
• Texas Section 3.302 - Holder In Due Course
  (a) Subject to Subsection (c) and Section 3.106(d), "holder in due course" means the holder of an instrument if: (1) the instrument when issued or...
• Texas Section 3.303 - Value And Consideration
  (a) An instrument is issued or transferred for value if: (1) the instrument is issued or transferred for a promise of performance, to the extent...
• Texas Section 3.304 - Overdue Instrument
  (a) An instrument payable on demand becomes overdue at the earliest of the following times: (1) on the day after the day demand for payment...
• Texas Section 3.305 - Defenses And Claims In Recoupment
  (a) Except as otherwise provided in this section, the right to enforce the obligation of a party to pay an instrument is subject to the...
• Texas Section 3.306 - Claims To An Instrument
  A person taking an instrument, other than a person having rights of a holder in due course, is subject to a claim of a property...
• Texas Section 3.307 - Notice Of Breach Of Fiduciary Duty
  (a) In this section: (1) "Fiduciary" means an agent, trustee, partner, corporate officer or director, or other representative owing a fiduciary duty with respect to...
• Texas Section 3.308 - Proof Of Signatures And Status As Holder In Due Course
  (a) In an action with respect to an instrument, the authenticity of, and authority to make, each signature on the instrument are admitted unless specifically...
• Texas Section 3.309 - Enforcement Of Lost, Destroyed, Or Stolen Instrument
  (a) A person who is not in possession of an instrument is entitled to enforce the instrument if: (1) the person seeking to enforce the...
• Texas Section 3.310 - Effect Of Instrument On Obligation For Which Taken
  (a) Unless otherwise agreed, if a certified check, cashier's check, or teller's check is taken for an obligation, the obligation is discharged to the same...
• Texas Section 3.311 - Accord And Satisfaction By Use Of Instrument
  (a) Subsections (b)-(d) apply if a person against whom a claim is asserted proves that: (1) that person in good faith tendered an instrument to...

SUBCHAPTER D LIABILITY OF PARTIES

• Texas Section 3.312 - Lost, Destroyed, Or Stolen Cashier's Check, Teller's Check, Or Certified Check
  (a) In this section: (1) "Check" means a cashier's check, teller's check, or certified check. (2) "Claimant" means a person who claims the right to...
• Texas Section 3.401 - Signature
  (a) A person is not liable on an instrument unless the person: (1) signed the instrument; or (2) is represented by an agent or representative...
• Texas Section 3.402 - Signature By Representative
  (a) If a person acting, or purporting to act, as a representative signs an instrument by signing either the name of the represented person or...
• Texas Section 3.403 - Unauthorized Signature
  (a) Unless otherwise provided in this chapter or Chapter 4, an unauthorized signature is ineffective except as the signature of the unauthorized signer in favor...
• Texas Section 3.404 - Impostors; Fictitious Payees
  (a) If an impostor, by use of the mails or otherwise, induces the issuer of an instrument to issue the instrument to the impostor, or...
• Texas Section 3.405 - Employer's Responsibility For Fraudulent Indorsement By Employee
  (a) In this section: (1) "Employee" includes an independent contractor and employee of an independent contractor retained by the employer. (2) "Fraudulent indorsement" means: (A)...
• Texas Section 3.406 - Negligence Contributing To Forged Signature Or Alteration Of Instrument
  (a) A person whose failure to exercise ordinary care substantially contributes to an alteration of an instrument or to the making of a forged signature...
• Texas Section 3.407 - Alteration
  (a) "Alteration" means: (1) an unauthorized change in an instrument that purports to modify in any respect the obligation of a party; or (2) an...
• Texas Section 3.408 - Drawee Not Liable On Unaccepted Draft
  A check or other draft does not of itself operate as an assignment of funds in the hands of the drawee available for its payment,...
• Texas Section 3.409 - Acceptance Of Draft; Certified Check
  (a) "Acceptance" means the drawee's signed agreement to pay a draft as presented. It must be written on the draft and may consist of the...
• Texas Section 3.410 - Acceptance Varying Draft
  (a) If the terms of a drawee's acceptance vary from the terms of the draft as presented, the holder may refuse the acceptance and treat...
• Texas Section 3.411 - Refusal To Pay Cashier's Checks, Teller's Checks, And Certified Checks
  (a) In this section, "obligated bank" means the acceptor of a certified check or the issuer of a cashier's check or teller's check bought from...
• Texas Section 3.412 - Obligation Of Issuer Of Note Or Cashier's Check
  The issuer of a note or cashier's check or other draft drawn on the drawer is obliged to pay the instrument (i) according to its...
• Texas Section 3.413 - Obligation Of Acceptor
  (a) The acceptor of a draft is obliged to pay the draft (i) according to its terms at the time it was accepted, even though...
• Texas Section 3.414 - Obligation Of Drawer
  (a) This section does not apply to cashier's checks or other drafts drawn on the drawer. (b) If an unaccepted draft is dishonored, the drawer...
• Texas Section 3.415 - Obligation Of Indorser
  (a) Subject to Subsections (b), (c), (d), and (e) and to Section 3.419(d), if an instrument is dishonored, an indorser is obliged to pay the...
• Texas Section 3.416 - Transfer Warranties
  (a) A person who transfers an instrument for consideration warrants to the transferee and, if the transfer is by indorsement, to any subsequent transferee that:...
• Texas Section 3.417 - Presentment Warranties
  (a) If an unaccepted draft is presented to the drawee for payment or acceptance and the drawee pays or accepts the draft, (i) the person...
• Texas Section 3.418 - Payment Or Acceptance By Mistake
  (a) Except as provided in Subsection (c), if the drawee of a draft pays or accepts the draft and the drawee acted on the mistaken...
• Texas Section 3.419 - Instruments Signed For Accommodation
  (a) If an instrument is issued for value given for the benefit of a party to the instrument ("accommodated party") and another party to the...

SUBCHAPTER E DISHONOR

• Texas Section 3.420 - Conversion Of Instrument
  (a) The law applicable to conversion of personal property applies to instruments. An instrument is also converted if it is taken by transfer, other than...
• Texas Section 3.501 - Presentment
  (a) "Presentment" means a demand made by or on behalf of a person entitled to enforce an instrument to: (1) pay the instrument made to...
• Texas Section 3.502 - Dishonor
  (a) Dishonor of a note is governed by the following rules: (1) If the note is payable on demand, the note is dishonored if presentment...
• Texas Section 3.503 - Notice Of Dishonor
  (a) The obligation of an indorser stated in Section 3.415(a) and the obligation of a drawer stated in Section 3.414(d) may not be enforced unless:...
• Texas Section 3.504 - Excused Presentment And Notice Of Dishonor
  (a) Presentment for payment or acceptance of an instrument is excused if: (1) the person entitled to present the instrument cannot with reasonable diligence make...
• Texas Section 3.505 - Evidence Of Dishonor
  (a) The following are admissible as evidence and create a presumption of dishonor and of any notice of dishonor stated: (1) a document regular in...
• Texas Section 3.506 - Processing Fee By Holder Of Payment Device
  (a) For purposes of this section, "payment device" means any check, item, paper or electronic payment, or other payment device used as a medium for...

SUBCHAPTER F DISCHARGE AND PAYMENT

• Texas Section 3.507 - Delivery Notification Fee By Holder Of Check Or Similar Sight Order
  (a) On return of a check or similar sight order, as defined by Section 1.07, Penal Code, to the holder following dishonor of the check...
• Texas Section 3.601 - Discharge And Effect Of Discharge
  (a) The obligation of a party to pay the instrument is discharged as stated in this chapter or by an act or agreement with the...
• Texas Section 3.602 - Payment
  (a) Subject to Subsection (e), an instrument is paid to the extent payment is made by or on behalf of a party obliged to pay...
• Texas Section 3.603 - Tender Of Payment
  (a) If tender of payment of an obligation to pay an instrument is made to a person entitled to enforce the instrument, the effect of...
• Texas Section 3.604 - Discharge By Cancellation Or Renunciation
  (a) A person entitled to enforce an instrument, with or without consideration, may discharge the obligation of a party to pay the instrument: (1) by...
• Texas Section 3.605 - Discharge Of Secondary Obligors
  (a) If a person entitled to enforce an instrument releases the obligation of a principal obligor in whole or in part, and another party to...

Last modified: September 28, 2016