§ 3—104.

676 words·~3 min read·/vt/3-4

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§ 3—104. Negotiable instrument

(a)Except as provided in subsections

(c)and

(d)of this section, “negotiable instrument” means an unconditional promise or order to pay a fixed amount of money, with or without interest or other charges described in the promise or order, if it:

(1)is payable to bearer or to order at the time it is issued or first comes into possession of a holder;

(2)is payable on demand or at a definite time; and

(3)does not state any other undertaking or instruction by the person promising or ordering payment to do any act in addition to the payment of money, but the promise or order may contain

(i)an undertaking or power to give, maintain, or protect collateral to secure payment,

(ii)an authorization or power to the holder to confess judgment or realize on or dispose of collateral,

(iii)a waiver of the benefit of any law intended for the advantage or protection of an obligor,

(iv)a term that specifies the law that governs the promise or order, or

(v)an undertaking to resolve in a specified forum a dispute concerning the promise or order.

(b)“Instrument” means a negotiable instrument.

(c)An order that meets all of the requirements of subsection

(a)of this section, except paragraph (1), and otherwise falls within the definition of “check” in subsection

(f)of this section is a negotiable instrument and a check.

(d)A promise or order other than a check is not an instrument if, at the time it is issued or first comes into possession of a holder, it contains a conspicuous statement, however expressed, to the effect that the promise or order is not negotiable or is not an instrument governed by this article.

(e)An instrument is a “note” if it is a promise and is a “draft” if it is an order. If an instrument falls within the definition of both “note” and “draft,” a person entitled to enforce the instrument may treat it as either.

(f)“Check” means

(i)a draft, other than a documentary draft, payable on demand and drawn on a bank;

(ii)a cashier’s check or teller’s check; or

(iii)a demand draft. An instrument may be a check even though it is described on its face by another term, such as “money order.”

(g)“Cashier’s check” means a draft with respect to which the drawer and drawee are the same bank or branches of the same bank.

(h)“Teller’s check” means a draft drawn by a bank

(i)on another bank, or

(ii)payable at or through a bank.

(i)“Traveler’s check” means an instrument that

(i)is payable on demand,

(ii)is drawn on or payable at or through a bank,

(iii)is designated by the term “traveler’s check” or by a substantially similar term, and

(iv)requires, as a condition to payment, a countersignature by a person whose specimen signature appears on the instrument.

(j)“Certificate of deposit” means an instrument containing an acknowledgment by a bank that a sum of money has been received by the bank and a promise by the bank to repay the sum of money. A certificate of deposit is a note of the bank.

(k)“Demand draft” means a writing not signed by a customer that is created by a third party under the purported authority of the customer for the purpose of charging the customer’s account with a bank. A demand draft shall contain the customer’s account number and may contain any or all of the following:

(i)the customer’s printed or typewritten name;

(ii)a notation that the customer authorized the draft; and

(iii)the statement “No Signature Required” or words to that effect. A demand draft shall not include a check purportedly drawn by and bearing the signature of a fiduciary, as defined in section 3—307(a)(1) of this title. (Added 1993, No. 158 (Adj. Sess.), § 12, eff. Jan. 1, 1995; amended 2003, No. 87 (Adj. Sess.), §§ 1, 2; 2025, No. 17, § 4, eff. July 1, 2025.)