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Negotiable Instruments Law
of Banking & Finance (9h Edition) by Charles J Woelfel
(We recommend this as work of authority.)
3 Commercial Paper
Section 3-113. Seal.
instrument otherwise negotiable is within this Article even though it
is under a seal.
Section 3-114. Date,
The negotiability of an instrument is not affected by the fact
that it is undated, antedated, or postdated.
Where an instrument is antedated or postdated the time when it
is payable is determined by the stated date if the instrument is payable
on demand or at a fixed period after date.
Where the instrument or any signature thereon is dated, the date
is presumed to be correct.
Section 3-115. Incomplete
When a paper whose contents at the time of signing show that it
is intended to become an instrument is signed while still incomplete in
any necessary respect, it cannot be enforced until completed, but when
it is completed in accordance with authority given it is effective as
If the completion is unauthorized, the rules as to material alteration
apply (Section 3-407), even though the paper was not delivered by the
maker or drawer; but the burden of establishing that any completion is
unauthorized is on the party so asserting.
Section 3-116. Instruments
Payable to Two or More Persons.
instrument payable to the order of two or more persons
if in the alternative is payable to any
one of them and may be negotiated, discharged or enforced by any of them
who has possession of it;
not in the alternative is payable to all of them and may be negotiated,
discharged or enforced only by all of them.
Section 3-117. Instruments
Payable with Words of Description.
instrument made payable to a named person with the addition of words describing
agent or officer of a specified person is payable to his principal, but
the agent or officer may act as if he were the holder;
any other fiduciary for a specified person or purpose is payable to the
payee and may be negotiated, discharged or enforced by him;
in any other manner is payable to the
payee unconditionally and the additional words are without effect on subsequent
Section 3-118. Ambiguous
Terms and Rules of Construction.
following rules apply to every instrument:
there is doubt whether the instrument is a draft or a note the holder
may treat it as either. A
draft drawn on the drawer is effective as a note.
Handwritten terms control typewritten
and printed terms, and typewritten control printed.
control figures except that if the words are ambiguous, figures control.
otherwise specified, a provision for interest means interest at the judgment
rate at the place of payment from the date of the instrument, or if it
is undated from the date of issue.
the instrument otherwise specifies, two or more persons who sign as maker,
acceptor or drawer or indorser and as a part of the same transaction are
jointly and severally liable even though the instrument contains such
words as "I promise to pay."
otherwise specified, consent to extension authorizes a single extension
for not longer than the original period.
A consent to extension, expressed in the instrument, is binding
on secondary parties and accommodation makers.
A holder may not exercise his option to extend an instrument over
the objection of a maker or acceptor or other party who in accordance
with Section 3-604 tenders full payment when the instrument is due.
Section 3-119. Other
Writings Affecting Instrument.
As between the obligor and his immediate obligee or any transferee
the terms of an instrument may be modified or affected by any other written
agreement executed as part of the same transaction, except that a holder
in due course is not affected by any limitation of his rights arising
out of the separate written agreement if he had no notice of the limitation
when he took the instrument.
A separate agreement does not affect the negotiability of an instrument.
Section 3-120. Instruments
"Payable Through" Bank.
instrument which states that it is "payable through" a bank or the like
designates that bank as a collecting bank to make presentment but does
not of itself authorize the bank to pay the instrument.
Section 3-121. Instruments
Payable at Bank.
If this Act is introduced in the Congress of the
this section should be omitted. (States
to select either alternative)
note or acceptance which states that it is payable at a bank is the equivalent
of a draft drawn on the bank payable when it falls due out of any funds
of the maker or acceptor in current account or otherwise available for
note or acceptance which states that it is payable at a bank is not of
itself an order or authorization to the bank to pay it.
Section 3-122. Accrual
of Cause of Action.
A cause of action against a maker or an acceptor accrues:
in the case of a time instrument on the
day after maturity;
In the case of a demand instrument upon
its date or, if no date is stated, on the date of issue.
A cause of action against the obligor of a demand or time certificate
of deposit accrues upon demand, but demand on a time certificate may not
be made until on or after the date of maturity.
A cause of action against a drawer of a draft or an indorser of
any instrument accrues upon demand following dishonor of the instrument.
Notice of dishonor is a demand.
Unless an instrument provides otherwise, interest runs at the rate
provided by law for a judgment:
in the case of a maker, acceptor or other
primary obligor of a demand instrument from the date of demand;
in all other cases from the date of accrual
of the cause of action.
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