1-102: This article applies to a transaction if it is governed by another article of the UCC.
(a) UCC liberally construed and applied to promote purposes and policies:
(1) Simplify, clarify, and modernize the law governing commercial transactions;
(2) Permit the continued expansion of commercial practices through custom, usage, and agreement.
(3) Make uniform laws of jurisdictions; .
(b) Unless changed by UCC, law of equity, including that applicable to K, principal and agent, estoppel, fraud, misrepresentation, duress, coercion, mistake, bankruptcy shall supplement the code.
1-201: This section only applies to definitions that are not defined by another article.
1-201(20) Good Faith means honesty in fact and observance of reasonable commercial standards of fair dealing.
Waiver and Good Faith:
1-302: (a) Except as stated in (b) or elsewhere, provisions may be varied by agreement;
(b) Good faith diligence, reasonableness, reasonable amount of time and care may not be disclaimed, but agreement can be made as to their measurement, unless unreasonable.
1-304: Every K or duty w/in imposes obligation of good faith in its performance and enforcement.
Negotiable Instrument: (Article 3)
3-102: (a) This article applies to NI’s. It does not apply to money, payment orders governed by 4A, or to securities governed by Article 8.
3-103(7):Maker is a person who signs or is identified in a note as a person undertaking to pay.
III. Requirements: This is all conjunctive. You must meet all elements!
3-104: (a) Except as provided by (c) and (d), “NI” is:
1. Writing: (1-102(b)(43)): “Writing” includes printing, typewriting, or any other intentional reduction to tangible form. “Written” has a corresponding meaning.
2. Signed: (1-201(b)(37)): A symbol executed or adopted with present intent to adopt/accept a writing.
3. Promise/Order: 3-103(a)
(8) Order: Written instruction to pay money signed by the person giving the instruction. The instruction may to be to any person, including himself, or one or more persons jointly or in the alternative. An authorization to pay is not an order unless the person authorized to pay is also instructed to pay.
(12) Promise: is a written undertaking to pay money signed by the person undertaking to pay. An acknowledgement is not enough.
4. Unconditional: 3-106
(a) A promise or order is unconditional, unless:
1. Express condition to payment.
2. Promise or order subject/governed by another writing.
3. Rights or obligations regarding p/o stated in another record.
4. A reference to another writing does not make it per se unconditional.
(b) A promise or order not made conditional:
1. Reference to another record or regarding collateral, acceleration or prepayment; or
2. Payment limited to a particular source or fund.
5. Money: (1-201)(b)(24); 3-107
(24) Money is a medium of exchange currently authorized or adopted by a domestic or foreign gov’t.
107: An instrument that states the amount payable in foreign money may be paid in the foreign money or in an equivalent amount in dollars calculated by using the current bank-offered rate on the day on which the instrument is paid.
6. Fixed Amount: 3-112 (OC’s) Fixed amount applies only to the principal.
(a) Unless otherwise provided in the instrument:
(i) Instrument not payable w/interest.
(ii) Interest on an instrument is payable from date of instrument.
(b) Interest can be stated as:
(i) Fixed or variable amount.
(ii) Fixed or variable rate.
7. Payable to Order or Bearer: 3-109;3-110
3-109 (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 or otherwise indicates that the person in possession of the promise/order is entitled to payment;
(2) Does not state a payee; or
(3) States that it is payable to the order of cash or otherwise
indicates that it is not payable to an identified person.
(b) A promise or order that is not payable to bearer is payable to order if
(i) Payable to the order of an identified person; or
(ii) To an identified person or order.
3-110(a) Person to whom an instrument is initially payable is determined by:
(1) Intent of person who signs, whether or not authorized, in name or on behalf of the issuer.
(2) Payable to person intended by signer even if the name/ID in the instrument is different than that person.
(3) If multiple signers, the instrument is payable to a person intended by one or more signers.
(d) (1) If the instrument is payable to alternative payees, it is payable to any of them in possession of the instrument.
(2) If it is payable to not alternative payees, it is payable only to all of them.
(3) If ambiguous, it is payable in the alternative.
8. Payable on Demand or @ Definite Period of Time: 3-108
(a) Promise or Order is payable on demand if it states:
(i) Payable on demand/sight.
(ii) Payable at will of holder
(iii) Does not state when payable.
(b) Promise or Order is payable at a definite period of time if:
(i) Payable on elapse of definite period of time after sight.
(ii) Fixed date/dates
(iii) Fixed time/times readily ascertainable at time of issuance.
(iv) Prepayment, Acceleration
(v) Extension at will of holder, or at will of issuer to a further definite period of time/upon occurrence of a specified event or act.
9. No Additional Undertakings: 3-104(a)(3)
(3) A NI may not state any other undertaking by the orderer or promisor EXCEPT:
(i) Power to give or maintain collateral.
(ii) Authorization to confess judgment/realize on collateral.
(iii) Waiver of law intended to benefit or protect obligor.
V. Other Applicable Rules:
1. 3-117 (Modification by Contemporaneous Agreement)
(1) Subject to applicable law regarding contemporaneous agreements, the obligation of an instrument may be modified, supplement or nullified by a separate agreement b/en the parties if issued:
(i) In reliance of the agreement; or
(ii) In same transaction as the agreement.
(2) If obligation modified, supplemented or nullified by a separate agreement, it is a defense to the obligation.
2. 3-104(c); (d) Agreement to go o/s Article 3.
(c) A check that meets all of the requirements under (a) except (a)(1) is a NI and a check.
(d) A P/O other than a check is not an instrument if, at issuance, it conspicuously states it is non-negotiable/not governed by Article 3.
Full Satisfaction Payment:
(a) If claim is asserted against a person and he shows that
(i) She tendered instrument in GF to claimant as full satisfaction,
(ii) Claim was a bona fide dispute, and
(iii) Claimant obtained payment, the following §’s apply:
(b) Unless (c) applies, the claim is discharged if the D. proves that the instrument contained a conspicuous statement to that it was tendered as full satisfaction of the claim.
(c) Subject to (d), a claim is not discharged if:
(1) Claimant was an organization and proves that it notified:
(1) D that instruments for full satisfaction are to be sent to a designated person and
(2) Instrument was not sent there; or
(3) Claimant, whether or not an organiz, proves it tendered payment back to the D.
i. Maker Liability
1. 3-103(a)(7) “Maker” means a person who signs or is Id’d in a note as a person undertaking to pay.
2. Payee: Person to whom payment is made. No Article 3 term.
2. §3-412: Maker Liability §
(1) The issuer of a note is obligate
excused under 3-504(d).
(b) Notice of dishonor may be given by:
(1) Any person
(2) Through any commercially reasonable means (oral, written, or electronic communication) and
(3) Reasonably identifies the instrument and individual and indicates that it has been dishonored.
(c) Notice of dishonor must be given:
(i)By a collection bank b/fore midnight deadline.
(ii)Anyone else must give notice w/in 30 days following the day on which dishonor occurs.
A. “Giving Notice” 1-202(d)
(d) A person notifies or gives by taking steps reasonably required to inform the other person in ordinary course, whether or not the other person actually comes to know of it.
4. Excuse of Conditions or Delay: 3-504
A. Presentment: excused if:
(1) Person cannot w/reasonable diligence make presentment.
(2) The maker has repudiated an obligation to pay the instrument; is dead; or in insolvent proceedings.
(3) Terms state presentment is not necessary to enforce the obligation of indorsers or the drawers.
(4) The obligor waived presentment or otherwise has no reason to expect or require that the instrument be paid or accepted.
B. Notice of dishonor is excused if:
(1) The terms of the instrument indicate that notice of dishonor is not necessary to enforce the obligation.
(2) The obligor waived notice of dishonor or presentment.
C. Delay in giving notice of dishonor is excused if:
(1) The delay was caused by circumstances beyond the control of the control of the notifying party, and she exercised reasonable diligence after the cessation of the cause of the delay.
3-416: (a) A person who transfers an instrument for consideration warrants to the trans’ee and, if by indorsement, to any subsequent transferee that:
(1) She is a PETE. 3-301.
(2) All signatures on the instrument are authentic & authorized;
(3) Instrument not altered. 3-407.
(4) Instrument not subject to a defense or claim in recoupmant;
(5) The warrantor has no knowledge of any insolvency proceeding commenced;
(b) A person warranted who took in good faith may recover damages for BOW equal to the loss suffered by the breach, but not more than the face amount of the instrument + expenses & loss of interest incurred as a result of the breach.
C. No Disclaim & 30 day Rule
(c) (i) Warranties cannot be disclaimed for checks.
(ii) Unless notice of BOW claim is given to the warrantor w/in 30 days after the claimant should know 1-201(b)(27) Person means an individual, corporation, business trust, estate, trust, partnership, LLM, Assoc., Joint venture, Gov’t, agency, public corporation.  3-203(a) (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 delivery the right to enforce the instrument. (1-201(15)) delivery is voluntary transfer of possession).  To disclaim warranties, you use words such as “without warranties” next to the indorsement. OC’s.