Table of Contents
Sec. 42a-3-101. Short title: Uniform Commercial Code−Negotiable Instruments.
Sec. 42a-3-102. Subject matter.
Sec. 42a-3-103. Definitions.
Sec. 42a-3-104. Negotiable instrument.
Sec. 42a-3-105. Issue of instrument.
Sec. 42a-3-106. Unconditional promise or order.
Sec. 42a-3-107. Instrument payable in foreign money.
Sec. 42a-3-108. Payable on demand or at definite time.
Sec. 42a-3-109. Payable to bearer or to order.
Sec. 42a-3-110. Identification of person to whom instrument is payable.
Sec. 42a-3-111. Place of payment.
Sec. 42a-3-112. Interest.
Sec. 42a-3-113. Date of instrument.
Sec. 42a-3-114. Contradictory terms of instrument.
Sec. 42a-3-115. Incomplete instrument.
Sec. 42a-3-116. Joint and several liability. Contribution.
Sec. 42a-3-117. Other agreements affecting instrument.
Sec. 42a-3-118. Statute of limitations.
Sec. 42a-3-119. Notice of right to defend action.
Secs. 42a-3-120 to 42a-3-122. Instruments "payable through" bank. Instruments payable at
bank. Accrual of cause of action.
Sec. 42a-3-201. Negotiation.
Sec. 42a-3-202. Negotiation subject to rescission.
Sec. 42a-3-203. Transfer of an instrument. Rights acquired by transfer.
Sec. 42a-3-204. Endorsement.
Sec. 42a-3-205. Special endorsement. Blank endorsement. Anomalous endorsement.
Sec. 42a-3-206. Restrictive endorsement.
Sec. 42a-3-207. Reacquisition.
Sec. 42a-3-208. Reacquisition.
Sec. 42a-3-301. Person entitled to enforce instrument.
Sec. 42a-3-302. Holder in due course.
Sec. 42a-3-303. Value and consideration.
Sec. 42a-3-304. Overdue instrument.
Sec. 42a-3-305. Defenses and claims in recoupment.
Sec. 42a-3-306. Claims to an instrument.
Sec. 42a-3-307. Notice of breach of fiduciary duty.
Sec. 42a-3-308. Proof of signatures and status as holder in due course.
Sec. 42a-3-309. Enforcement of lost, destroyed or stolen instrument.
Sec. 42a-3-310. Effect of instrument on obligation for which taken.
Sec. 42a-3-311. Accord and satisfaction by use of instrument.
Sec. 42a-3-312. Enforcement of lost, destroyed or stolen cashier's checks, teller's
checks or certified checks.
Sec. 42a-3-401. Signature.
Sec. 42a-3-402. Signature by representative.
Sec. 42a-3-403. Unauthorized signature.
Sec. 42a-3-404. Impostors. Fictitious payees.
Sec. 42a-3-405. Employer's responsibility for fraudulent endorsement by employee.
Sec. 42a-3-406. Negligence contributing to forged signature or alteration of instrument.
Sec. 42a-3-407. Alteration.
Sec. 42a-3-408. Drawee not liable on unaccepted draft.
Sec. 42a-3-409. Acceptance of draft. Certified check.
Sec. 42a-3-410. Acceptance varying draft.
Sec. 42a-3-411. Refusal to pay cashier's checks, teller's checks and certified checks.
Sec. 42a-3-412. Obligation of issuer of note or cashier's check.
Sec. 42a-3-413. Obligation of acceptor.
Sec. 42a-3-414. Obligation of drawer.
Sec. 42a-3-415. Obligation of endorser.
Sec. 42a-3-416. Transfer warranties.
Sec. 42a-3-417. Presentment warranties.
Sec. 42a-3-418. Payment or acceptance by mistake.
Sec. 42a-3-419. Instruments signed for accommodation.
Sec. 42a-3-420. Conversion of instrument.
Sec. 42a-3-501. Presentment.
Sec. 42a-3-502. Dishonor.
Sec. 42a-3-503. Notice of dishonor.
Sec. 42a-3-504. Excused presentment and notice of dishonor.
Sec. 42a-3-505. Evidence of dishonor.
Secs. 42a-3-506 to 42a-3-511. Time allowed for acceptance or payment. Dishonor; holder's
right of recourse; term allowing representment. Notice of dishonor. Protest; noting for
protest. Evidence of dishonor and notice of dishonor. Waved or excused presentment, protest or notice of dishonor or delay therein.
Sec. 42a-3-601. Discharge and effect of discharge.
Sec. 42a-3-602. Payment.
Sec. 42a-3-603. Tender of payment.
Sec. 42a-3-604. Discharge by cancellation or renunciation.
Sec. 42a-3-605. Discharge of endorsers and accommodation parties.
Sec. 42a-3-606. Impairment of recourse or of collateral.
Sec. 42a-3-701. Letter of advice of international sight draft.
Secs. 42a-3-801 to 42a-3-805. Drafts in a set. Effect of instrument on obligation for
which it is given. Notice to third party. Lost, destroyed or stolen instruments. Instruments not payable to order or to bearer.
GENERAL PROVISIONS AND DEFINITIONS
Sec. 42a-3-101. Short title: Uniform Commercial Code−Negotiable Instruments. This article may be cited as "Uniform Commercial Code−Negotiable Instruments". Sec. 42a-3-102. Subject matter. (a) This article applies to negotiable instruments.
It does not apply to money, to payment orders governed by article 4A, or to securities
governed by article 8. Sec. 42a-3-103. Definitions. (a) In this article: Sec. 42a-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 or without interest or other charges described in the promise or
order, if it: Sec. 42a-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 rights on the instrument to any person. Sec. 42a-3-106. Unconditional promise or order. (a) Except as provided in this
section, for the purposes of section 42a-3-104(a), a promise or order is unconditional
unless it states (i) an express condition to payment, (ii) that the promise or order is
subject to or governed by another writing, or (iii) that rights or obligations with respect
to the promise or order are stated in another writing. A reference to another writing does
not of itself make the promise or order conditional. Sec. 42a-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 equivalent amount in dollars calculated by using
the current bank-offered spot rate at the place of payment for the purchase of dollars on
the day on which the instrument is paid. Sec. 42a-3-108. Payable on demand or at definite time. (a) A promise or order
is "payable on demand" if it (i) states that it is payable on demand or at sight, or otherwise
indicates that it is payable at the will of the holder, or (ii) does not state any time of
payment. Sec. 42a-3-109. Payable to bearer or to order. (a) A promise or order is payable
to bearer if it: Sec. 42a-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 in the name or behalf of, the issuer of
the instrument. The instrument is payable to the person intended by the signer even if
that person is identified in the instrument by a name or other identification that is not
that of the intended person. If more than one person signs in the name or behalf of the
issuer of an instrument and all the signers do not intend the same person as payee, the
instrument is payable to any person intended by one or more of the signers. Sec. 42a-3-111. Place of payment. Except as otherwise provided for items in article 4, an instrument is payable at the place of payment stated in the instrument. If no
place of payment is stated, an instrument is payable at the address of the drawee or
maker stated in the instrument. If no address is stated, the place of payment is the place
of business of the drawee or maker. If a drawee or maker has more than one place of
business, the place of payment is any place of business of the drawee or maker chosen
by the person entitled to enforce the instrument. If the drawee or maker has no place of
business, the place of payment is the residence of the drawee or maker. Sec. 42a-3-112. Interest. (a) Unless otherwise provided in the instrument, (i) an
instrument is not payable with interest, and (ii) interest on an interest-bearing instrument
is payable from the date of the instrument. Sec. 42a-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 after date. Except as provided in section 42a-4-401(c), an instrument payable on demand is not payable before the date of the instrument. Sec. 42a-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. Sec. 42a-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 it is incomplete but that the signer intended it to be completed by
the addition of words or numbers. Sec. 42a-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, endorsers who endorse as joint payees, or
anomalous endorsers are jointly and severally liable in the capacity in which they sign. Sec. 42a-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 may be modified, supplemented,
or nullified by a separate agreement of the obligor and a person entitled to enforce the
instrument, if the instrument is issued or the obligation is incurred in reliance on the
agreement or as part of the same transaction giving rise to the agreement. To the extent
an obligation is modified, supplemented, or nullified by an agreement under this section,
the agreement is a defense to the obligation. Sec. 42a-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
must be commenced within six years after the due date or dates stated in the note or, if
a due date is accelerated, within six years after the accelerated due date. Sec. 42a-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 article or article
4, the defendant may give the third person written notice of the litigation, and the person
notified may then give similar notice to any other person who is answerable over. If the
notice states (i) that the person notified may come in and defend and (ii) that failure to
do so will bind the person notified in an action later brought by the person giving the
notice as to any determination of fact common to the two litigations, the person notified
is so bound unless after seasonable receipt of the notice the person notified does come
in and defend. Secs. 42a-3-120 to 42a-3-122. Instruments "payable through" bank. Instruments payable at bank. Accrual of cause of action. Sections 42a-3-120 to 42a-3-122,
inclusive, are repealed. Sec. 42a-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 thereby becomes its holder. Sec. 42a-3-202. Negotiation subject to rescission. (a) Negotiation is effective
even if obtained (i) from an infant, a corporation exceeding its powers, or a person
without capacity, (ii) by fraud, duress, or mistake, or (iii) in breach of duty or as part
of an illegal transaction. Sec. 42a-3-203. Transfer of an 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 delivery the right to enforce the instrument. Sec. 42a-3-204. Endorsement. (a) "Endorsement" means a signature, other than
that of a signer as maker, drawer, or acceptor, that alone or accompanied by other words
is made on an instrument for the purpose of (i) negotiating the instrument, (ii) restricting
payment of the instrument, or (iii) incurring endorser's liability on the instrument, but
regardless of the intent of the signer, a signature and its accompanying words is an
endorsement unless the accompanying words, terms of the instrument, place of the
signature, or other circumstances unambiguously indicate that the signature was made
for a purpose other than endorsement. For the purpose of determining whether a signature is made on an instrument, a paper affixed to the instrument is a part of the instrument. Sec. 42a-3-205. Special endorsement. Blank endorsement. Anomalous endorsement. (a) If an endorsement is made by the holder of an instrument, whether
payable to an identified person or payable to bearer, and the endorsement identifies a
person to whom it makes the instrument payable, it is a "special endorsement". When
specially endorsed, an instrument becomes payable to the identified person and may be
negotiated only by the endorsement of that person. The principles stated in section 42a-
3-110 apply to special endorsements. Sec. 42a-3-206. Restrictive endorsement. (a) An endorsement limiting payment
to a particular person or otherwise prohibiting further transfer or negotiation of the
instrument is not effective to prevent further transfer or negotiation of the instrument. Sec. 42a-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 cancel endorsements made after the reacquirer first became a holder
of the instrument. If the cancellation causes the instrument to be payable to the reacquirer
or to bearer, the reacquirer may negotiate the instrument. An endorser whose endorsement is cancelled is discharged, and the discharge is effective against any subsequent
holder. Sec. 42a-3-208. Reacquisition. Section 42a-3-208 is repealed. Sec. 42a-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 of a holder, or (iii) a person not in possession of
the instrument who is entitled to enforce the instrument pursuant to section 42a-3-309
or 42a-3-418(d). A person may be a person entitled to enforce the instrument even
though the person is not the owner of the instrument or is in wrongful possession of the
instrument. Sec. 42a-3-302. Holder in due course. (a) Subject to subsection (c) and section
42a-3-106(d), "holder in due course" means the holder of an instrument if: Sec. 42a-3-303. Value and consideration. (a) An instrument is issued or transferred for value if: Sec. 42a-3-304. Overdue instrument. (a) An instrument payable on demand becomes overdue at the earliest of the following times: Sec. 42a-3-305. Defenses and claims in recoupment. (a) Except as stated in subsection (b), the right to enforce the obligation of a party to pay an instrument is subject
to the following: Sec. 42a-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
or possessory right in the instrument or its proceeds, including a claim to rescind a
negotiation and to recover the instrument or its proceeds. A person having rights of a
holder in due course takes free of the claim to the instrument. Sec. 42a-3-307. Notice of breach of fiduciary duty. (a) In this section: Sec. 42a-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 is admitted unless specifically denied in the pleadings. If
the validity of a signature is denied in the pleadings, the burden of establishing validity
is on the person claiming validity, but the signature is presumed to be authentic and
authorized unless the action is to enforce the liability of the purported signer and the
signer is dead or incompetent at the time of trial of the issue of validity of the signature.
If an action to enforce the instrument is brought against a person as the undisclosed
principal of a person who signed the instrument as a party to the instrument, the plaintiff
has the burden of establishing that the defendant is liable on the instrument as a represented person under section 42a-3-402(a). Sec. 42a-3-309. Enforcement of lost, destroyed or stolen instrument. (a) A person not in possession of an instrument is entitled to enforce the instrument if (i) the person
was in possession of the instrument and entitled to enforce it when loss of possession
occurred, (ii) the loss of possession was not the result of a transfer by the person or a
lawful seizure, and (iii) the person cannot reasonably obtain possession of the instrument
because the instrument was destroyed, its whereabouts cannot be determined, or it is in
the wrongful possession of an unknown person or a person that cannot be found or is
not amenable to service of process. Sec. 42a-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 extent discharge would result if an
amount of money equal to the amount of the instrument were taken in payment of the
obligation. Discharge of the obligation does not affect any liability that the obligor may
have as an endorser of the instrument. Sec. 42a-3-311. Accord and satisfaction by use of instrument. (a) If a person
against whom a claim is asserted proves that (i) that person in good faith tendered an
instrument to the claimant as full satisfaction of the claim, (ii) the amount of the claim
was unliquidated or subject to a bona fide dispute, and (iii) the claimant obtained payment of the instrument, the following subsections apply. Sec. 42a-3-312. Enforcement of lost, destroyed or stolen cashier's checks, teller's checks or certified checks. (a) In this section: Sec. 42a-3-401. Signature. (a) A person is not liable on an instrument unless (i)
the person signed the instrument, or (ii) the person is represented by an agent or representative who signed the instrument and the signature is binding on the represented person
under section 42a-3-402. Sec. 42a-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 the name of the signer, the represented person is bound by the signature
to the same extent the represented person would be bound if the signature were on a
simple contract. If the represented person is bound, the signature of the representative
is the "authorized signature of the represented person" and the represented person is
liable on the instrument, whether or not identified in the instrument.
(1959, P.A. 133, S. 3-101; P.A. 91-304, S. 1.)
History: P.A. 91-304 changed title of article from "Commercial Paper" to "Negotiable Instruments".
Cited. 189 C. 591, 595. Cited. 208 C. 248, 253.
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(b) If there is conflict between this article and article 4 or 9, articles 4 and 9 govern.
(c) Regulations of the Board of Governors of the Federal Reserve System and operating circulars of the federal reserve banks supersede any inconsistent provision of
this article to the extent of the inconsistency.
(1959, P.A. 133, S. 3-102; P.A. 91-304, S. 2.)
History: P.A. 91-304 entirely replaced former provisions re definitions applicable to article with provisions re subject
matter of article, a restatement of Sec. 42a-3-103, revised to 1991, and provisions re federal preemption.
See Secs. 42a-3-103, 42a-3-104(b) and 42a-3-105(b) for successor provisions to Sec. 42a-3-102, revised to 1991, re
definitions.
Cited. 225 C. 367, 377. Cited. 240 C. 10.
Cited. 5 CA 366, 367.
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(1) "Acceptor" means a drawee who has accepted a draft.
(2) "Drawee" means a person ordered in a draft to make payment.
(3) "Drawer" means a person who signs or is identified in a draft as a person ordering
payment.
(4) "Good faith" means honesty in fact and the observance of reasonable commercial standards of fair dealing.
(5) "Maker" means a person who signs or is identified in a note as a person undertaking to pay.
(6) "Order" means a written instruction to pay money signed by the person giving
the instruction. The instruction may be addressed to any person, including the person
giving the instruction, or to one or more persons jointly or in the alternative but not in
succession. An authorization to pay is not an order unless the person authorized to pay
is also instructed to pay.
(7) "Ordinary care" in the case of a person engaged in business means observance
of reasonable commercial standards, prevailing in the area in which the person is located,
with respect to the business in which the person is engaged. In the case of a bank that takes
an instrument for processing for collection or payment by automated means, reasonable
commercial standards do not require the bank to examine the instrument if the failure
to examine does not violate the bank's prescribed procedures and the bank's procedures
do not vary unreasonably from general banking usage not disapproved by this article
or article 4.
(8) "Party" means a party to an instrument.
(9) "Promise" means a written undertaking to pay money signed by the person
undertaking to pay. An acknowledgment of an obligation by the obligor is not a promise
unless the obligor also undertakes to pay the obligation.
(10) "Prove" with respect to a fact means to meet the burden of establishing the
fact, as defined in section 42a-1-201(8).
(11) "Remitter" means a person who purchases an instrument from its issuer if the
instrument is payable to an identified person other than the purchaser.
(b) Other definitions applying to this article and the sections in which they appear are:
"Acceptance". Section 42a-3-409.
"Accommodated party". Section 42a-3-419.
"Accommodation party". Section 42a-3-419.
"Alteration". Section 42a-3-407.
"Anomalous endorsement". Section 42a-3-205.
"Blank endorsement". Section 42a-3-205.
"Cashier's check". Section 42a-3-104.
"Certificate of deposit". Section 42a-3-104.
"Certified check". Section 42a-3-409.
"Check". Section 42a-3-104.
"Consideration". Section 42a-3-303.
"Draft". Section 42a-3-104.
"Endorsement". Section 42a-3-204.
"Endorser". Section 42a-3-204.
"Holder in due course". Section 42a-3-302.
"Incomplete instrument". Section 42a-3-115.
"Instrument". Section 42a-3-104.
"Issue". Section 42a-3-105.
"Issuer". Section 42a-3-105.
"Negotiable instrument". Section 42a-3-104.
"Negotiation". Section 42a-3-201.
"Note". Section 42a-3-104.
"Payable at a definite time". Section 42a-3-108.
"Payable on demand". Section 42a-3-108.
"Payable to bearer". Section 42a-3-109.
"Payable to order". Section 42a-3-109.
"Payment". Section 42a-3-602.
"Person entitled to enforce". Section 42a-3-301.
"Presentment". Section 42a-3-501.
"Reacquisition". Section 42a-3-207.
"Special endorsement". Section 42a-3-205.
"Teller's check". Section 42a-3-104.
"Transfer of instrument". Section 42a-3-203.
"Traveler's check". Section 42a-3-104.
"Value". Section 42a-3-303.
(c) The following definitions in other articles apply to this article:
"Bank". Section 42a-4-105.
"Banking day". Section 42a-4-104.
"Clearing house". Section 42a-4-104.
"Collecting bank". Section 42a-4-105.
"Depositary bank". Section 42a-4-105.
"Documentary draft". Section 42a-4-104.
"Intermediary bank". Section 42a-4-105.
"Item". Section 42a-4-104.
"Payor bank". Section 42a-4-105.
"Suspends payments". Section 42a-4-104.
(d) In addition, article 1 contains general definitions and principles of construction
and interpretation applicable throughout this article.
(1959, P.A. 133, S. 3-103; P.A. 91-304, S. 3; May Sp. Sess. P.A. 92-11, S. 15, 70.)
History: P.A. 91-304 entirely replaced former provisions re scope of article with provisions re definitions; May Sp.
Sess. P.A. 92-11 amended Subsec. (a) to make a technical change in the definition of "prove".
See Sec. 42a-3-102 for successor provisions to Sec. 42a-3-103, revised to 1991, re scope of article.
Subsec. (a):
Subdiv. (6) cited. 230 C. 486, 494. Subdiv. (9) cited. Id.
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(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, or (iii) a waiver of the benefit of any law intended
for the advantage or protection of an obligor.
(b) "Instrument" means a negotiable instrument.
(c) An order that meets all of the requirements of subsection (a), except paragraph
(1), and otherwise falls within the definition of "check" in subsection (f) 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 or (ii) a cashier's check or teller's check. 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.
(1959, P.A. 133, S. 3-104; P.A. 91-304, S. 4.)
History: P.A. 91-304 substantially revised section and added definitions of "cashier's check", "teller's check" and
"traveler's check".
Annotations to former statutes:
(1958 Rev., S. 39-1): Law does not recognize a "renewal note." 92 C. 707. A written order for the payment of money
to a particular person to be charged to the account of the drawer is not a negotiable instrument. 93 C. 399.
(1958 Rev., S. 39-2): Negotiable coupon bonds payable to bearer are within the act. 80 C. 60; 82 C. 333. Seal does not
affect negotiability. 81 C. 670. A certificate of stock is not a negotiable instrument. 94 C. 607. (2) Provision including
taxes in note rendered the sum uncertain and so destroyed negotiability before the 1927 amendment. 104 C. 700; 111 C.
67. Cited. 110 C. 441; 122 C. 170; 126 C. 38.
Subsec. (2): Requirement not met if the promise is to pay a sum plus another indefinite sum. 4 CS 211.
(1958 Rev., S. 39-127): Request by subcontractor to original contractor to pay certain sum to third person not a negotiable
bill of exchange. 86 C. 511; 93 C. 399.
(1958 Rev., S. 39-186): Check properly delivered, though drawer was to substitute another for it, imports consideration.
83 C. 526. Cited. 110 C. 399; 122 C. 170; 128 C. 482.
Annotations to present section:
Cited. 149 C. 159; id., 558; 156 C. 243. Waiver of defense clause void as attempt to impart negotiability to otherwise
nonnegotiable instrument. 158 C. 543. Cited. 203 C. 394, 404. Cited. 210 C. 734, 739. Cited. 221 C. 530, 542.
Cited. 5 CA 366, 367.
Cashier's check, in which issuing bank acts as both drawer and drawee, is equivalent to negotiable promissory note
payable on demand. 33 CS 641, 644, 645. Cited. 40 CS 287, 288.
Former Subsec. (1):
A promissory note remains a simple contract and is enforceable as such even though lacking an element essential for
negotiability. 181 C. 207, 210. Cited. 182 C. 530, 531.
Cited. 36 CS 213, 216.
Former Subsec. (2):
Subdiv. (b) cited. 202 C. 277, 284. Subdiv. (c) cited. 205 C. 604, 610.
Subsec. (a):
Cited. 230 C. 486, 494.
Subsec. (b):
Cited. 230 C. 486, 494.
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(b) An unissued instrument, or an unissued incomplete instrument that is completed,
is binding on the maker or drawer, but nonissuance is a defense. An instrument that is
conditionally issued or is issued for a special purpose is binding on the maker or drawer,
but failure of the condition or special purpose to be fulfilled is a defense.
(c) "Issuer" applies to issued and unissued instruments and means a maker or drawer
of an instrument.
(1959, P.A. 133, S. 3-105; 1963, P.A. 526, S. 3; P.A. 91-304, S. 5.)
History: 1963 act specified that promise or order is not made conditional by fact that instrument refers to a separate
agreement for rights as to prepayment or acceleration in Subdiv. (c); P.A. 91-304 entirely replaced former provisions re
unconditional promise or order with provisions re issue of an instrument.
See Sec. 42a-3-106(a) and (b)(ii) for successor provisions to Sec. 42a-3-105, revised to 1991, re unconditional promise
or order.
Annotations to former statute (1958 Rev., S. 39-4):
Order to pay what may be due on a specified book is conditional and not negotiable. 73 C. 572; 93 C. 395. Where trade
acceptance stated time of payment, held that reference to maturity of purchase contract was a mere statement of the
transaction. 126 C. 37.
Annotations to present section:
Cited. 149 C. 159.
Notes nonnegotiable because "subject to a subordination agreement dated October 13, 1965" were each transferable
or assignable and each was property subject of separate count in one pleading by plaintiff holder upon the default of
defendant payor. 6 Conn. Cir. Ct. 28.
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(b) A promise or order is not made conditional (i) by a reference to another writing
for a statement of rights with respect to collateral, prepayment, or acceleration, or (ii)
because payment is limited to resort to a particular fund or source.
(c) If a promise or order requires, as a condition to payment, a countersignature by
a person whose specimen signature appears on the promise or order, the condition does
not make the promise or order conditional for the purposes of section 42a-3-104(a). If
the person whose specimen signature appears on an instrument fails to countersign the
instrument, the failure to countersign is a defense to the obligation of the issuer, but the
failure does not prevent a transferee of the instrument from becoming a holder of the
instrument.
(d) If a promise or order at the time it is issued or first comes into possession of a
holder contains a statement, required by applicable statutory or administrative law, to
the effect that the rights of a holder or transferee are subject to claims or defenses that
the issuer could assert against the original payee, the promise or order is not thereby
made conditional for the purposes of section 42a-3-104(a); but if the promise or order
is an instrument, there cannot be a holder in due course of the instrument.
(1959, P.A. 133, S. 3-106; 1961, P.A. 116, S. 2; P.A. 91-304, S. 6.)
History: 1961 act added (f) to subsec. (1); P.A. 91-304 entirely replaced former provisions re sum certain with provisions
re unconditional promise or order, a restatement in part of Sec. 42a-3-105, revised to 1991.
See Sec. 42a-3-104(a) for successor provisions to Sec. 42a-3-106, revised to 1991, re sum certain.
Annotations to former statute (1958 Rev., S. 39-3):
Sum payable must be a sum certain. Only exceptions are those specifically permitted by this section. Application under
former statute. 104 C. 700. Equity may relieve against effect of acceleration clause if default of debtor is not wilful but
the result of accident or mistake. 97 C. 357. Does not require an election between a provision to recover costs of collection
and one providing for attorney's fee. 110 C. 442. Negotiability destroyed by broad provision for collection of costs of
litigation or controversy arising from or connected with note or debt. Id., 443. Provision for payment of taxes applies only
to instruments executed since enactment in 1927. 111 C. 67; 116 C. 423.
Exception to section 39-2 (2). 4 CS 212.
Annotations to present section:
Cited. 221 C. 530, 542, 543.
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(1959, P.A. 133, S. 3-107; P.A. 91-304, S. 7.)
History: P.A. 91-304 deleted provision re when an instrument is payable in money, deleted provision that an instrument
payable in "currency" or "current funds" is payable in money, and revised provisions re instruments payable in foreign
money and conversion rates.
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(b) A promise or order is "payable at a definite time" if it is payable on elapse of a
definite period of time after sight or acceptance or at a fixed date or dates or at a time
or times readily ascertainable at the time the promise or order is issued, subject to rights
of (i) prepayment, (ii) acceleration, (iii) extension at the option of the holder, or (iv)
extension to a further definite time at the option of the maker or acceptor or automatically
upon or after a specified act or event.
(c) If an instrument, payable at a fixed date, is also payable upon demand made
before the fixed date, the instrument is payable on demand until the fixed date and, if
demand for payment is not made before that date, becomes payable at a definite time
on the fixed date.
(1959, P.A. 133, S. 3-108; P.A. 91-304, S. 8.)
History: P.A. 91-304 designated former provisions as Subsec. (a) and amended said Subsec. to replace "Instruments"
with "A promise or order" and revise provisions re when a promise or order is payable on demand, added Subsec. (b) re
when a promise or order is payable at a definite time, a restatement of Sec. 42a-3-109(1), revised to 1991, and added
Subsec. (c) re an instrument payable at a fixed date and upon demand before said date.
Annotations to former statute (1958 Rev., S. 39-8):
If no time is stated, note is due on demand. 1 C. 405; 10 C. 485. Provision for semiannual interest discussed. 71 C. 39.
Under former statute, demand note overdue after four months. 75 C. 431. Agreement that loan represented by note shall
be a continuing one held valid. 78 C. 319. In re provision that note be "payable on demand after date" and is to bear interest.
84 C. 55. Has no application to any writing not a negotiable instrument. 101 C. 168; 105 C. 639.
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(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 or order is entitled to payment;
(2) Does not state a payee; or
(3) States that it is payable to or 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 it is payable
(i) to the order of an identified person or (ii) to an identified person or order. A promise
or order that is payable to order is payable to the identified person.
(c) An instrument payable to bearer may become payable to an identified person if
it is specially endorsed pursuant to section 42a-3-205(a). An instrument payable to an
identified person may become payable to bearer if it is endorsed in blank pursuant to
section 42a-3-205(b).
(1959, P.A. 133, S. 3-109; P.A. 91-304, S. 9.)
History: P.A. 91-304 entirely replaced former provisions re when an instrument is payable at a definite time with
provisions re when a promise or order is payable to bearer or to order, a restatement in part of provisions of Secs. 42a-3-
110 and 42a-3-111, revised to 1991.
See Sec. 42a-3-108(b) for successor provisions to Sec. 42a-3-109(1), revised to 1991, re instruments payable at a
definite time.
Annotations to former statute (1958 Rev., S. 39-5):
Note payable on demand "after my decease" good. 19 C. 7. Promise must be absolute. 60 C. 407.
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(b) If the signature of the issuer of an instrument is made by automated means, such
as a check-writing machine, the payee of the instrument is determined by the intent of the
person who supplied the name or identification of the payee, whether or not authorized to
do so.
(c) A person to whom an instrument is payable may be identified in any way, including by name, identifying number, office, or account number. For the purpose of determining the holder of an instrument, the following rules apply:
(1) If an instrument is payable to an account and the account is identified only by
number, the instrument is payable to the person to whom the account is payable. If an
instrument is payable to an account identified by number and by the name of a person,
the instrument is payable to the named person, whether or not that person is the owner
of the account identified by number.
(2) If an instrument is payable to: (i) A trust, an estate, or a person described as
trustee or representative of a trust or estate, the instrument is payable to the trustee, the
representative, or a successor of either, whether or not the beneficiary or estate is also
named; (ii) a person described as agent or similar representative of a named or identified
person, the instrument is payable to the represented person, the representative, or a
successor of the representative; (iii) a fund or organization that is not a legal entity, the
instrument is payable to a representative of the members of the fund or organization;
or (iv) an office or to a person described as holding an office, the instrument is payable
to the named person, the incumbent of the office, or a successor to the incumbent.
(d) If an instrument is payable to two or more persons alternatively, it is payable to
any of them and may be negotiated, discharged, or enforced by any or all of them in
possession of the instrument. If an instrument is payable to two or more persons not
alternatively, it is payable to all of them and may be negotiated, discharged, or enforced
only by all of them. If an instrument payable to two or more persons is ambiguous as
to whether it is payable to the persons alternatively, the instrument is payable to the
persons alternatively.
(1959, P.A. 133, S. 3-110; P.A. 91-304, S. 10.)
History: P.A. 91-304 revised provisions re instruments payable to two or more payees, to an estate, trust or fund and
to an office or an officer by his title, and entirely replaced other former provisions.
See Sec. 42a-3-109(b) for successor provisions to Sec. 42a-3-110(1) and (3), revised to 1991, re when an instrument
is payable to order.
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(1959, P.A. 133, S. 3-111; P.A. 91-304, S. 11.)
History: P.A. 91-304 entirely replaced former provisions re when an instrument is payable to bearer with provisions
re place of payment.
See Sec. 42a-3-109(a)(1) for successor provisions to Sec. 42a-3-111(a) and (b), revised to 1991, re instruments payable
to bearer or the order of bearer or to a specified person or bearer.
See Secs. 42a-3-109(a)(3) and 42a-3-205(b) for successor provisions to Sec. 42a-3-111(c), revised to 1991, re instruments payable to cash or without a specific payee.
Annotation to former statute (1958 Rev., S. 39-10):
Not "payable to bearer" when drawer did not know named payee was fictitious. 126 C. 184.
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(b) Interest may be stated in an instrument as a fixed or variable amount of money
or it may be expressed as a fixed or variable rate or rates. The amount or rate of interest
may be stated or described in the instrument in any manner and may require reference
to information not contained in the instrument. If an instrument provides for interest,
but the amount of interest payable cannot be ascertained from the description, interest
is payable at the judgment rate in effect at the place of payment of the instrument and
at the time interest first accrues.
(1959, P.A. 133, S. 3-112; 1963, P.A. 526, S. 4; P.A. 91-304, S. 12.)
History: 1963 act reworded Subdiv. (b) in Subsec. (1) for clarity; P.A. 91-304 entirely replaced former provisions re
terms and omissions not affecting the negotiability of an instrument with provisions re interest.
See Secs. 42a-3-104(a)(3) and 42a-3-311 for successor provisions to Sec. 42a-3-112(1), revised to 1991, re terms and
conditions not affecting negotiability.
Annotations to former statute (1958 Rev., S. 39-6):
Provisions to pay taxes and assessments and to insure property in addition to paying the principal renders a note
nonnegotiable. 4 CS 211. Provision for the furnishing of additional security does not render negotiable note nonnegotiable.
10 CS 180.
Cited. 149 C. 159.
Annotations to present section:
Cited. 149 C. 159.
Former Subsec. (1):
Subdiv. (f) cited. 202 C. 277, 284.
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(b) If an instrument is undated, its date is the date of its issue or, in the case of an
unissued instrument, the date it first comes into possession of a holder.
(1959, P.A. 133, S. 3-113; P.A. 91-304, S. 13.)
History: P.A. 91-304 entirely replaced former provisions re instrument under seal with provisions re date of instrument,
a restatement in part of Sec. 42a-3-114, revised to 1991.
Annotations to former statute (1958 Rev., S. 39-7):
Presence of seal immaterial. 81 C. 670. Where note bearing word "seal" is negotiable and does not purport to be contract
under seal, six-year statute of limitations applies. 110 C. 413.
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(1959, P.A. 133, S. 3-114; P.A. 91-304, S. 14.)
History: P.A. 91-304 entirely replaced former provisions re the date of an instrument with provisions re contradictory
terms, a restatement of Sec. 42a-3-118(b) and (c), revised to 1991.
See Sec. 42a-3-113(a) for successor provisions to Sec. 42a-3-114(2), revised to 1991, re an antedated or postdated
instrument.
Annotation to former statute (1958 Rev., S. 39-12):
The presumption is rebuttable. 105 C. 78.
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(b) Subject to subsection (c), if an incomplete instrument is an instrument under
section 42a-3-104, it may be enforced according to its terms if it is not completed, or
according to its terms as augmented by completion. If an incomplete instrument is not
an instrument under section 42a-3-104, but, after completion, the requirements of section
42a-3-104 are met, the instrument may be enforced according to its terms as augmented
by completion.
(c) If words or numbers are added to an incomplete instrument without authority
of the signer, there is an alteration of the incomplete instrument under section 42a-3-407.
(d) The burden of establishing that words or numbers were added to an incomplete
instrument without authority of the signer is on the person asserting the lack of authority.
(1959, P.A. 133, S. 3-115; P.A. 91-304, S. 15.)
History: P.A. 91-304 substantially revised section.
Cited. 156 C. 243. Cited. 242 C. 17.
Where note, when completed, was ratified by two payments thereon by defendants, they could not raise defense of
unauthorized completion by party to whom they negotiated the signed note. 4 Conn. Cir. Ct. 620. Defendant endorser who
consented to insertions and alterations of checks is disqualified from attaching their validity and his liability thereon. 5
Conn. Cir. Ct. 405.
Former Subsec. (1):
A promissory note remains a simple contract and is enforceable as such even though lacking an element essential for
negotiability. 181 C. 207, 210. Cited. 203 C. 394, 404. Cited. 233 C. 304, 315.
Former Subsec. (2):
Cited. 233 C. 304, 315.
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(b) Except as provided in section 42a-3-419(e) or by agreement of the affected
parties, a party having joint and several liability who pays the instrument is entitled
to receive from any party having the same joint and several liability contribution in
accordance with applicable law.
(c) Discharge of one party having joint and several liability by a person entitled to
enforce the instrument does not affect the right under subsection (b) of a party having
the same joint and several liability to receive contribution from the party discharged.
(1959, P.A. 133, S. 3-116; P.A. 91-304, S. 16.)
History: P.A. 91-304 entirely replaced former provisions re instruments payable to two or more persons with provisions
re joint and several liability and contribution.
See Sec. 42a-3-110(d) for successor provisions to Sec. 42a-3-116, revised to 1991, re instruments payable to two or
more persons.
Cited. 40 CS 70, 72.
Former Subdiv. (b):
Instrument payable to the order of two or more persons if not in the alternative is payable to all of them and may be
negotiated, discharged or enforced only by all of them. 170 C. 691, 695.
Cited. 34 CS 606, 610.
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(1959, P.A. 133, S. 3-117; P.A. 91-304, S. 17.)
History: P.A. 91-304 entirely replaced former provisions re instruments payable with words of description with provisions re other agreements affecting an instrument, a restatement in part of Sec. 42a-3-119, revised to 1991.
See Sec. 42a-3-110(c)(2) for successor provisions to Sec. 42a-3-117, revised to 1991, re instruments payable with
words of description.
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(b) Except as provided in subsection (d) or (e), if demand for payment is made to
the maker of a note payable on demand, an action to enforce the obligation of a party
to pay the note must be commenced within six years after the demand. If no demand
for payment is made to the maker, an action to enforce the note is barred if neither
principal nor interest on the note has been paid for a continuous period of ten years.
(c) Except as provided in subsection (d), an action to enforce the obligation of a
party to an unaccepted draft to pay the draft must be commenced within three years
after dishonor of the draft or ten years after the date of the draft, whichever period
expires first.
(d) An action to enforce the obligation of the acceptor of a certified check or the
issuer of a teller's check, cashier's check, or traveler's check must be commenced within
three years after demand for payment is made to the acceptor or issuer, as the case may be.
(e) An action to enforce the obligation of a party to a certificate of deposit to pay
the instrument must be commenced within six years after demand for payment is made
to the maker, but if the instrument states a due date and the maker is not required to pay
before that date, the six-year period begins when a demand for payment is in effect and
the due date has passed.
(f) An action to enforce the obligation of a party to pay an accepted draft, other than
a certified check, must be commenced (i) within six years after the due date or dates
stated in the draft or acceptance if the obligation of the acceptor is payable at a definite
time, or (ii) within six years after the date of the acceptance if the obligation of the
acceptor is payable on demand.
(g) Unless governed by other law regarding claims for indemnity or contribution,
an action (i) for conversion of an instrument, for money had and received, or like action
based on conversion, (ii) for breach of warranty, or (iii) to enforce an obligation, duty,
or right arising under this article and not governed by this section must be commenced
within three years after the cause of action accrues.
(1959, P.A. 133, S. 3-118; P.A. 91-304, S. 18.)
History: P.A. 91-304 entirely replaced former provisions re rules of construction with provisions re statute of limitations.
See Secs. 42a-3-103(a)(6), 42a-3-104(e), 42a-3-112, 42a-3-114 and 42a-3-116(a) for successor provisions to Sec. 42a-
3-118, revised to 1991, re rules of construction.
Annotations to former statute (1958 Rev., S. 39-18): Holder may fill in blank amount with sum not exceeding figures
in margin. 13 C. 279. (2) 40 C. 552; (6) 97 C. 315; (7) 90 C. 254.
Annotation to former section 39-18: Where note did not specify dates from which interest was to run, interest ran from
date of instrument. 149 C. 559.
Annotations to present section:
Subsec. (a):
Cashier's check, in which issuing bank acts as both drawer and drawee, is equivalent to negotiable promissory note
payable on demand. 33 CS 641, 644, 645.
Subsec. (e):
Cited. 207 C. 483, 493.
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(1959, P.A. 133, S. 3-119; P.A. 91-304, S. 19.)
History: P.A. 91-304 entirely replaced former provisions re other written agreements affecting an instrument with
provisions re notice of the right to defend an action, a restatement of Sec. 42a-3-803, revised to 1991.
See Secs. 42a-3-106(a) and (b) and 42a-3-117 for successor provisions to Sec. 42a-3-119, revised to 1991, re other
written agreements affecting an instrument.
Cited. 215 C. 355, 364.
Cited. 33 CS 183.
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(1959, P.A. 133, S. 3-120−3-122; 1961, P.A. 116, S. 3; P.A. 91-304, S. 112.)
See Sec. 42a-4-106(a) for successor provisions re items "payable through" a bank.
See Sec. 42a-4-106(b) for successor provisions re items "payable at" a bank.
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NEGOTIATION, TRANSFER AND ENDORSEMENT
(b) Except for negotiation by a remitter, if an instrument is payable to an identified
person, negotiation requires transfer of possession of the instrument and its endorsement
by the holder. If an instrument is payable to bearer, it may be negotiated by transfer of
possession alone.
(1959, P.A. 133, S. 3-201; P.A. 91-304, S. 20.)
History: P.A. 91-304 entirely replaced former provisions re transfer of an instrument with provisions re negotiation of
an instrument, a restatement of Sec. 42a-3-202(1), revised to 1991.
See Sec. 42a-3-203(b) and (c) and Sec. 42a-3-204(c) for successor provisions to Sec. 42a-3-201, revised to 1991, re
transfer of an instrument and right to endorsement.
Annotations to former statute (1958 Rev., S. 39-50):
Transfer by parol and delivery gives good title. 86 C. 408. Where payee did not actually endorse, purchaser of note for
value did not become holder in due course, but acquired good title. 124 C. 180. The assignment of a mortgage held sufficient
to pass title without an endorsement of the note itself. 148 C. 466.
Title to note passed by manual delivery without endorsement where the intention was to make a gift of the note. 11 CS
228. Cited. 12 CS 1.
Annotations to present section:
Cited. 202 C. 277, 290.
Cited. 35 CA 326, 331.
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(b) To the extent permitted by other law, negotiation may be rescinded or may be
subject to other remedies, but those remedies may not be asserted against a subsequent
holder in due course or a person paying the instrument in good faith and without knowledge of facts that are a basis for rescission or other remedy.
(1959, P.A. 133, S. 3-202; P.A. 91-304, S. 21.)
History: P.A. 91-304 entirely replaced former provisions re negotiation and endorsement with provisions re negotiation
subject to rescission, a restatement of Sec. 42a-3-207, revised to 1991.
See Sec. 42a-3-201(a), 42a-3-203(d) and 42a-3-204(a) for successor provisions to Sec. 42a-3-202, revised to 1991, re
negotiation and endorsement.
Annotations to former statute (1958 Rev., S. 39-31):
There must be delivery as well as endorsement to transfer title. 17 C. 520; 97 C. 318; id., 483. Continuing guaranty
made to avoid necessity of endorsing each of long series of notes. 67 C. 155. Effect of two endorsements by same person,
one "without recourse." 71 C. 418. Delivery may be conditional. 71 C. 177; id., 742; 76 C. 126; 79 C. 626. "Transfer"
defined. 81 C. 677. Delivery in escrow. Id., 670. Fact that check delivered was to be replaced by another held no defense.
83 C. 526. Meaning of "negotiation." 85 C. 154. Cited. 118 C. 45.
Cited. 11 CS 228.
One may acquire title of order paper by assignment but need endorsement to become a holder in due course. 6 Conn.
Cir. Ct. 545.
Annotations to present section:
Subsec. (a):
Subdiv. (i) cited. 35 CA 326, 331.
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(b) Transfer of an instrument, whether or not the transfer is a negotiation, vests in
the transferee any right of the transferor to enforce the instrument, including any right
as a holder in due course, but the transferee cannot acquire rights of a holder in due
course by a transfer, directly or indirectly, from a holder in due course if the transferee
engaged in fraud or illegality affecting the instrument.
(c) Unless otherwise agreed, if an instrument is transferred for value and the transferee does not become a holder because of lack of endorsement by the transferor, the
transferee has a specifically enforceable right to the unqualified endorsement of the
transferor, but negotiation of the instrument does not occur until the endorsement is
made.
(d) If a transferor purports to transfer less than the entire instrument, negotiation of
the instrument does not occur. The transferee obtains no rights under this article and
has only the rights of a partial assignee.
(1959, P.A. 133, S. 3-203; P.A. 91-304, S. 22.)
History: P.A. 91-304 entirely replaced former provisions re instruments with wrong or misspelled names with provisions
re transfer of an instrument and rights acquired by a transferee.
See Sec. 42a-3-204(d) for successor provisions to Sec. 42a-3-203, revised to 1991, re instruments with wrong or
misspelled names.
Cited. 240 C. 10.
Subsec. (b):
Cited. 240 C. 10.
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(b) "Endorser" means a person who makes an endorsement.
(c) For the purpose of determining whether the transferee of an instrument is a
holder, an endorsement that transfers a security interest in the instrument is effective as
an unqualified endorsement of the instrument.
(d) If an instrument is payable to a holder under a name that is not the name of the
holder, endorsement may be made by the holder in the name stated in the instrument or
in the holder's name or both, but signature in both names may be required by a person
paying or taking the instrument for value or collection.
(1959, P.A. 133, S. 3-204; P.A. 91-304, S. 23.)
History: P.A. 91-304 entirely replaced former provisions re special and blank endorsements with provisions re endorsement.
See Sec. 42a-3-205 for successor provisions to Sec. 42a-3-204, revised to 1991, re special and blank endorsements.
Annotations to former statutes:
1958 Rev., S. 39-34: Inference of endorsement drawn from evidence that note was left with holder and credited on
account. 76 C. 126. Little practical distinction between special and blank endorsement. 81 C. 667.
1958 Rev., S. 39-36: Holder sustained in writing over blank endorsement parol agreement of guaranty. 6 C. 315.
1958 Rev., S. 39-192: Former law concerning blank endorsements of nonnegotiable note. 60 C. 416; 66 C. 462; 74 C. 308.
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(b) If an endorsement is made by the holder of an instrument and is not a special
endorsement, it is a "blank endorsement". When endorsed in blank, an instrument becomes payable to bearer and may be negotiated by transfer of possession alone until
specially endorsed.
(c) The holder may convert a blank endorsement that consists only of a signature
into a special endorsement by writing, above the signature of the endorser, words identifying the person to whom the instrument is made payable.
(d) "Anomalous endorsement" means an endorsement made by a person who is not
the holder of the instrument. An anomalous endorsement does not affect the manner in
which the instrument may be negotiated.
(1959, P.A. 133, S. 3-205; P.A. 91-304, S. 24.)
History: P.A. 91-304 entirely replaced former provisions re restrictive endorsements with provisions re special, blank
and anomalous endorsements, a restatement of Sec. 42a-3-204, revised to 1991.
See Sec. 42a-3-206 for successor provisions to Sec. 42a-3-205, revised to 1991, re restrictive endorsements.
Annotation to former statute (1958 Rev., S. 39-37):
The fact that an endorsement is restrictive does not necessarily prevent the endorsee from being a holder in due course.
147 C. 215.
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(b) An endorsement stating a condition to the right of the endorsee to receive payment does not affect the right of the endorsee to enforce the instrument. A person paying
the instrument or taking it for value or collection may disregard the condition, and the
rights and liabilities of that person are not affected by whether the condition has been
fulfilled.
(c) If an instrument bears an endorsement (i) described in section 42a-4-201(b), or
(ii) in blank or to a particular bank using the words "for deposit", "for collection", or
other words indicating a purpose of having the instrument collected by a bank for the
endorser or for a particular account, the following rules apply:
(1) A person other than a bank, who purchases the instrument when so endorsed
converts the instrument unless the amount paid for the instrument is received by the
endorser or applied consistently with the endorsement.
(2) A depositary bank that purchases the instrument or takes it for collection when
so endorsed converts the instrument unless the amount paid by the bank with respect to
the instrument is received by the endorser or applied consistently with the endorsement.
(3) A payor bank that is also the depositary bank or that takes the instrument for
immediate payment over the counter from a person other than a collecting bank converts
the instrument unless the proceeds of the instrument are received by the endorser or
applied consistently with the endorsement.
(4) Except as otherwise provided in paragraph (3), a payor bank or intermediary
bank may disregard the endorsement and is not liable if the proceeds of the instrument
are not received by the endorser or applied consistently with the endorsement.
(d) Except for an endorsement covered by subsection (c), if an instrument bears an
endorsement using words to the effect that payment is to be made to the endorsee as
agent, trustee, or other fiduciary for the benefit of the endorser or another person, the
following rules apply:
(1) Unless there is notice of breach of fiduciary duty as provided in section 42a-3-
307, a person who purchases the instrument from the endorsee or takes the instrument
from the endorsee for collection or payment may pay the proceeds of payment or the
value given for the instrument to the endorsee without regard to whether the endorsee
violates a fiduciary duty to the endorser.
(2) A subsequent transferee of the instrument or person who pays the instrument is
neither given notice nor otherwise affected by the restriction in the endorsement unless
the transferee or payor knows that the fiduciary dealt with the instrument or its proceeds
in breach of fiduciary duty.
(e) The presence of an instrument of an endorsement to which this section applies
does not prevent a purchaser of the instrument from becoming a holder in due course
of the instrument unless the purchaser is a converter under subsection (c) or has notice
or knowledge of breach of fiduciary duty as stated in subsection (d).
(f) In an action to enforce the obligation of a party to pay the instrument, the obligor
has a defense if payment would violate an endorsement to which this section applies
and the payment is not permitted by this section.
(1959, P.A. 133, S. 3-206; P.A. 91-304, S. 25.)
History: P.A. 91-304 substantially revised section.
Annotations to former statute (1958 Rev., S. 39-38):
Effect of endorsement "for collection and remittance." 76 C. 126; 87 C. 248; 88 C. 202.
Annotations to present section:
Former Subsec. (4):
Cited. 185 C. 463, 474.
(Return to TOC) (Return to Chapters) (Return to Titles)
(1959, P.A. 133, S. 3-207; P.A. 91-304, S. 26.)
History: P.A. 91-304 entirely replaced former provisions re the effectiveness of a negotiation subject to rescission with
provisions re reacquisition of an instrument, a restatement of Sec. 42a-3-208, revised to 1991.
See Sec. 42a-3-202 for successor provisions to Sec. 42a-3-207, revised to 1991, re negotiation subject to rescission.
Former Subsec. (2):
Cited. 208 C. 248, 251.
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(1959, P.A. 133, S. 3-208; P.A. 91-304, S. 112.)
See Sec. 42a-3-207 for successor provisions re reacquisition.
(Return to TOC) (Return to Chapters) (Return to Titles)
ENFORCEMENT OF INSTRUMENTS
(1959, P.A. 133, S. 3-301; P.A. 91-304, S. 27.)
History: P.A. 91-304 entirely replaced former provisions re rights of a holder to transfer, negotiate, enforce or discharge
an instrument with provisions defining a person entitled to enforce an instrument.
Annotations to former statute (1958 Rev., S. 39-52):
Possession of note sufficient to give prima facie right to sue thereon. 76 C. 132. Note given with conditional bill of sale
may be sued on and right to retake property disregarded. 98 C. 737. Allegation that plaintiff was "holder" sufficient to
establish prima facie right to sue. 111 C. 630.
Annotations to present section:
Cited. 238 C. 745.
Cited. 4 CA 376, 381. Cited. 35 CA 326, 331.
Under former negotiable instruments act, section 39-52, where a note sued on is in the possession of the plaintiff, he
must produce it, as it is the best evidence. 23 CS 346.
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(1) The instrument when issued or negotiated to the holder does not bear such apparent evidence of forgery or alteration or is not otherwise so irregular or incomplete as to
call into question its authenticity; and
(2) The holder took the instrument (i) for value, (ii) in good faith, (iii) without notice
that the instrument is overdue or has been dishonored or that there is an uncured default
with respect to payment of another instrument issued as part of the same series, (iv)
without notice that the instrument contains an unauthorized signature or has been altered,
(v) without notice of any claim to the instrument described in section 42a-3-306, and
(vi) without notice that any party has a defense or claim in recoupment described in
section 42a-3-305(a).
(b) Notice of discharge of a party, other than discharge in an insolvency proceeding,
is not notice of a defense under subsection (a), but discharge is effective against a person
who became a holder in due course with notice of the discharge. Public filing or recording
of a document does not of itself constitute notice of a defense, claim in recoupment or
claim to the instrument.
(c) Except to the extent a transferor or predecessor in interest has rights as a holder
in due course, a person does not acquire rights of a holder in due course of an instrument
taken (i) by legal process or by purchase in an execution, bankruptcy, or creditor's sale
or similar proceeding, (ii) by purchase as part of a bulk transaction not in ordinary course
of business of the transferor, or (iii) as the successor in interest to an estate or other
organization.
(d) If, under section 42a-3-303(a)(1), the promise of performance that is the consideration for an instrument has been partially performed, the holder may assert rights as
a holder in due course of the instrument only to the fraction of the amount payable under
the instrument equal to the value of the partial performance divided by the value of the
promised performance.
(e) If (i) the person entitled to enforce an instrument has only a security interest in
the instrument and (ii) the person obliged to pay the instrument has a defense, claim in
recoupment or claim to the instrument that may be asserted against the person who
granted the security interest, the person entitled to enforce the instrument may assert
rights as a holder in due course only to an amount payable under the instrument which,
at the time of enforcement of the instrument, does not exceed the amount of the unpaid
obligation secured.
(f) To be effective, notice must be received at a time and in a manner that gives a
reasonable opportunity to act on it.
(g) This section is subject to any law limiting status as a holder in due course in
particular classes of transactions.
(1959, P.A. 133, S. 3-302; P.A. 91-304, S. 28.)
History: P.A. 91-304 substantially revised section.
Annotations to former statutes:
(1958 Rev., S. 39-1): Bank is "holder" of note which has been endorsed by it for collection and returned unpaid. 76 C.
126. Transferee for value not technically a holder where payee did not endorse. 124 C. 181.
(1958 Rev., S. 39-53): One who takes note as collateral security is holder in due course; negligence of maker in again
putting notes in circulation after they are once paid. 72 C. 576. Fraud of defendant, not participated in by one who takes
note as collateral security, no defense to suit by him. 74 C. 200; 77 C. 636. Whether one who takes notes as collateral
security is bona fide holder is question of fact. 78 C. 211; 91 C. 260. Valuable consideration necessary at common law.
82 C. 333. One who takes note of third person in payment of stock under agreement to collect it and remit any balance is
a holder in due course. 82 C. 585. Note taken after maturity cannot make holder one in due course; 88 C. 720; 105 C. 79;
even though note has been fraudulently altered as to time of payment. 89 C. 592. Knowledge of holder that endorsement
was for accommodation does not prevent him from being a holder in due course nor impair his right to recover against
such accommodation endorser. 92 C. 707. And likewise where note itself is given for accommodation. 97 C. 711. Purchaser
of corporate bonds from pledgee before maturity is holder in due course though he paid less than par. Id., 592. Cited. 111
C. 630; 118 C. 116; 139 C. 539. Doctrine of notice as it affects transactions generally does not apply to negotiable instruments. 119 C. 371. Bank which gives depositor draft for amount of account, and later cashes it after account has been
garnisheed, does not become holder in due course. 122 C. 171. Payee who repays collecting bank after dishonor, not a
holder in due course. 131 C. 411. See note to section 42a-3-408. The fact that an endorsement is restrictive does not
necessarily prevent the endorsee from being a holder in due course. 147 C. 215.
Subsec. (3):
Where real estate developer made false statements and purchasers in reliance gave negotiable notes, assignee with
knowledge of this fraud held not a holder in due course. 1 CS 176. Where endorsee of an accommodation promissory note
discounted it for payee contrary to provisions of a collateral agreement of which he had knowledge, held not a holder in
due course. 16 CS 293. Test is not whether the plaintiff was negligent in acquiring the paper, but whether he acted in good
faith. It is not the failure to inquire but the dishonest purpose which establishes bad faith. 18 CS 16. Consideration paid
for a check is a question of good faith and inadequacy of consideration coupled with suspicious circumstances justifies a
finding of bad faith. 19 CS 407.
Annotations to present section:
Cited. 182 C. 437, 442. Cited. 187 C. 637, 641. Cited. 207 C. 483, 487, 488. Cited. 240 C. 10.
Cited. 4 CA 102, 105. Trial court correctly concluded that plaintiff was a holder in due course. 49 CA 563. Note taken
for value where exact amount of note is unknown because purchased in pool of loans. 51 CA 392.
Former Subsec. (1):
Subdiv. (b): Standard of good faith is a subjective standard. Evidence admissible to test holder's subjective good faith
discussed. 187 C. 637, 642. Cited. 242 C. 17.
Bank which provisionally credits deposit against overdrawn account gives "value;" deposit as "value" discussed. 33
CS 641.
Plaintiff bank, payee of note obtained from defendant consumers in freezer-food sale transaction, was holder in due
course and four cases of prior complaints to bank by others did not change this rule where there was no complaint by this
defendant at or before time bank took note. 4 Conn. Cir. Ct. 620. Statute does not require endorsement to be holder in due
course but does require one to be "holder." 6 Conn. Cir. Ct. 546.
Former Subsec. (2):
Cited. 242 C. 17.
Former Subsec. (3):
Subdiv. (c) cited. 207 C. 483, 488, 489, 491.
Subsec. (a):
Subdiv. (2)(iii) cited. 231 C. 441, 450.
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(1) The instrument is issued or transferred for a promise of performance, to the
extent the promise has been performed;
(2) The transferee acquires a security interest or other lien in the instrument other
than a lien obtained by judicial proceeding;
(3) The instrument is issued or transferred as payment of, or as security for, an
antecedent claim against any person, whether or not the claim is due;
(4) The instrument is issued or transferred in exchange for a negotiable instrument; or
(5) The instrument is issued or transferred in exchange for the incurring of an irrevocable obligation to a third party by the person taking the instrument.
(b) "Consideration" means any consideration sufficient to support a simple contract.
The drawer or maker of an instrument has a defense if the instrument is issued without
consideration. If an instrument is issued for a promise of performance, the issuer has a
defense to the extent performance of the promise is due and the promise has not been
performed. If an instrument is issued for value as stated in subsection (a), the instrument
is also issued for consideration.
(1959, P.A. 133, S. 3-303; P.A. 91-304, S. 29.)
History: P.A. 91-304 substantially revised provisions re when an instrument is issued or transferred for value and added
Subsec. (b) re consideration.
Annotations to former statutes:
(1958 Rev., S. 39-26): Compromise of lawsuit is valid consideration. 70 C. 634; 76 C. 126. So is antecedent debt,
whether note taken in payment of or as security for it. 72 C. 581; 94 C. 607. Services incident to organization of a corporation
will sustain note of corporation. 73 C. 626. Forbearance on request of wife to sue husband good consideration for her note.
75 C. 91; 93 C. 359. Sale made in another state, which is valid there but would not be here, is good consideration. 80 C.
509. Transfer of note of third person in payment for stock, under agreement that seller shall collect it and remit any balance,
is a good consideration. 82 C. 585. Discharge of unliquidated liability good consideration. Id., 600. But surrender of forged
note is not a good consideration. 89 C. 592. Cited. 118 C. 118.
(1958 Rev., S. 39-27): Bona fide holder for value without notice and in due course may enforce note against maker
without regard to defects of title of prior parties. 118 C. 117.
(1958 Rev., S. 39-28): Endorsement of note of third party as collateral security gives endorsee a lien on the note. 77
C. 634.
Annotation to present section:
Cited. 242 C. 17.
Subdiv. (b):
Bank which provisionally credits deposit against overdrawn account gives "value;" deposit as "value" discussed. 33
CS 641.
Former Subdiv. (c):
Cited. 187 C. 637, 641.
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(1) On the day after the day demand for payment is duly made;
(2) If the instrument is a check, ninety days after its date; or
(3) If the instrument is not a check, when the instrument has been outstanding for
a period of time after its date which is unreasonably long under the circumstances of
the particular case in light of the nature of the instrument and usage of the trade.
(b) With respect to an instrument payable at a definite time the following rules
apply:
(1) If the principal is payable in installments and a due date has not been accelerated,
the instrument becomes overdue upon default under the instrument for nonpayment of
an installment, and the instrument remains overdue until the default is cured.
(2) If the principal is not payable in installments and the due date has not been
accelerated, the instrument becomes overdue on the day after the due date.
(3) If a due date with respect to principal has been accelerated, the instrument becomes overdue on the day after the accelerated due date.
(c) Unless the due date of principal has been accelerated, an instrument does not
become overdue if there is default in payment of interest but no default in payment of
principal.
(1959, P.A. 133, S. 3-304; P.A. 91-304, S. 30.)
History: P.A. 91-304 substantially revised provisions of former Subsecs. (3) and (4)(f) re overdue instruments and
deleted remainder of former provisions re when the purchaser has notice of a claim or defense.
See Sec. 42a-3-302(a)(1), 42a-3-302(a)(2)(iii), 42a-3-302(b) and 42a-3-307 for successor provisions to Sec. 42a-3-
304, revised to 1991, re when a purchaser has notice of a claim or defense.
Annotations to former statutes:
1958 Rev., S. 39-46: This presumption (re date of negotiation) is rebuttable. 105 C. 78.
1958 Rev., S. 39-56: Maker of note is not affected by usurious agreement between payee and pledgee. 91 C. 560.
Defense of usury is personal to debtor and to those in privity with him. Id., 560.
Cited. 16 CS 293; 18 CS 15.
1958 Rev., S. 39-57: Bad faith must be more than negligence. 42 C. 146; 54 C. 383; 106 C. 150. No presumption that
endorsee knew of fraud. 71 C. 61; id., 668. Knowledge of officer of bank taking note as to fraud not imputable to it, when.
72 C. 666; 79 C. 348. Facts consistent with valid title in endorser not enough to put endorsee on notice. 72 C. 576. If
endorsee has knowledge of such facts that his action amounts to bad faith, he cannot recover. 78 C. 184. Knowledge is
question of fact. 91 C. 263. Inadequacy of consideration as bearing on question of bad faith. 106 C. 150. Cited. 118 C.
117. No duty on purchaser of note to inquire into purpose for which it was given, or to maker's or endorser's responsibility,
or existence of possible defenses. 119 C. 371. Bank, which gives depositor draft for amount of account and later cashes it
after account has been garnisheed, is chargeable with knowledge of defect. 122 C. 171.
Cited. 16 CS 294; 18 CS 15. Notice does not have to be express from the face of the instrument. 19 CS 124.
Annotations to present section:
Cited. 182 C. 437, 442.
Where plaintiff bank had no notice of complaint of defendant as to performance by freezer-food company of underlying
contract at time it bought the note, this defense could not be raised against plaintiff, a payee holder in due course. 4 Conn.
Cir. Ct. 620. Cited. 5 Conn. Cir. Ct. 413.
Former Subsec. (4):
Former Subdiv. (e) cited. 185 C. 463, 472.
Subsec. (b):
Subdiv. (2) cited. 231 C. 441, 450.
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(1) A defense of the obligor based on (i) infancy of the obligor to the extent it is a
defense to a simple contract, (ii) duress, lack of legal capacity, or illegality of the transaction which, under other law, nullifies the obligation of the obligor, (iii) fraud that induced
the obligor to sign the instrument with neither knowledge nor reasonable opportunity
to learn of its character or its essential terms, or (iv) discharge of the obligor in insolvency
proceedings;
(2) A defense of the obligor stated in another section of this article or a defense of
the obligor that would be available if the person entitled to enforce the instrument were
enforcing a right to payment under a simple contract; and
(3) A claim in recoupment of the obligor against the original payee of the instrument
if the claim arose from the transaction that gave rise to the instrument; but the claim of
the obligor may be asserted against a transferee of the instrument only to reduce the
amount owing on the instrument at the time the action is brought.
(b) The right of a holder in due course to enforce the obligation of a party to pay
the instrument is subject to defenses of the obligor stated in subsection (a)(1), but is not
subject to defenses of the obligor stated in subsection (a)(2) or claims in recoupment
stated in subsection (a)(3) against a person other than the holder.
(c) Except as stated in subsection (d), in an action to enforce the obligation of a
party to pay the instrument, the obligor may not assert against the person entitled to
enforce the instrument a defense, claim in recoupment, or claim to the instrument, as
provided in section 42a-3-306, of another person, but the other person's claim to the
instrument may be asserted by the obligor if the other person is joined in the action and
personally asserts the claim against the person entitled to enforce the instrument. An
obligor is not obliged to pay the instrument if the person seeking enforcement of the
instrument does not have rights of a holder in due course and the obligor proves that
the instrument is a lost or stolen instrument.
(d) In an action to enforce the obligation of an accommodation party to pay an
instrument, the accommodation party may assert against the person entitled to enforce
the instrument any defense or claim in recoupment under subsection (a) that the accommodated party could assert against the person entitled to enforce the instrument, except
the defenses of discharge in insolvency proceedings, infancy and lack of legal capacity.
(1959, P.A. 133, S. 3-305; P.A. 91-304, S. 31; May Sp. Sess. P.A. 92-11, S. 16, 70.)
History: P.A. 91-304 substantially revised section; May Sp. Sess. P.A. 92-11 made a technical change in Subsec. (c).
See Sec. 42a-3-306 for successor provisions to Sec. 42a-3-305(1), revised to 1991, re claims to an instrument.
See Sec. 42a-3-601(b) for successor provisions to Sec. 42a-3-305(2)(e), revised to 1991, re effectiveness of discharge
against a holder in due course.
See Sec. 52-572g re defenses against holder in due course of instrument in consumer goods credit transaction.
Annotations to former statute (1958 Rev., S. 39-58):
Holder in due course may enforce payment against maker who was induced to sign through fraud or misrepresentation.
47 C. 347; 64 C. 61. Fraud of treasurer of manufacturing corporation in endorsing notes without authority, no defense. 71
C. 668; 72 C. 576. Fraud, unknown to holder, is no defense. 74 C. 198; 114 C. 699. Right of holder in due course to sue
on accommodation note taken after maturity. 77 C. 634. Certain circumstances indicating lack of good faith on part of
foreign bank attempting to collect drafts from acceptor in this state considered. 82 C. 24. Holder of note given without
consideration as collateral security can enforce only to extent of debt secured. 91 C. 562. Holder in due course of note
jointly endorsed may sue maker and endorsers jointly or separately. 101 C. 708. Cited. 97 C. 315; 105 C. 79. Applied. 106
C. 149. Quaere whether defense of usury is available against holder in due course. 126 C. 340. Subsection (2)(c) is a
codification of the common-law definition of fraud in the factum and as such it seems best that it be adopted for use in
case under the negotiable instruments law. 152 C. 474.
Cited. 18 CS 15.
Annotations to present section:
Cited. 205 C. 604, 612. Cited. 207 C. 483, 488. Cited. 217 C. 205, 214. Cited. 240 C. 10.
Defendants' failure to read terms of contracts they signed was real cause for their ignorance of terms of note they signed
payable to plaintiff, a holder in due course, and they had no defense under subsection (2) (c) of this section when sued
thereon. 4 Conn. Cir. Ct. 620.
Former Subsec. (2):
Cited. 187 C. 637, 640. Cited. 189 C. 591, 594.
Subsec. (a):
Subdiv. (2) cited. 231 C. 441, 451.
(Return to TOC) (Return to Chapters) (Return to Titles)
(1959, P.A. 133, S. 3-306; P.A. 91-304, S. 32.)
History: P.A. 91-304 revised former Subdiv. (a) re the claims to an instrument which a person not having the rights of
a holder in due course is subject to and deleted former Subdivs. (b), (c) and (d) re the defenses which a person not having
the rights of a holder in due course is subject to.
See Sec. 42a-3-305(a)(2) for successor provisions to Sec. 42a-3-306(b), revised to 1991, re defenses available in an
action on a simple contract.
See Secs. 42a-3-105(b), 42a-3-303(b) and 42a-3-305(a)(2) for successor provisions to Sec. 42a-3-306(c), revised to
1991, re defenses of want or failure of consideration, nonperformance of any condition precedent, nondelivery or delivery
for a special purpose.
See Sec. 42a-3-305(c) for successor provisions to Sec. 42a-3-306(d), revised to 1991, re defense that the instrument
was acquired by theft.
Annotations to former statutes:
(1958 Rev., S. 39-59): Defenses which may be made do not include matter arising out of collateral transactions. 70 C.
9. Fraudulent alteration and reissuance of note once paid is a defense. 89 C. 594. Defenses that endorsement was to give
credit and that receiver taking note did not act within authority, not available to him individually, where he endorsed
without qualification before delivery to purchaser for value. 124 C. 177. Cited. 139 C. 539.
Cited. 19 CS 124.
(1958 Rev., S. 39-60): Effect of this provision. 79 C. 348; 80 C. 60; 82 C. 333; 89 C. 128; id., 592; 105 C. 79. Burden
of proof that holder is not a holder in due course is on endorser contesting liability except when affected by this section.
92 C. 707; 102 C. 624. Position of signature of endorser as showing priority between several endorsers. 97 C. 315. Burden
is on holder bringing action to go forward with evidence; upon laying in note, burden of going forward shifts to defendant;
burden of proof is at all times on plaintiff. 111 C. 182; 118 C. 115. Allegation that plaintiff was owner and holder sufficient.
118 C. 115. Cited. 119 C. 370.
Cited. 18 CS 15; 19 CS 124; id., 406.
Annotations to present section:
Waiver of defense clause in consumer sales contract void as opposed to policy of this section. 158 C. 543. Cited. 207
C. 483, 491. Cited. 217 C. 205, 214. Cited. 240 C. 10.
Cited. 33 CS 641, 644, 645.
Former Subdiv. (b):
Cited. 207 C. 483, 491.
Former Subdiv. (d):
Cited. 205 C. 604. 613.
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(1) "Fiduciary" means an agent, trustee, partner, corporate officer or director, or
other representative owing a fiduciary duty with respect to an instrument.
(2) "Represented person" means the principal, beneficiary, partnership, limited liability company, corporation, or other person to whom the duty stated in paragraph (1)
is owed.
(b) If (i) an instrument is taken from a fiduciary for payment or collection or for
value, (ii) the taker has knowledge of the fiduciary status of the fiduciary, and (iii) the
represented person makes a claim to the instrument or its proceeds on the basis that the
transaction of the fiduciary is a breach of fiduciary duty, the following rules apply:
(1) Notice of breach of fiduciary duty by the fiduciary is notice of the claim of the
represented person.
(2) In the case of an instrument payable to the represented person or the fiduciary
as such, the taker has notice of the breach of fiduciary duty if the instrument is (i) taken
in payment of or as security for a debt known by the taker to be the personal debt of the
fiduciary, (ii) taken in a transaction known by the taker to be for the personal benefit of
the fiduciary, or (iii) deposited to an account other than an account of the fiduciary, as
such, or an account of the represented person.
(3) If an instrument is issued by the represented person or the fiduciary as such, and
made payable to the fiduciary personally, the taker does not have notice of the breach
of fiduciary duty unless the taker knows of the breach of fiduciary duty.
(4) If an instrument is issued by the represented person or the fiduciary as such, to
the taker as payee, the taker has notice of the breach of fiduciary duty if the instrument
is (i) taken in payment of or as security for a debt known by the taker to be the personal
debt of the fiduciary, (ii) taken in a transaction known by the taker to be for the personal
benefit of the fiduciary, or (iii) deposited to an account other than an account of the
fiduciary, as such, or an account of the represented person.
(1959, P.A. 133, S. 3-307; P.A. 91-304, S. 33; P.A. 95-79, S. 165, 189.)
History: P.A. 91-304 entirely replaced former provisions re burden of establishing signatures, defenses and holder in
due course status with provisions re notice of breach of fiduciary duty; P.A. 95-79 redefined "represented person" to include
a limited liability company, effective May 31, 1995.
See Sec. 42a-3-308 for successor provisions to Sec. 42-3-307, revised to 1991, re proof of signatures, defenses and
holder in due course status.
Annotations to former statute (1958 Rev., S. 39-17):
Understanding that absolute endorsement was to be without recourse cannot be shown by oral evidence under this
section. 92 C. 592. Proper remedy. Id., 593. This presumption is rebuttable. 105 C. 78.
Annotations to present section:
Cited. 230 C. 779, 788.
Cited. 33 CS 641, 644, 645.
Former Subsec. (1):
Special defense was sufficient to put effectiveness of signature in issue; furthermore, failure to object to evidence
waived any objection of variance or improper pleading; section 52-93 compared. 33 CS 654. Authority of agent to sign
note; burden of proof. Id.
Former Subsec. (2):
Cited. 182 C. 530, 531. Cited. 189 C. 591, 594.
Cited. 1 CA 162, 164.
Cited. 6 Conn. Cir. Ct. 547.
Former Subsec. (3):
Cited. 187 C. 637, 640. Cited. 189 C. 591, 594, 597. Cited. 242 C. 17.
Cited. 1 CA 162, 164. Cited. 4 CA 102, 105.
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(b) If the validity of signatures is admitted or proved and there is compliance with
subsection (a), a plaintiff producing the instrument is entitled to payment if the plaintiff
proves entitlement to enforce the instrument under section 42a-3-301, unless the defendant proves a defense or claim in recoupment. If a defense or claim in recoupment is
proved, the right to payment of the plaintiff is subject to the defense or claim, except
to the extent the plaintiff proves that the plaintiff has rights of a holder in due course
which are not subject to the defense or claim.
(P.A. 91-304, S. 34.)
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(b) A person seeking enforcement of an instrument under subsection (a) must prove
the terms of the instrument and the person's right to enforce the instrument. If that proof
is made, section 42a-3-308 applies to the case as if the person seeking enforcement had
produced the instrument. The court may not enter judgment in favor of the person seeking
enforcement unless it finds that the person required to pay the instrument is adequately
protected against loss that might occur by reason of a claim by another person to enforce
the instrument. Adequate protection may be provided by any reasonable means.
(P.A. 91-304, S. 35.)
Cited. 238 C. 745.
Cited. 44 CS 464.
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(b) Unless otherwise agreed and except as provided in subsection (a), if a note or
an uncertified check is taken for an obligation, the obligation is suspended to the same
extent the obligation would be discharged if an amount of money equal to the amount
of the instrument were taken, and the following rules apply:
(1) In the case of an uncertified check, suspension of the obligation continues until
dishonor of the check or until it is paid or certified. Payment or certification of the check
results in discharge of the obligation to the extent of the amount of the check.
(2) In the case of a note, suspension of the obligation continues until dishonor of
the note or until it is paid. Payment of the note results in discharge of the obligation to
the extent of the payment.
(3) Except as provided in paragraph (4), if the check or note is dishonored and the
obligee of the obligation for which the instrument was taken is the person entitled to
enforce the instrument, the obligee may enforce either the instrument or the obligation.
In the case of an instrument of a third person which is negotiated to the obligee by the
obligor, discharge of the obligor on the instrument also discharges the obligation.
(4) If the person entitled to enforce the instrument taken for an obligation is a person
other than the obligee, the obligee may not enforce the obligation to the extent the
obligation is suspended. If the obligee is the person entitled to enforce the instrument
but no longer has possession of it because it was lost, stolen, or destroyed, the obligation
may not be enforced to the extent of the amount payable on the instrument, and to
that extent the obligee's rights against the obligor are limited to enforcement of the
instrument.
(c) If an instrument other than one described in subsection (a) or (b) is taken for an
obligation, the effect is (i) that stated in subsection (a) if the instrument is one on which
a bank is liable as maker or acceptor, or (ii) that stated in subsection (b) in any other case.
(P.A. 91-304, S. 36.)
Subsec. (b):
Subdiv. (2) cited. 231 C. 441, 447.
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(b) Unless subsection (c) applies, the claim is discharged if the person against whom
the claim is asserted proves that the instrument or an accompanying written communication contained a conspicuous statement to the effect that the instrument was tendered
as full satisfaction of the claim.
(c) Subject to subsection (d), a claim is not discharged under subsection (b) if either
of the following applies:
(1) The claimant, if an organization, proves that (i) within a reasonable time before
the tender, the claimant sent a conspicuous statement to the person against whom the
claim is asserted that communications concerning disputed debts, including an instrument tendered as full satisfaction of a debt, are to be sent to a designated person, office,
or place, and (ii) the instrument or accompanying communication was not received by
that designated person, office, or place.
(2) The claimant, whether or not an organization, proves that within ninety days
after payment of the instrument, the claimant tendered repayment of the amount of the
instrument to the person against whom the claim is asserted. This paragraph does not
apply if the claimant is an organization that sent a statement complying with paragraph
(1)(i).
(d) A claim is discharged if the person against whom the claim is asserted proves
that within a reasonable time before collection of the instrument was initiated, the claimant, or an agent of the claimant having direct responsibility with respect to the disputed
obligation, knew that the instrument was tendered in full satisfaction of the claim.
(P.A. 91-304, S. 37.)
Cited. 236 C. 750, 765.
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(1) "Check" means a cashier's check, teller's check or certified check.
(2) "Claimant" means a person who claims the right to receive the amount of a
cashier's check, teller's check or certified check that was lost, destroyed or stolen.
(3) "Declaration of loss" means a written statement, made under penalty of perjury,
to the effect that (i) the declarer lost possession of a check, (ii) the declarer is the drawer
or payee of the check, in the case of a certified check, or the remitter or payee of the
check, in the case of a cashier's check or teller's check, (iii) the loss of possession was
not the result of a transfer by the declarer or a lawful seizure and (iv) the declarer cannot
reasonably obtain possession of the check because the check was destroyed, its whereabouts cannot be determined, or it is in the wrongful possession of an unknown person
or a person that cannot be found or is not amenable to service of process.
(4) "Obligated bank" means the issuer of a cashier's check or teller's check or the
acceptor of a certified check.
(b) A claimant may assert a claim to the amount of a check by a communication to the
obligated bank describing the check with reasonable certainty and requesting payment of
the amount of the check, if (i) the claimant is the drawer or payee of a certified check
or the remitter or payee of a cashier's check or teller's check, (ii) the communication
contains or is accompanied by a declaration of loss of the claimant with respect to the
check, (iii) the communication is received at a time and in a manner affording the bank
a reasonable time to act on it before the check is paid and (iv) the claimant provides
reasonable identification if requested by the obligated bank. Delivery of a declaration
of loss is a warranty of the truth of the statements made in the declaration. If a claim is
asserted in compliance with this subsection, the following rules apply:
(1) The claim becomes enforceable at the later of (i) the time the claim is asserted
or (ii) the ninetieth day following the date of the check, in the case of a cashier's check
or teller's check, or the ninetieth day following the date of the acceptance, in the case
of a certified check.
(2) Until the claim becomes enforceable, it has no legal effect and the obligated
bank may pay the check or, in the case of a teller's check, may permit the drawee to
pay the check. Payment to a person entitled to enforce the check discharges all liability
of the obligated bank with respect to the check.
(3) If the claim becomes enforceable before the check is presented for payment, the
obligated bank is not obliged to pay the check.
(4) When the claim becomes enforceable, the obligated bank becomes obliged to
pay the amount of the check to the claimant if payment of the check has not been made
to a person entitled to enforce the check. Subject to section 42a-4-302(a)(1), payment
to a claimant discharges all liability of the obligated bank with respect to the check.
(c) If the obligated bank pays the amount of a check to a claimant under subdivision
(4) of subsection (b) of this section and the check is presented for payment by a person
having rights of a holder in due course, the claimant is obliged to (i) refund the payment
to the obligated bank if the check is paid or (ii) pay the amount of the check to the person
having rights of a holder in due course if the check is dishonored.
(d) If a claimant has the right to assert a claim under subsection (b) of this section
and is also a person entitled to enforce a cashier's check, teller's check or certified check
which is lost, destroyed or stolen, the claimant may assert rights with respect to the
check either under this section or section 42a-3-309.
(P.A. 94-168.)
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LIABILITY OF PARTIES
(b) A signature may be made (i) manually or by means of a device or machine, and
(ii) by the use of any name, including a trade or assumed name, or by a word, mark, or
symbol executed or adopted by a person with present intention to authenticate a writing.
(1959, P.A. 133, S. 3-401; P.A. 91-304, S. 38.)
History: P.A. 91-304 replaced numeric Subsec. indicators with alphabetic Subsec. indicators, amended Subsec. (a) to
revise provisions and add provision re signature by agent or represented person and amended Subsec. (b) to revise provisions
and add provision authorizing a signature to be made manually or by means of a device or machine.
Cited. 32 CS 178.
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(b) If a representative signs the name of the representative to an instrument and the
signature is an authorized signature of the represented person, the following rules apply:
(1) If the form of the signature shows unambiguously that the signature is made on
behalf of the represented person who is identified in the instrument, the representative
is not liable on the instrument.
(2) Subject to subsection (c), if (i) the form of the signature does not show unambiguously that the signature is made in a representative capacity or (ii) the represented person
is not identified in the instrument, the representative is liable on the instrument to a
holder in due course that took the instrument without notice that the representative
was not intended to be liable on the instrument. With respect to any other person, the
representative is liable on the instrument unless the representative proves that the original parties did not intend the representative to be liable on the instrument.
(c) If a representative signs the name of the representative as drawer of a check
without indication of the representative status and the check is payable from an account
of the represented person who is identified on the check, the signer is not liable on the
check if the signature is an authorized signature of the represented person.
(1959, P.A. 133, S. 3-402; P.A. 91-304, S. 39.)
History: P.A. 91-304 entirely replaced former provisions re when a signature is an endorsement with provisions re
signature by a representative, a restatement of Sec. 42a-3-403, revised to 1991.
See Sec. 42a-3-204(a) for successor provisions to Sec. 42a-3-402, revised to 1991, re when a signature is an endorsement.
Annotations to former statute (1958 Rev., S. 39-64):
Effect of such endorsement prior to this act. 66 C. 462; 74 C. 309. This obligation cannot be varied by parol evidence.
79 C. 626. Applied. 97 C. 315. Cited. 111 C. 631. Liability of guarantor distinguished from that of endorser. 117 C. 21.
Annotations to present section:
Cited. 203 C. 394, 405.
Cited. 32 CS 178. Cited. 33 CS 181, 182.
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