reglab/statecodes huggingface dataset:
2023 Texas Statutes › Business and Commerce Code › Title 1 - Uniform Commercial Code › Chapter 3 - Negotiable Instruments › Subchapter A. General Provisions and Definitions › Section 3.102. Subject Matter

Sec. 3.102.  SUBJECT MATTER.  (a)  This chapter applies to negotiable instruments.  It does not apply to money, to payment orders governed by Chapter 4A, or to securities governed by Chapter 8.
(b)  If there is conflict between this chapter and Chapter 4 or 9, Chapters 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 chapter to the extent of the inconsistency.
Amended by Acts 1995, 74th Leg., ch. 921, Sec. 1, eff. Jan. 1, 1996.
2023 Texas Statutes › Business and Commerce Code › Title 1 - Uniform Commercial Code › Chapter 3 - Negotiable Instruments › Subchapter A. General Provisions and Definitions › Section 3.105. Issue of Instrument

Sec. 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.
(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.
Amended by Acts 1995, 74th Leg., ch. 921, Sec. 1, eff. Jan. 1, 1996.
2023 Texas Statutes › Business and Commerce Code › Title 1 - Uniform Commercial Code › Chapter 3 - Negotiable Instruments › Subchapter A. General Provisions and Definitions › Section 3.106. Unconditional Promise or Order

Sec. 3.106.  UNCONDITIONAL PROMISE OR ORDER.  (a)  Except as provided in this section, for the purposes of Section 3.104(a), a promise or order is unconditional unless it states (i) an express condition to payment, (ii) that the promise or order is subject to or governed by another record, or (iii) that rights or obligations with respect to the promise or order are stated in another record.  A reference to another record does not of itself make the promise or order conditional.
(b)  A promise or order is not made conditional (i) by a reference to another record 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 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 3.104(a);  but if the promise or order is an instrument, there cannot be a holder in due course of the instrument.
Amended by Acts 1995, 74th Leg., ch. 921, Sec. 1, eff. Jan. 1, 1996.
Amended by:
Acts 2005, 79th Leg., Ch. 95 (S.B. 1563), Sec. 3, eff. September 1, 2005.
2023 Texas Statutes › Business and Commerce Code › Title 1 - Uniform Commercial Code › Chapter 3 - Negotiable Instruments › Subchapter A. General Provisions and Definitions › Section 3.107. Instrument Payable in Foreign Money

Sec. 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.
Amended by Acts 1995, 74th Leg., ch. 921, Sec. 1, eff. Jan. 1, 1996.
2023 Texas Statutes › Business and Commerce Code › Title 1 - Uniform Commercial Code › Chapter 3 - Negotiable Instruments › Subchapter A. General Provisions and Definitions › Section 3.108. Payable on Demand or at Definite Time

Sec. 3.108.  PAYABLE ON DEMAND OR AT DEFINITE TIME.  (a)  A promise or order is "payable on demand" if it:
(1)  states that it is payable on demand or at sight, or otherwise indicates that it is payable at the will of the holder;  or
(2)  does not state any time of payment.
(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:
(1)  prepayment;
(2)  acceleration;
(3)  extension at the option of the holder;  or
(4)  extension to a further definite time at the option of the maker or acceptor or automatically on or after a specified act or event.
(c)  If an instrument, payable at a fixed date, is also payable on 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.
Amended by Acts 1995, 74th Leg., ch. 921, Sec. 1, eff. Jan. 1, 1996.
2023 Texas Statutes › Business and Commerce Code › Title 1 - Uniform Commercial Code › Chapter 3 - Negotiable Instruments › Subchapter A. General Provisions and Definitions › Section 3.109. Payable to Bearer or to Order

Sec. 3.109.  PAYABLE TO BEARER OR TO ORDER.  (a)  A promise or order is payable to bearer if it:
(1)  states that it is payable to bearer or to the order of bearer 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 indorsed pursuant to Section 3.205(a).  An instrument payable to an identified person may become payable to bearer if it is indorsed in blank pursuant to Section 3.205(b).
Amended by Acts 1995, 74th Leg., ch. 921, Sec. 1, eff. Jan. 1, 1996.
2023 Texas Statutes › Business and Commerce Code › Title 1 - Uniform Commercial Code › Chapter 3 - Negotiable Instruments › Subchapter A. General Provisions and Definitions › Section 3.111. Place of Payment

Sec. 3.111.  PLACE OF PAYMENT.  Except as otherwise provided for items in Chapter 4, an instrument is payable at the place of payment stated in the instrument.  If no place 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.
Amended by Acts 1995, 74th Leg., ch. 921, Sec. 1, eff. Jan. 1, 1996.
2023 Texas Statutes › Business and Commerce Code › Title 1 - Uniform Commercial Code › Chapter 3 - Negotiable Instruments › Subchapter A. General Provisions and Definitions › Section 3.112. Interest

Sec. 3.112.  INTEREST.  (a)  Unless otherwise provided in the instrument:
(1)  an instrument is not payable with interest;  and
(2)  interest on an interest-bearing instrument is payable from the date of the instrument.
(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, and the instrument shall not by virtue of this sentence be considered to violate the provisions of Title 4, Finance Code.
Amended by Acts 1995, 74th Leg., ch. 921, Sec. 1, eff. Jan. 1, 1996;  Acts 1999, 76th Leg., ch. 62, Sec. 7.45, eff. Sept. 1, 1999.
2023 Texas Statutes › Business and Commerce Code › Title 1 - Uniform Commercial Code › Chapter 3 - Negotiable Instruments › Subchapter A. General Provisions and Definitions › Section 3.113. Date of Instrument

Sec. 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 4.401(c), an instrument payable on demand is not payable before the date of the instrument.
(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.
Amended by Acts 1995, 74th Leg., ch. 921, Sec. 1, eff. Jan. 1, 1996.
2023 Texas Statutes › Business and Commerce Code › Title 1 - Uniform Commercial Code › Chapter 3 - Negotiable Instruments › Subchapter A. General Provisions and Definitions › Section 3.114. Contradictory Terms of Instrument

Sec. 3.114.  CONTRADICTORY TERMS OF INSTRUMENT.  If an instrument contains contradictory terms, typewritten terms prevail over printed terms, handwritten terms prevail over both, and words prevail over numbers.
Amended by Acts 1995, 74th Leg., ch. 921, Sec. 1, eff. Jan. 1, 1996.
2023 Texas Statutes › Business and Commerce Code › Title 1 - Uniform Commercial Code › Chapter 3 - Negotiable Instruments › Subchapter A. General Provisions and Definitions › Section 3.115. Incomplete Instrument

Sec. 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.
(b)  Subject to Subsection (c), if an incomplete instrument is an instrument under Section 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 3.104, but, after completion, the requirements of Section 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 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.
Amended by Acts 1995, 74th Leg., ch. 921, Sec. 1, eff. Jan. 1, 1996.
2023 Texas Statutes › Business and Commerce Code › Title 1 - Uniform Commercial Code › Chapter 3 - Negotiable Instruments › Subchapter A. General Provisions and Definitions › Section 3.116. Joint and Several Liability; Contribution

Sec. 3.116.  JOINT AND SEVERAL LIABILITY;  CONTRIBUTION.  (a)  Except as otherwise provided in the instrument, two or more persons who have the same liability on an instrument as makers, drawers, acceptors, indorsers who indorse as joint payees, or anomalous indorsers are jointly and severally liable in the capacity in which they sign.
(b)  Except as provided in Section 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)  Repealed by Acts 2005, 79th Leg., Ch. 95, Sec. 21, eff. September 1, 2005.
Amended by Acts 1995, 74th Leg., ch. 921, Sec. 1, eff. Jan. 1, 1996.
Amended by:
Acts 2005, 79th Leg., Ch. 95 (S.B. 1563), Sec. 21, eff. September 1, 2005.
2023 Texas Statutes › Business and Commerce Code › Title 1 - Uniform Commercial Code › Chapter 3 - Negotiable Instruments › Subchapter A. General Provisions and Definitions › Section 3.117. Other Agreements Affecting Instrument

Sec. 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.
Amended by Acts 1995, 74th Leg., ch. 921, Sec. 1, eff. Jan. 1, 1996.
2023 Texas Statutes › Business and Commerce Code › Title 1 - Uniform Commercial Code › Chapter 3 - Negotiable Instruments › Subchapter A. General Provisions and Definitions › Section 3.119. Notice of Right to Defend Action

Sec. 3.119.  NOTICE OF RIGHT TO DEFEND ACTION.  In an action for breach of an obligation for which a third person is answerable over pursuant to this chapter or Chapter 4, the defendant may give the third person notice of the litigation in a record, 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.
Amended by Acts 1995, 74th Leg., ch. 921, Sec. 1, eff. Jan. 1, 1996.
Amended by:
Acts 2005, 79th Leg., Ch. 95 (S.B. 1563), Sec. 4, eff. September 1, 2005.
2023 Texas Statutes › Business and Commerce Code › Title 1 - Uniform Commercial Code › Chapter 3 - Negotiable Instruments › Subchapter B. Negotiation, Transfer, and Indorsement › Section 3.201. Negotiation

Sec. 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.
(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 indorsement by the holder.  If an instrument is payable to bearer, it may be negotiated by transfer of possession alone.
Amended by Acts 1995, 74th Leg., ch. 921, Sec. 1, eff. Jan. 1, 1996.
2023 Texas Statutes › Business and Commerce Code › Title 1 - Uniform Commercial Code › Chapter 3 - Negotiable Instruments › Subchapter B. Negotiation, Transfer, and Indorsement › Section 3.202. Negotiation Subject to Rescission

Sec. 3.202.  NEGOTIATION SUBJECT TO RESCISSION.  (a)  Negotiation is effective even if obtained:
(1)  from an infant, a corporation exceeding its powers, or a person without capacity;
(2)  by fraud, duress, or mistake;  or
(3)  in breach of duty or as part of an illegal transaction.
(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.
Amended by Acts 1995, 74th Leg., ch. 921, Sec. 1, eff. Jan. 1, 1996.
2023 Texas Statutes › Business and Commerce Code › Title 1 - Uniform Commercial Code › Chapter 3 - Negotiable Instruments › Subchapter B. Negotiation, Transfer, and Indorsement › Section 3.203. Transfer of Instrument; Rights Acquired by Transfer

Sec. 3.203.  TRANSFER OF INSTRUMENT;  RIGHTS ACQUIRED BY TRANSFER.  (a)  An instrument is transferred when it is delivered by a person other than its issuer for the purpose of giving to the person receiving delivery the right to enforce the instrument.
(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.  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 indorsement by the transferor, the transferee has a specifically enforceable right to the unqualified indorsement of the transferor, but negotiation of the instrument does not occur until the indorsement 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 chapter and has only the rights of a partial assignee.
Amended by Acts 1995, 74th Leg., ch. 921, Sec. 1, eff. Jan. 1, 1996.
2023 Texas Statutes › Business and Commerce Code › Title 1 - Uniform Commercial Code › Chapter 3 - Negotiable Instruments › Subchapter B. Negotiation, Transfer, and Indorsement › Section 3.204. Indorsement

Sec. 3.204.  INDORSEMENT.  (a)  "Indorsement" means a signature, other than that of a signer as maker, drawer, or acceptor, that alone or accompanied by other words is made on an instrument for the purpose of (i) negotiating the instrument, (ii) restricting payment of the instrument, or (iii) incurring indorser's liability on the instrument, but regardless of the intent of the signer, a signature and its accompanying words is an indorsement 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 indorsement.  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.
(b)  "Indorser" means a person who makes an indorsement.
(c)  For the purpose of determining whether the transferee of an instrument is a holder, an indorsement that transfers a security interest in the instrument is effective as an unqualified indorsement of the instrument.
(d)  If an instrument is payable to a holder under a name that is not the name of the holder, indorsement 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.
Amended by Acts 1995, 74th Leg., ch. 921, Sec. 1, eff. Jan. 1, 1996.
2023 Texas Statutes › Business and Commerce Code › Title 1 - Uniform Commercial Code › Chapter 3 - Negotiable Instruments › Subchapter B. Negotiation, Transfer, and Indorsement › Section 3.205. Special Indorsement; Blank Indorsement; Anomalous Indorsement

Sec. 3.205.  SPECIAL INDORSEMENT;  BLANK INDORSEMENT;  ANOMALOUS INDORSEMENT.  (a)  If an indorsement is made by the holder of an instrument, whether payable to an identified person or payable to bearer, and the indorsement identifies a person to whom it makes the instrument payable, it is a "special indorsement."  When specially indorsed, an instrument becomes payable to the identified person and may be negotiated only by the indorsement of that person.  The principles stated in Section 3.110 apply to special indorsements.
(b)  If an indorsement is made by the holder of an instrument and it is not a special indorsement, it is a "blank indorsement."  When indorsed in blank, an instrument becomes payable to bearer and may be negotiated by transfer of possession alone until specially indorsed.
(c)  The holder may convert a blank indorsement that consists only of a signature into a special indorsement by writing, above the signature of the indorser, words identifying the person to whom the instrument is made payable.
(d)  "Anomalous indorsement" means an indorsement made by a person who is not the holder of the instrument.  An anomalous indorsement does not affect the manner in which the instrument may be negotiated.
Amended by Acts 1995, 74th Leg., ch. 921, Sec. 1, eff. Jan. 1, 1996.
2023 Texas Statutes › Business and Commerce Code › Title 1 - Uniform Commercial Code › Chapter 3 - Negotiable Instruments › Subchapter B. Negotiation, Transfer, and Indorsement › Section 3.207. Reacquisition

Sec. 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 indorsements 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 indorser whose indorsement is canceled is discharged, and the discharge is effective against any subsequent holder.
Amended by Acts 1995, 74th Leg., ch. 921, Sec. 1, eff. Jan. 1, 1996.
2023 Texas Statutes › Business and Commerce Code › Title 1 - Uniform Commercial Code › Chapter 3 - Negotiable Instruments › Subchapter C. Enforcement of Instruments › Section 3.301. Person Entitled to Enforce Instrument

Sec. 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 3.309 or 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.
Amended by Acts 1995, 74th Leg., ch. 921, Sec. 1, eff. Jan. 1, 1996.
2023 Texas Statutes › Business and Commerce Code › Title 1 - Uniform Commercial Code › Chapter 3 - Negotiable Instruments › Subchapter C. Enforcement of Instruments › Section 3.302. Holder in Due Course

Sec. 3.302.  HOLDER IN DUE COURSE.  (a)  Subject to Subsection (c) and Section 3.106(d), "holder in due course" means the holder of an instrument if:
(1)  the instrument when issued or 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:
(A)  for value;
(B)  in good faith;
(C)  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;
(D)  without notice that the instrument contains an unauthorized signature or has been altered;
(E)  without notice of any claim to the instrument described in Section 3.306;  and
(F)  without notice that any party has a defense or claim in recoupment described in Section 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:
(1)  by legal process or by purchase in an execution, bankruptcy, or creditor's sale or similar proceeding;
(2)  by purchase as part of a bulk transaction not in ordinary course of business of the transferor;  or
(3)  as the successor in interest to an estate or other organization.
(d)  If, under Section 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 that, 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.
Amended by Acts 1995, 74th Leg., ch. 921, Sec. 1, eff. Jan. 1, 1996.
2023 Texas Statutes › Business and Commerce Code › Title 1 - Uniform Commercial Code › Chapter 3 - Negotiable Instruments › Subchapter C. Enforcement of Instruments › Section 3.303. Value and Consideration

Sec. 3.303.  VALUE AND CONSIDERATION.  (a)  An instrument is issued or transferred for value if:
(1)  the instrument is issued or transferred for a promise of performance, to the extent 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.
Amended by Acts 1995, 74th Leg., ch. 921, Sec. 1, eff. Jan. 1, 1996.
2023 Texas Statutes › Business and Commerce Code › Title 1 - Uniform Commercial Code › Chapter 3 - Negotiable Instruments › Subchapter C. Enforcement of Instruments › Section 3.304. Overdue Instrument

Sec. 3.304.  OVERDUE INSTRUMENT.  (a)  An instrument payable on demand becomes overdue at the earliest of the following times:
(1)  on the day after the day demand for payment is duly made;
(2)  if the instrument is a check, 90 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 that 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 on 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;  and
(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.
Amended by Acts 1995, 74th Leg., ch. 921, Sec. 1, eff. Jan. 1, 1996.
2023 Texas Statutes › Business and Commerce Code › Title 1 - Uniform Commercial Code › Chapter 3 - Negotiable Instruments › Subchapter C. Enforcement of Instruments › Section 3.306. Claims to an Instrument

Sec. 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.
Amended by Acts 1995, 74th Leg., ch. 921, Sec. 1, eff. Jan. 1, 1996.
2023 Texas Statutes › Business and Commerce Code › Title 1 - Uniform Commercial Code › Chapter 3 - Negotiable Instruments › Subchapter C. Enforcement of Instruments › Section 3.307. Notice of Breach of Fiduciary Duty

Sec. 3.307.  NOTICE OF BREACH OF FIDUCIARY DUTY.  (a)  In this section:
(1)  "Fiduciary" means an agent, trustee, partner, corporate officer or director, or other representative owing a fiduciary duty with respect to an instrument.
(2)  "Represented person" means the principal, beneficiary, partnership, corporation, or other person to whom the duty stated in Subdivision (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:
(A)  taken in payment of or as security for a debt known by the taker to be the personal debt of the fiduciary;
(B)  taken in a transaction known by the taker to be for the personal benefit of the fiduciary;  or
(C)  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;  and
(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:
(A)  taken in payment of or as security for a debt known by the taker to be the personal debt of the fiduciary;
(B)  taken in a transaction known by the taker to be for the personal benefit of the fiduciary;  or
(C)  deposited to an account other than an account of the fiduciary, as such, or an account of the represented person.
Amended by Acts 1995, 74th Leg., ch. 921, Sec. 1, eff. Jan. 1, 1996.
2023 Texas Statutes › Business and Commerce Code › Title 1 - Uniform Commercial Code › Chapter 3 - Negotiable Instruments › Subchapter C. Enforcement of Instruments › Section 3.308. Proof of Signatures and Status as Holder in Due Course

Sec. 3.308.  PROOF OF SIGNATURES AND STATUS AS HOLDER IN DUE COURSE.  (a)  In an action with respect to an instrument, the authenticity of, and authority to make, each signature on the instrument are admitted unless specifically 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 3.402(a).
(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 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 that are not subject to the defense or claim.
Added by Acts 1995, 74th Leg., ch. 921, Sec. 1, eff. Jan. 1, 1996.
2023 Texas Statutes › Business and Commerce Code › Title 1 - Uniform Commercial Code › Chapter 3 - Negotiable Instruments › Subchapter C. Enforcement of Instruments › Section 3.309. Enforcement of Lost, Destroyed, or Stolen Instrument

Sec. 3.309.  ENFORCEMENT OF LOST, DESTROYED, OR STOLEN INSTRUMENT.  (a)  A person who is not in possession of an instrument is entitled to enforce the instrument if:
(1)  the person seeking to enforce the instrument:
(A)  was entitled to enforce the instrument when loss of possession occurred; or
(B)  has directly or indirectly acquired ownership of the instrument from a person who was entitled to enforce the instrument when loss of possession occurred;
(2)  the loss of possession was not the result of a transfer by the person or a lawful seizure; and
(3)  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.
(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 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.
Added by Acts 1995, 74th Leg., ch. 921, Sec. 1, eff. Jan. 1, 1996.
Amended by:
Acts 2005, 79th Leg., Ch. 95 (S.B. 1563), Sec. 6, eff. September 1, 2005.
2023 Texas Statutes › Business and Commerce Code › Title 1 - Uniform Commercial Code › Chapter 3 - Negotiable Instruments › Subchapter C. Enforcement of Instruments › Section 3.310. Effect of Instrument on Obligation for Which Taken

Sec. 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 indorser of the instrument.
(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 Subdivision (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 that 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:
(1)  that stated in Subsection (a) if the instrument is one for which a bank is liable as maker or acceptor;  or
(2)  that stated in Subsection (b) in any other case.
Added by Acts 1995, 74th Leg., ch. 921, Sec. 1, eff. Jan. 1, 1996.
2023 Texas Statutes › Business and Commerce Code › Title 1 - Uniform Commercial Code › Chapter 3 - Negotiable Instruments › Subchapter C. Enforcement of Instruments › Section 3.311. Accord and Satisfaction by Use of Instrument

Sec. 3.311.  ACCORD AND SATISFACTION BY USE OF INSTRUMENT.  (a)  Subsections (b)-(d) apply if a person against whom a claim is asserted proves that:
(1)  that person in good faith tendered an instrument to the claimant as full satisfaction of the claim;
(2)  the amount of the claim was unliquidated or subject to a bona fide dispute;  and
(3)  the claimant obtained payment of the instrument.
(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:
(A)  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
(B)  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 90 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 subdivision does not apply if the claimant is an organization that sent a statement complying with Subdivision (1)(A).
(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.
Added by Acts 1995, 74th Leg., ch. 921, Sec. 1, eff. Jan. 1, 1996.
2023 Texas Statutes › Business and Commerce Code › Title 1 - Uniform Commercial Code › Chapter 3 - Negotiable Instruments › Subchapter D. Liability of Parties › Section 3.401. Signature

Sec. 3.401.  SIGNATURE.  (a)  A person is not liable on an instrument unless the person:
(1)  signed the instrument;  or
(2)  is represented by an agent or representative who signed the instrument and the signature is binding on the represented person under Section 3.402.
(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.
Amended by Acts 1995, 74th Leg., ch. 921, Sec. 1, eff. Jan. 1, 1996.
2023 Texas Statutes › Business and Commerce Code › Title 1 - Uniform Commercial Code › Chapter 3 - Negotiable Instruments › Subchapter D. Liability of Parties › Section 3.402. Signature by Representative

Sec. 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.
(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), 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 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.  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.
Amended by Acts 1995, 74th Leg., ch. 921, Sec. 1, eff. Jan. 1, 1996.
2023 Texas Statutes › Business and Commerce Code › Title 1 - Uniform Commercial Code › Chapter 3 - Negotiable Instruments › Subchapter D. Liability of Parties › Section 3.403. Unauthorized Signature

Sec. 3.403.  UNAUTHORIZED SIGNATURE.  (a)  Unless otherwise provided in this chapter or Chapter 4, an unauthorized signature is ineffective except as the signature of the unauthorized signer in favor of a person who in good faith pays the instrument or takes it for value.  An unauthorized signature may be ratified for all purposes of this chapter.
(b)  If the signature of more than one person is required to constitute the authorized signature of an organization, the signature of the organization is unauthorized if one of the required signatures is lacking.
(c)  The civil or criminal liability of a person who makes an unauthorized signature is not affected by any provision of this chapter that makes the unauthorized signature effective for the purposes of this chapter.
Amended by Acts 1995, 74th Leg., ch. 921, Sec. 1, eff. Jan. 1, 1996.
2023 Texas Statutes › Business and Commerce Code › Title 1 - Uniform Commercial Code › Chapter 3 - Negotiable Instruments › Subchapter D. Liability of Parties › Section 3.404. Impostors; Fictitious Payees

Sec. 3.404.  IMPOSTORS;  FICTITIOUS PAYEES.  (a)  If an impostor, by use of the mails or otherwise, induces the issuer of an instrument to issue the instrument to the impostor, or to a person acting in concert with the impostor, by impersonating the payee of the instrument or a person authorized to act for the payee, an indorsement of the instrument by any person in the name of the payee is effective as the indorsement of the payee in favor of a person who, in good faith, pays the instrument or takes it for value or for collection.
(b)  If (i) a person whose intent determines to whom an instrument is payable (Section 3.110(a) or (b)) does not intend the person identified as payee to have any interest in the instrument, or (ii) the person identified as payee of an instrument is a fictitious person, the following rules apply until the instrument is negotiated by special indorsement:
(1)  Any person in possession of the instrument is its holder.
(2)  An indorsement by any person in the name of the payee stated in the instrument is effective as the indorsement of the payee in favor of a person who, in good faith, pays the instrument or takes it for value or for collection.
(c)  Under Subsection (a) or (b), an indorsement is made in the name of a payee if:
(1)  it is made in a name substantially similar to that of the payee;  or
(2)  the instrument, whether or not indorsed, is deposited in a depositary bank to an account in a name substantially similar to that of the payee.
(d)  With respect to an instrument to which Subsection (a) or (b) applies, if a person paying the instrument or taking it for value or for collection fails to exercise ordinary care in paying or taking the instrument and that failure contributes to loss resulting from payment of the instrument, the person bearing the loss may recover from the person failing to exercise ordinary care to the extent the failure to exercise ordinary care contributed to the loss.
Amended by Acts 1995, 74th Leg., ch. 921, Sec. 1, eff. Jan. 1, 1996.