2007 California Commercial Code Chapter 1. General Provisions And Definitions

CA Codes (com:3101-3119)

3101.  This division may be cited as Uniform Commercial
Code--Negotiable Instruments.



3102.  (a) This division applies to negotiable instruments.  It does
not apply to money, to payment orders governed by Division 11
(commencing with Section 11101), or to securities governed by
Division 8 (commencing with Section 8101).
   (b) If there is conflict between this division and Division 4
(commencing with Section 4101) or Division 9 (commencing with Section
9101), Divisions 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 division to the extent of the
inconsistency.


3103.  (a) In this division:
   (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) (Reserved)
   (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
division or Division 4 (commencing with Section 4101).
   (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 (paragraph (8) of subdivision (b) of Section
1201).
   (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 division and the sections
in which they appear are:


"Acceptance"                      Section 3409
"Accommodated party"              Section 3419
"Accommodation party"             Section 3419
"Alteration"                      Section 3407
"Anomalous endorsement"           Section 3205
"Blank endorsement"               Section 3205
"Cashier's check"                 Section 3104
"Certificate of deposit"          Section 3104
"Certified check"                 Section 3409
"Check"                           Section 3104
"Consideration"                   Section 3303
"Demand Draft"                      Section
                                         3104
"Draft"                           Section 3104
"Holder in due course"            Section 3302
"Incomplete instrument"           Section 3115
"Indorsement"                     Section 3204
"Indorser"                        Section 3204
"Instrument"                      Section 3104
"Issue"                           Section 3105
"Issuer"                          Section 3105
"Negotiable instrument"           Section 3104
"Negotiation"                     Section 3201
"Note"                            Section 3104
"Payable at a definite time"      Section 3108
"Payable on demand"                 Section
                                         3108
"Payable to bearer"               Section 3109
"Payable to order"                Section 3109
"Payment"                         Section 3602
"Person entitled to enforce"      Section 3301
"Presentment"                     Section 3501
"Reacquisition"                   Section 3207
"Special indorsement"             Section 3205
"Teller's check"                  Section 3104
"Transfer of       instrument"    Section 3203
"Traveler's check"                Section 3104
"Value"                           Section 3303

   (c) The following definitions in other divisions apply to this
division:


"Bank"                            Section 4105
"Banking day"                     Section 4104
"Clearinghouse"                   Section 4104
"Collecting bank"                 Section 4105
"Depositary bank"                 Section 4105
"Documentary draft"               Section 4104
"Intermediary bank"               Section 4105
"Item"                            Section 4104
"Payor bank"                        Section
                                         4105
"Suspends payments"               Section 4104

   (d) In addition, Division 1 (commencing with Section 1101)
contains general definitions and principles of construction and
interpretation applicable throughout this division.



3104.  (a) Except as provided in subdivisions (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 is all of the
following:
   (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.
   (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 subdivision
(a), except paragraph (1), and otherwise falls within the definition
of "check" in subdivision (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 division.
   (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 (1) a draft, other than a documentary draft,
payable on demand and drawn on a bank, (2) a cashier's check or
teller's check, or (3) a demand draft.  An instrument may be a check
even though it is described on its face by another term, such as
"money order."
   (g) "Cashier's check" means a draft with respect to which the
drawer and drawee are the same bank or branches of the same bank.
   (h) "Teller's check" means a draft drawn by a bank (1) on another
bank, or (2) payable at or through a bank.
   (i) "Traveler's check" means an instrument that (1) is payable on
demand, (2) is drawn on or payable at or through a bank, (3) is
designated by the term "traveler's check" or by a substantially
similar term, and (4) requires, as a condition to payment, a
countersignature by a person whose specimen signature appears on the
instrument.
   (j) "Certificate of deposit" means an instrument containing an
acknowledgment by a bank that a sum of money has been received by the
bank and a promise by the bank to repay the sum of money.  A
certificate of deposit is a note of the bank.
   (k) "Demand draft" means a writing not signed by a customer that
is created by a third party under the purported authority of the
customer for the purpose of charging the customer's account with a
bank.  A demand draft shall contain the customer's account number and
may contain any or all of the following:
   (1) The customer's printed or typewritten name.
   (2) A notation that the customer authorized the draft.
   (3) The statement "No Signature Required" or words to that effect.

   A demand draft shall not include a check purportedly drawn by and
bearing the signature of a fiduciary, as defined in paragraph (1) of
subdivision (a) of Section 3307.



3105.  (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.


3106.  (a) Except as provided in this section, for the purposes of
subdivision (a) of Section 3104, a promise or order is unconditional
unless it states (1) an express condition to payment, (2) that the
promise or order is subject to or governed by another writing, or (3)
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.
   (b) A promise or order is not made conditional (1) by a reference
to another writing for a statement of rights with respect to
collateral, prepayment, or acceleration, or (2) 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 subdivision (a) of Section 3104.  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
subdivision (a) of Section 3104; but if the promise or order is an
instrument, there cannot be a holder in due course of the instrument.



3107.  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.




3108.  (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 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.



3109.  (a) A promise or order is payable to bearer if it is any of
the following:
   (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.
   (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 (1) to the order of an identified person or
(2) 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 subdivision
(a) of Section 3205.  An instrument payable to an identified person
may become payable to bearer if it is indorsed in blank pursuant to
subdivision (b) of Section 3205.



3110.  (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.
   (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:
   (A) 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.
   (B) 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.
   (C) 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.
   (D) 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.



3111.  Except as otherwise provided for items in Division 4
(commencing with Section 4101), 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.



3112.  (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.



3113.  (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 subdivision (c) of
Section 4401, 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.


3114.  If an instrument contains contradictory terms, typewritten
terms prevail over printed terms, handwritten terms prevail over
both, and words prevail over numbers.



3115.  (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 subdivision (c), if an incomplete instrument is an
instrument under Section 3104, 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 3104, but, after completion, the requirements of
Section 3104 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 3407.
   (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.



3116.  (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 subdivision (e) of Section 3419 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 subdivision (b) of a party having the same joint and several
liability to receive contribution from the party discharged.



3117.  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.



3118.  (a) Except as provided in subdivision (e), an action to
enforce the obligation of a party to pay a note payable at a definite
time shall 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.
   (b) Except as provided in subdivision (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 shall 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 10 years.
   (c) Except as provided in subdivision (d), an action to enforce
the obligation of a party to an unaccepted draft to pay the draft
shall be commenced within three years after dishonor of the draft or
10 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 shall 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 shall 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, shall be commenced (1)
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 (2) 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 (1) for conversion of an instrument, for
money had and received, or like action based on conversion, (2) for
breach of warranty, or (3) to enforce an obligation, duty, or right
arising under this division and not governed by this section shall be
commenced within three years after the cause of action accrues.



3119.  In an action for breach of an obligation for which a third
person is answerable over pursuant to this division or Division 4
(commencing with Section 4101), 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 (1) that the person notified may come in and
defend and (2) 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.