2021 Colorado Code
Title 4 - Uniform Commercial Code
Article 3 - Negotiable Instruments
Part 1 - General Provisions and Definitions
§ 4-3-108. Payable on Demand or at Definite Time

1. 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.
2. 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.
3. 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.

History. Source: L. 94: Entire article R&RE, p. 845, § 1, effective January 1, 1995.

This section is similar to former §§ 4-3-108 and 4-3-109 as they existed prior to 1994.

This section is a restatement of former Section 3-108 and Section 3-109. Subsection (b) broadens former Section 3-109 somewhat by providing that a definite time includes a time readily ascertainable at the time the promise or order is issued. Subsection (b)(iii) and (iv) restates former Section 3-109(1)(d). It adopts the generally accepted rule that a clause providing for extension at the option of the holder, even without a time limit, does not affect negotiability since the holder is given only a right which the holder would have without the clause. If the extension is to be at the option of the maker or acceptor or is to be automatic, a definite time limit must be stated or the time of payment remains uncertain and the order or promise is not a negotiable instrument. If a definite time limit is stated, the effect upon certainty of time of payment is the same as if the instrument were made payable at the ultimate date with a term providing for acceleration.

I.GENERAL CONSIDERATION.

Annotator's note. The following annotations include cases decided under former provisions similar to this section.

A note fixing no date for payment is payable on demand, as provided by this section. Thompson v. Hilleweart, 137 Colo. 107 , 321 P.2d 623.

Suit may be filed and recovery had on a demand note without a formal demand, the filing of the suit constituting the demand. Thompson v. Hilleweart, 137 Colo. 107 , 321 P.2d 623 (1958).

Where notes are payable on demand, the statute of limitations commences to run on the date of execution of such note. Kirby v. Bourg, 165 Colo. 500 , 440 P.2d 151 (1968).

A note, secured by a chattel mortgage and payable “on demand after date”, but containing a marginal notation when signed stating that note is due at a date six months later, is not due after date of execution, since the marginal notation must be construed with the mortgage as to a creditor with notice. Whittier v. First Nat'l Bank, 73 Colo. 153 , 214 P. 536 (1923).

The words “temporary loan” following the word “due” do not fix a date for payment other than on demand, as such words are no part of the promise to pay, constituting nothing more than a reference for the holder, and, if omitted, would not impair or change the obligation. Thompson v. Hilleweart, 137 Colo. 107 , 321 P.2d 623 (1958).

When a promissory note is payable on a future event that does not occur, the note is payable within a reasonable time. People v. Garnett, 725 P.2d 1149 (Colo. 1986).

Applied in West Greeley Nat'l Bank v. Wygant, 650 P.2d 1339 (Colo. App. 1982).

II.ACCELERATION.

A negotiable instrument is not rendered nonnegotiable by provisions for an option of payment before maturity. Cowing v. Cloud, 16 Colo. App. 326, 65 P. 417 (1901).

Provision for acceleration of maturity for nonpayment of installments or interest is recognized as valid by this section. Axelson v. Dailey Coop. Co., 88 Colo. 555 , 298 P. 957 (1931).

Acceleration clauses premised upon default in payment are enforceable. Smith v. Certified Realty Corp., 41 Colo. App. 170, 585 P.2d 293 (1978), aff'd, 198 Colo. 222 , 597 P.2d 1043 (1979).

Notice is required only where provided. Where a promissory note provides for acceleration in default of installments or interest payments, the maker is not entitled to notice of such a demand unless specifically provided for. Hendron v. Bolander, 101 Colo. 414 , 74 P.2d 706 (1937).

Where a note contains an acceleration clause, the payee may waive this option by failing to exercise it or by accepting payments upon default in installments. Barday v. Steinbaugh, 130 Colo. 10 , 272 P.2d 657 (1954).

Where a note contains an acceleration clause, the payee may be estopped. Where on an installment note with an acceleration clause, payments are customarily made and accepted after they are due, the holder is estopped to take advantage of the acceleration clause upon the failure to pay the remaining balance on the due date. Ashback v. Wenzel, 141 Colo. 35 , 346 P.2d 295 (1959).

Acceleration clause in mortgage does not apply to note. A clause in a mortgage accelerating full payment of the principal upon failure to pay interest when due cannot be taken advantage of in an action on the note, inasmuch as such an acceleration clause accelerates the due date only in foreclosure proceedings. Spears v. Cook, 85 Colo. 318 , 275 P. 907 (1929).

No right to cure default in suit on note only. Where suit after default in payment is on the note only and the creditor does not bring an action to foreclose on the security, the acceleration clause in the note is enforceable, and the debtor has no statutory or equitable right to cure the money default. Smith v. Certified Realty Corp., 41 Colo. App. 170, 585 P.2d 293 (1978), aff'd, 198 Colo. 222 , 597 P.2d 1043 (1979).

III.EXTENSION.

Inclusion of an extension of time clause in a promissory note does not destroy the negotiable character of the note. Longmont Nat'l Bank v. Loukonen, 53 Colo. 489 , 127 P. 947 (1912).

Where a note provides for an indefinite extension at the uncontrolled discretion of the maker, it is nonnegotiable. United States v. General Res., Ltd., 204 F. Supp. 872 (D. Colo. 1962 ).

Burden of proof where payee extends. Where a note contains a clause providing that the maker will agree to an extension of time for payment and the payee executes an extension which tolls the statute of limitations, the payee has the burden of proving that the extension was made with the knowledge and consent of the maker. Am. Medical & Dental Ass'n v. Grant, 87 Colo. 183 , 285 P. 1099 (1930).

Between the maker and payee of a note, an oral agreement for extending the time of payment is enforceable; such agreement is supported by sufficient consideration by a promise to pay interest during the time of extension. Drescher v. Fulham, 11 Colo. App. 62, 52 P. 685 (1898).

An oral agreement for extending the time of payment releases the surety from his obligation. Drescher v. Fulham, 11 Colo. App. 62, 52 P. 685 (1898).