Statutes > Illinois Statutes > CHAPTER 810 COMMERCIAL CODE > 810 ILCS 5/ Uniform Commercial Code. > Part 1 - General Provisions And Definitions

Part 1 - General Provisions And Definitions


      (810 ILCS 5/Art. 3 Pt. 1 heading)
PART 1. GENERAL PROVISIONS AND DEFINITIONS

    (810 ILCS 5/3‑101) (from Ch. 26, par. 3‑101)
    Sec. 3‑101. Short title. This Article may be cited as Uniform Commercial Code‑Negotiable Instruments.
(Source: P.A. 87‑582.)

    (810 ILCS 5/3‑102) (from Ch. 26, par. 3‑102)
    Sec. 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.
    (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.
(Source: P.A. 87‑582; 87‑1135.)

    (810 ILCS 5/3‑103)(from Ch. 26, par. 3‑103)
    Sec. 3‑103. Definitions.
    (a) In this Article:
        (1) "Acceptor" means a drawee that 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 (Section 1‑201(b)(8)).
        (11) "Remitter" means a person that 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 3‑409
    "Accommodated party"Section 3‑419
    "Accommodation party"Section 3‑419
    "Alteration"Section 3‑407
    "Anomalous indorsement"Section 3‑205
    "Blank indorsement"Section 3‑205
    "Cashier's check"Section 3‑104
    "Certificate of deposit"Section 3‑104
    "Certified check"Section 3‑409
    "Check"Section 3‑104
    "Consideration"Section 3‑303
    "Draft"Section 3‑104
    "Holder in due course"Section 3‑302
    "Incomplete instrument"Section 3‑115
    "Indorsement"Section 3‑204
    "Indorser"Section 3‑204
    "Instrument"Section 3‑104
    "Issue"Section 3‑105
    "Issuer"Section 3‑105
    "Negotiable instrument"Section 3‑104
    "Negotiation"Section 3‑201
    "Note"Section 3‑104
    "Payable at a definite time"Section 3‑108
    "Payable on demand"Section 3‑108
    "Payable to bearer"Section 3‑109
    "Payable to order"Section 3‑109
    "Payment"Section 3‑602
    "Person entitled to enforce"Section 3‑301
    "Presentment"Section 3‑501
    "Reacquisition"Section 3‑207
    "Special indorsement"Section 3‑205
    "Teller's check"Section 3‑104
    "Transfer of instrument"Section 3‑203
    "Traveler's check"Section 3‑104
    "Value"Section 3‑303
    (c) The following definitions in other Articles apply to this Article:
    "Bank"Section 4‑105
    "Banking day"Section 4‑104
    "Clearing house"Section 4‑104
    "Collecting bank"Section 4‑105
    "Depositary bank"Section 4‑105
    "Documentary draft"Section 4‑104
    "Intermediary bank"Section 4‑105
    "Item"Section 4‑104
    "Payor bank"Section 4‑105
    "Suspends payments"Section 4‑104.
    (d) In addition, Article 1 contains general definitions and principles of construction and interpretation applicable throughout this Article.
(Source: P.A. 95‑895, eff. 1‑1‑09.)

    (810 ILCS 5/3‑104) (from Ch. 26, par. 3‑104)
    Sec. 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:
        (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 any 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.
(Source: P.A. 87‑582; 87‑1135.)

    (810 ILCS 5/3‑105) (from Ch. 26, par. 3‑105)
    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.
(Source: P.A. 87‑582; 87‑1135.)

    (810 ILCS 5/3‑106) (from Ch. 26, par. 3‑106)
    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 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.
    (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 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.
(Source: P.A. 87‑582; 87‑1135.)

    (810 ILCS 5/3‑107) (from Ch. 26, par. 3‑107)
    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.
(Source: P.A. 87‑582.)

    (810 ILCS 5/3‑108) (from Ch. 26, par. 3‑108)
    Sec. 3‑108. Payable on demand or at a 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.
    (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.
(Source: P.A. 87‑582; 87‑1135.)

    (810 ILCS 5/3‑109) (from Ch. 26, par. 3‑109)
    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).
(Source: P.A. 87‑582; 87‑1135.)

    (810 ILCS 5/3‑110) (from Ch. 26, par. 3‑110)
    Sec. 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.
    (b) If the signature of the issuer of an instrument is made by automated means, such as a checkwriting 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 2 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 2 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 2 or more persons is ambiguous as to whether it is payable to the persons alternatively, the instrument is payable to the persons