CHAPTER 3. NEGOTIABLE INSTRUMENTS
BUSINESS AND COMMERCE CODE
TITLE 1. UNIFORM COMMERCIAL CODE
CHAPTER 3. NEGOTIABLE INSTRUMENTS
SUBCHAPTER A. GENERAL PROVISIONS AND DEFINITIONS
Sec. 3.101. SHORT TITLE. This chapter may be cited as Uniform
Commercial Code-Negotiable Instruments.
Amended by Acts 1995, 74th Leg., ch. 921, Sec. 1, eff. Jan. 1,
1996.
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.
Sec. 3.103. DEFINITIONS. (a) In this chapter:
(1) "Acceptor" means a drawee who has accepted a draft.
(2) Reserved.
(3) "Consumer transaction" means a transaction in which an
individual incurs an obligation primarily for personal, family,
or household purposes.
(4) "Drawee" means a person ordered in a draft to make payment.
(5) "Drawer" means a person who signs or is identified in a
draft as a person ordering payment.
(6) Reserved.
(7) "Maker" means a person who signs or is identified in a note
as a person undertaking to pay.
(8) "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.
(9) "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 chapter or Chapter 4.
(10) "Party" means a party to an instrument.
(11) "Principal obligor," with respect to an instrument, means
the accommodated party or any other party to the instrument
against whom a secondary obligor has recourse under this chapter.
(12) "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.
(13) "Prove" with respect to a fact means to meet the burden of
establishing the fact (Section 1.201(b)(8)).
(14) Reserved.
(15) "Remitter" means a person who purchases an instrument from
its issuer if the instrument is payable to an identified person
other than the purchaser.
(16) "Remotely-created item" means an item that is created by a
third party, other than the payor bank, under the purported
authority of the drawer of the item for the purpose of charging
the drawer's account with a bank and that does not bear a
handwritten signature purporting to be the signature of the
drawer.
(17) "Secondary obligor," with respect to an instrument, means
(A) an indorser or an accommodation party, (B) a drawer having
the obligation described in Section 3.414(d), or (C) any other
party to the instrument that has recourse against another party
to the instrument pursuant to Section 3.116(b).
(b) Other definitions applying to this chapter and the sections
in which they appear are:
"Acceptance"
Section 3.409.
"Accommodated party"
Section 3.419.
"Accommodation party"
Section 3.419.
"Account"
Section 4.104.
"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 chapters apply to this
chapter:
"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, Chapter 1 contains general definitions and
principles of construction and interpretation applicable
throughout this chapter.
Amended by Acts 1995, 74th Leg., ch. 921, Sec. 1, eff. Jan. 1,
1996; Acts 1997, 75th Leg., ch. 131, Sec. 1, eff. Sept. 1, 1997;
Acts 2003, 78th Leg., ch. 542, Sec. 10, eff. Sept. 1, 2003.
Amended by:
Acts 2005, 79th Leg., Ch.
95, Sec. 1, eff. September 1, 2005.
Acts 2005, 79th Leg., Ch.
95, Sec. 2, eff. September 1, 2005.
Acts 2007, 80th Leg., R.S., Ch.
427, Sec. 1, eff. September 1, 2007.
Acts 2007, 80th Leg., R.S., Ch.
427, Sec. 2, eff. September 1, 2007.
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:
(A) an undertaking or power to give, maintain, or protect
collateral to secure payment;
(B) an authorization or power to the holder to confess judgment
or realize on or dispose of collateral; or
(C) a waiver of the benefit of any law intended for the
advantage or protection of an obligor.
(b) "Instrument" means a negotiable instrument.
(c) An order that meets all of the requirements of Subsection
(a), except Subdivision (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 chapter.
(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:
(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) Repealed by Acts 2007, 80th Leg., R.S., Ch. 427, Sec. 4,
eff. September 1, 2007.
Amended by Acts 1995, 74th Leg., ch. 921, Sec. 1, eff. Jan. 1,
1996; Acts 1997, 75th Leg., ch. 131, Sec. 2, eff. Sept. 1, 1997.
Amended by:
Acts 2007, 80th Leg., R.S., Ch.
427, Sec. 4, eff. September 1, 2007.
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.
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, Sec. 3, eff. September 1, 2005.
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.
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.
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.
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 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; or
(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.
Amended by Acts 1995, 74th Leg., ch. 921, Sec. 1, eff. Jan. 1,
1996.
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.
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.
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.
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.
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.
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, Sec. 21, eff. September 1, 2005.
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.
Sec. 3.118. STATUTE OF LIMITATIONS. (a) Except as provided in
Subsection (e), an action to enforce the obligation of a party to
pay a note payable at a definite time must be commenced within
six years after the due date or dates stated in the note or, if a
due date is accelerated, within six years after the accelerated
due date.
(b) Except as provided in Subsection (d) or (e), if demand for
payment is made to the maker of a note payable on demand, an
action to enforce the obligation of a party to pay the note must
be commenced within six years after the demand. If no demand for
payment is made to the maker, an action to enforce the note is
barred if neither principal nor interest on the note has been
paid for a continuous period of 10 years.
(c) Except as provided in Subsection (d), an action to enforce
the obligation of a party to an unaccepted draft to pay the draft
must be commenced within three years after dishonor of the draft
or 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 must be commenced within three years
after demand for payment is made to the acceptor or issuer, as
the case may be.
(e) An action to enforce the obligation of a party to a
certificate of deposit to pay the instrument must be commenced
within six years after demand for payment is made to the maker,
but if the instrument states a due date and the maker is not
required to pay before that date, the six-year period begins when
a demand for payment is in effect and the due date has passed.
(f) An action to enforce the obligation of a party to pay an
accepted draft, other than a certified check, must be commenced:
(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, the following actions must be commenced within
three years after the cause of action accrues:
(1) an action for conversion of an instrument, an action for
money had and received, or like action based on conversion;
(2) an action for breach of warranty; or
(3) an action to enforce an obligation, duty, or right arising
under this chapter and not governed by this section.
(h) This section does not apply to an action involving a real
property lien covered by Section 16.035 or 16.036, Civil Practice
and Remedies Code.
(i) A right of action of a public institution of higher
education or the Texas Higher Education Coordinating Board is not
barred by this section.
Amended by Acts 1995, 74th Leg., ch. 921, Sec. 1, eff. Jan. 1,
1996; Acts 1997, 75th Leg., ch. 219, Sec. 4, eff. May 23, 1997;
Acts 2001, 77th Leg., ch. 279, Sec. 1, eff. May 22, 2001.
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, Sec. 4, eff. September 1, 2005.
SUBCHAPTER B. NEGOTIATION, TRANSFER, AND INDORSEMENT
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.
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.
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.
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.
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.
Sec. 3.206. RESTRICTIVE INDORSEMENT. (a) An indorsement
limiting payment to a particular person or otherwise prohibiting
further transfer or negotiation of the instrument is not
effective to prevent further transfer or negotiation of the
instrument.
(b) An indorsement stating a condition to the right of the
indorsee to receive payment does not affect the right of the
indorsee to enforce the instrument. A person paying the
instrument or taking it for value or collection may disregard the
condition, and the rights and liabilities of that person are not
affected by whether the condition has been fulfilled.
(c) If an instrument bears an indorsement (i) described in
Section 4.201(b), or (ii) in blank or to a particular bank using
the words "for deposit" or "for collection," or other words
indicating a purpose of having the instrument collected by a bank
for the indorser or for a particular account, the following rules
apply:
(1) a person, other than a bank, who purchases the instrument
when so indorsed converts the instrument unless the amount paid
for the instrument is received by the indorser or applied
consistently with the indorsement;
(2) a depositary bank that purchases the instrument or takes it
for collection when so indorsed converts the instrument unless
the amount paid by the bank with respect to the instrument is
received by the indorser or applied consistently with the
indorsement;
(3) a payor bank that is also the depositary bank or that takes
the instrument for immediate payment over the counter from a
person other than a collecting bank converts the instrument
unless the proceeds of the instrument are received by the
indorser or applied consistently with the indorsement; and
(4) except as otherwise provided in Subdivision (3), a payor
bank or intermediary bank may disregard the indorsement and is
not liable if the proceeds of the instrument are not received by
the indorser or applied consistently with the indorsement.
(d) Except for an indorsement covered by Subsection (c), if an
instrument bears an indorsement using words to the effect that
payment is to be made to the indorsee as agent, trustee, or other
fiduciary for the benefit of the indorser or another person, the
following rules apply:
(1) unless there is notice of breach of fiduciary duty as
provided in Section 3.307, a person who purchases the instrument
from the indorsee or takes the instrument from the indorsee for
collection or payment may pay the proceeds of payment or the
value given for the instrument to the indorsee without regard to
whether the indorsee violates a fiduciary duty to the indorser;
and
(2) a subsequent transferee of the instrument or person who pays
the instrument is neither given notice nor otherwise affected by
the restriction in the indorsement unless the transferee or payor
knows that the fiduciary dealt with the instrument or its
proceeds in breach of fiduciary duty.
(e) The presence on an instrument of an indorsement to which
this section applies does not prevent a purchaser of the
instrument from becoming a holder in due course of the instrument
unless the purchaser is a converter under Subsection (c) or has
notice or knowledge of breach of fiduciary duty as stated in
Subsection (d).
(f) In an action to enforce the obligation of a party to pay the
instrument, the obligor has a defense if payment would violate an
indorsement to which this section applies and the payment is not
permitted by this section.
Amended by Acts 1995, 74th Leg., ch. 921, Sec. 1, eff. Jan. 1,
1996.
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.
SUBCHAPTER C. ENFORCEMENT OF INSTRUMENTS
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.
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.
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.
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.
Sec. 3.305. DEFENSES AND CLAIMS IN RECOUPMENT. (a) Except as
otherwise provided in this section, the right to enforce the
obligation of a party to pay an instrument is subject to the
following:
(1) a defense of the obligor based on:
(A) infancy of the obligor to the extent it is a defense to a
simple contract;
(B) duress, lack of legal capacity, or illegality of the
transaction that, under other law, nullifies the obligation of
the obligor;
(C) fraud that induced the obligor to sign the instrument with
neither knowledge nor reasonable opportunity to learn of its
character or its essential terms; or
(D) discharge of the obligor in insolvency proceedings;
(2) a defense of the obligor stated in another section of this
chapter or a defense of the obligor that would be available if
the person entitled to enforce the instrument were enforcing a
right to payment under a simple contract; and
(3) a claim in recoupment of the obligor against the original
payee of the instrument if the claim arose from the transaction
that gave rise to the instrument; but the claim of the obligor
may be asserted against a transferee of the instrument only to
reduce the amount owing on the instrument at the time the action
is brought.
(b) The right of a holder in due course to enforce the
obligation of a party to pay the instrument is subject to
defenses of the obligor stated in Subsection (a)(1), but is not
subject to defenses of the obligor stated in Subsection (a)(2) or
claims in recoupment stated in Subsection (a)(3) against a person
other than the holder.
(c) Except as provided in Subsection (d), in an action to
enforce the obligation of a party to pay the instrument, the
obligor may not assert against the person entitled to enforce the
instrument a defense, claim in recoupment, or claim to the
instrument (Section 3.306) of another person, but the other
person's claim to the instrument may be asserted by the obligor
if the other person is joined in the action and personally
asserts the claim against the person entitled to enforce the
instrument. An obligor is not obliged to pay the instrument if
the person seeking enforcement of the instrument does not have
rights of a holder in due course and the obligor proves that the
instrument is a lost or stolen instrument.
(d) In an action to enforce the obligation of an accommodation
party to pay an instrument, the accommodation party may assert
against the person entitled to enforce the instrument any defense
or claim in recoupment under Subsection (a) that the accommodated
party could assert against the person entitled to enforce the
instrument, except the defenses of discharge in insolvency
proceedings, infancy, and lack of legal capacity.
(e) In a consumer transaction, if law other than this chapter
requires that an instrument include a statement to the effect
that the rights of a holder or transferee are subject to a claim
or defense that the issuer could assert against the original
payee, and the instrument does not include such a statement:
(1) the instrument has the same effect as if the instrument
included such a statement;
(2) the issuer may assert against the holder or transferee all
claims and defenses that would have been available if the
instrument included such a statement; and
(3) the extent to which claims may be asserted against the
holder or transferee is determined as if the instrument included
such a statement.
If an instrument includes or is deemed to include a statement
under this subsection, a holder or transferee who is liable under
the statement to the issuer, but who is not the seller of the
goods or services, shall be entitled to full indemnity from the
seller for any liability under the statement incurred by the
holder or transferee that results from the issuer's claims or
defenses against the seller, plus reasonable attorney's fees.
The provision in this section for express indemnity does not
affect any right of indemnity, subrogation, or recovery to which
a holder or transferee may be entitled under any rule, written
contract, judicial decision, or other statute. This section is
not intended to provide a holder or transferee indemnity from the
seller with respect to the holder or transferee's direct
liability to the issuer for the holder or transferee's own
actionable misconduct unrelated to derivative liability under the
statement.
(f) This section is subject to law other than this chapter that
establishes a different rule for consumer transactions.
Amended by Acts 1995, 74th Leg., ch. 921, Sec. 1, eff. Jan. 1,
1996.
Amended by:
Acts 2005, 79th Leg., Ch.
95, Sec. 5, eff. September 1, 2005.
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.
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.
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.
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, Sec. 6, eff. September 1, 2005.
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.
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.
Sec. 3.312. LOST, DESTROYED, OR STOLEN CASHIER'S CHECK, TELLER'S
CHECK, OR CERTIFIED CHECK. (a) In this section:
(1) "Check" means a cashier's check, teller's check, or
certified check.
(2) "Claimant" means a person who claims the right to receive
the amount of a cashier's check, teller's check, or certified
check that was lost, destroyed, or stolen.
(3) "Declaration of loss" means a statement, made in a record
under penalty of perjury, to the effect that:
(A) the declarer lost possession of a check;
(B) the declarer is the drawer or payee of the check, in the
case of a certified check, or the remitter or payee of the check,
in the case of a cashier's check or teller's check;
(C) the loss of possession was not the result of a transfer by
the declarer or a lawful seizure; and
(D) the declarer cannot reasonably obtain possession of the
check because the check was destroyed, its whereabouts cannot be
determined, or it is in the wrongful possession of an unknown
person or a person that cannot be found or is not amenable to
service of process.
(4) "Obligated bank" means the issuer of a cashier's check or
teller's check or the acceptor of a certified check.
(b) A claimant may assert a claim to the amount of a check by a
communication to the obligated bank describing the check with
reasonable certainty and requesting payment of the am