(810 ILCS 5/Art.
3 heading)
ARTICLE 3. NEGOTIABLE INSTRUMENTS
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(810 ILCS 5/Art.
3 Pt. 1 heading)
PART 1. GENERAL PROVISIONS AND DEFINITIONS
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(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.)
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(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.)
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(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
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(2) "Drawee" means
a person ordered in a draft to
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(3) "Drawer" means
a person who signs or is
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identified in a draft as a person ordering
payment.
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(4) "Good
faith" means honesty in fact and the
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observance of reasonable commercial standards
of fair dealing.
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(5) "Maker" means
a person who signs or is
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identified in a note as a person undertaking
to pay.
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(6) "Order" means
a written instruction to pay money
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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.
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(7) "Ordinary
care" in the case of a person engaged
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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.
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(8) "Party" means
a party to an instrument.
(9) "Promise" means
a written undertaking to pay
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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.
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(10) "Prove" with
respect to a fact means to meet
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the burden of establishing the fact (Section
1-201(8)).
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(11) "Remitter" means
a person that purchases an
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instrument from its issuer if the instrument
is payable to an identified person other than
the purchaser.
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(b) Other definitions
applying to this Article and the Sections in which they
appear are:
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"Acceptance"
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Section 3-409
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"Accommodated
party"
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Section 3-419
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"Accommodation
party"
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Section 3-419
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"Alteration"
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Section 3-407
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"Anomalous
indorsement"
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Section 3-205
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"Blank indorsement"
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Section 3-205
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"Cashier's
check"
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Section 3-104
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"Certificate
of deposit"
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Section 3-104
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"Certified
check"
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Section 3-409
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"Check"
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Section 3-104
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"Consideration"
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Section 3-303
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"Draft"
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Section 3-104
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"Holder
in due course"
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Section 3-302
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"Incomplete
instrument"
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Section 3-115
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"Indorsement"
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Section 3-204
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"Indorser"
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Section 3-204
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"Instrument"
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Section 3-104
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"Issue"
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Section 3-105
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"Issuer"
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Section 3-105
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"Negotiable
instrument"
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Section 3-104
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"Negotiation"
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Section 3-201
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"Note"
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Section 3-104
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"Payable
at a definite time"
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Section 3-108
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"Payable
on demand"
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Section 3-108
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"Payable
to bearer"
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Section 3-109
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"Payable
to order"
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Section 3-109
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"Payment"
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Section 3-602
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"Person
entitled to enforce"
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Section 3-301
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"Presentment"
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Section 3-501
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"Reacquisition"
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Section 3-207
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"Special
indorsement"
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Section 3-205
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"Teller's
check"
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Section 3-104
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"Transfer
of instrument"
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Section 3-203
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"Traveler's
check"
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Section 3-104
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"Value"
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Section 3-303
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(c) The following
definitions in other Articles apply to this Article:
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"Bank"
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Section 4-105
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"Banking
day"
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Section 4-104
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"Clearing
house"
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Section 4-104
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"Collecting
bank"
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Section 4-105
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"Depositary
bank"
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Section 4-105
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"Documentary
draft"
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Section 4-104
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"Intermediary
bank"
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Section 4-105
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"Item"
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Section 4-104
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"Payor bank"
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Section 4-105
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"Suspends
payments"
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Section 4-104.
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(d) In addition,
Article 1 contains general definitions and principles
of construction and interpretation applicable throughout
this Article.
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(Source: P.A. 87-582; 87-1135.)
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(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
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is issued or first comes into possession
of a holder;
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(2)
is payable on demand or at a definite time; and
(3)
does not state any other undertaking or
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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.
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(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.)
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(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.)
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(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.)
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