§ 4:1.Nature and definition of negotiable instrument, 5 Ga. Jur.

UCC § 4:1

5 Ga. Jur. UCC § 4:1

Georgia Jurisprudence | September 2017 Update

Business and Commercial Law: Uniform Commercial Code
Chapter 4. Article 3—Negotiable Instruments
Lonnie E. Griffith, Jr., J.D.

I. In General
A. Introduction to Negotiable Instruments

§ 4:1. Nature and definition of negotiable instrument

Chapter Summary | Correlation Table | Divisional References

West’s Key Number Digest

•0 West’s Key Number Digest, Bills and Notes 1, 2

Treatises and Practice Aids

•0 Frisch, Lawrence’s Anderson on the Uniform Commercial Code § 3-104 (3d ed.)

A negotiable instrument is a written promise or order to pay money 1 which meets the formal requirements set forth for the
form of a negotiable instrument 2 and is within the scope of Article 3, Uniform Commercial Code—Negotiable Instruments. 3
The term “instrument” means a negotiable instrument, 4 and the term “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: 5
0 (1) is payable to the bearer or to order at the time it is issued or first comes into possession of a holder;
1 (2) is payable on demand or at a definite time; and
2 (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.
A negotiable instrument is representative of money, but does not include money itself. 6 Nonetheless, negotiable instruments
are recognized by law as having an intrinsic value.7

The promise or order may contain:8

0 (1) an undertaking or power to give, maintain, or protect collateral to secure payment;
1 (2) an authorization or power to the holder to confess judgment or realize on or dispose of collateral; or
2 (3) a waiver of the benefit of any law intended for the advantage or protection of an obligor.

Comment:

A promise is a written undertaking to pay money signed by the person undertaking to pay, and an order is a written
instruction to pay money signed by the person giving the instruction. Thus, a negotiable instrument is limited to a signed

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§ 4:1.Nature and definition of negotiable instrument, 5 Ga. Jur. UCC § 4:1

writing that orders or promises payment of money.9

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 Article 3.10

If an instrument contains, in addition to any unconditional promise or order to pay a sum certain, any additional promise,
order, or obligation, except such as are otherwise generally permitted by Article 3, the instrument is not a negotiable
instrument and the concept of a holder in due course does not apply to the instrument.11

Practice Tip:

The central concept of negotiability is the status of a holder in due course, that is, negotiability may become effective through
a holder in due course, but negotiability exists distinct from and prior to the existence of a holder in due course. 12

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Footnotes
1
§§ 4:34 to 4:36.
2
O.C.G.A. § 11-3-104.
As to the required form and terms, see §§ 4:13 to 4:46.
3
§ 4:2.
4
O.C.G.A. § 11-3-104(b).
5
O.C.G.A. § 11-3-104(a).
6
§ 4:2.
7
Metro Brokers, Inc. v. Transportation Ins. Co., 2013 WL 7117840 (N.D. Ga. 2013), aff’d, 603 Fed. Appx. 833 (11th
Cir. 2015) (applying Georgia law); Harper v. State, 259 Ga. App. 843, 578 S.E.2d 544 (2003).
8
O.C.G.A. § 11-3-104(a)(3)(i) to (iii).
9
Official Comment 1 to revised U.C.C. § 3-104.
10
O.C.G.A. § 11-3-104(d).
11
Geiger Finance Co. v. Graham, 123 Ga. App. 771, 182 S.E.2d 521, 9 U.C.C. Rep. Serv. 598 (1971).
12
§§ 4:95 to 4:113.

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Works.

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