Oregon Revised Statutes

Chapter 73 — Negotiable Instruments

148 sections

73.0101 Short title

This chapter may be cited as Uniform Commercial Code–Negotiable Instruments.

73.0102 Application of chapter

This chapter applies to negotiable instruments. This chapter does not apply to money, to payment orders governed by ORS chapter 74, or to securities governed by ORS chapter 78. If there is conflict between this chapter and ORS chapter 74 or 79A, ORS chapter 74 or 79A shall govern. Regulations of the Board of Governors of the Federal Reserve System and oper…

73.0103 Definitions

As used in this chapter: “Acceptor” means a drawee who has accepted a draft. “Drawee” means a person ordered in a draft to make payment. “Drawer” means a person who signs or is identified in a draft as a person ordering payment. “Maker” means a person who signs or is identified in a note as a person undertaking to pay. “Order” means a written instructio…

73.0104 Negotiable instrument; other definitions

Except as provided in subsections (3) and (4) of this section, “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: Is payable to bearer or to order at the time it is issued or first comes into possession of a holder; Is payable on…

73.0105 Issue of instrument

“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; or If agreed by the payee, the first transmission by the drawer to the payee of an image of an item and information derived from the item that enables the depository bank to collect t…

73.0106 Unconditional promise or order

Except as provided in this section, for the purposes of ORS 73.0104 (1), a promise or order is unconditional unless it states an express condition to payment, that the promise or order is subject to or governed by another writing, or that rights or obligations with respect to the promise or order are stated in another writing. A reference to another writing …

73.0107 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.

73.0108 Payable on demand or at definite time

A promise or order is “payable on demand” if it: States that it is payable on demand or at sight, or otherwise indicates that it is payable at the will of the holder; or Does not state any time of payment. 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…

73.0109 Payable to bearer or to order

A promise or order is payable to bearer if it: 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; Does not state a payee; or States that it is payable to or to the order of cash or otherwise indicates that it is not payable to an identified pers…

73.0110 Identification of person to whom instrument is payable

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…

73.0111 Place of payment

Except as otherwise provided for items in ORS chapter 74, 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 draw…

73.0112 Interest

Unless otherwise provided in the instrument: An instrument is not payable with interest; and Interest on an interest-bearing instrument is payable from the date of the instrument. 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…

73.0113 Date of instrument

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 the date. Except as provided in ORS 74.4010 (3), an instrument payable on demand is not payable before the date of the instrument. If an instrument is undated, its date is the date of its issue or, in the case of a…

73.0114 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.

73.0115 Incomplete instrument

“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. Subject to subsection (3) of this section, if the incomplete instrument is an instrument under ORS 73.0104, it may be…

73.0116 Joint and several liability; contribution

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. Except as provided in ORS 73.0419 (5) or by agreement of the affected parties, a par…

73.0117 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 relia…

73.0118 Statute of limitations

Except as provided in subsection (5) of this section, 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. Except as provided in subsection (4) or (5) of this …

73.0119 Notice of right to defend action

In an action for breach of an obligation over which a third person is answerable pursuant to this chapter or ORS chapter 74, the defendant may give the third person written notice of the litigation, and the person notified may then give similar notice to any other person who is answerable. If the notice states that the person notified may come in and defend …

73.0201 Negotiation

“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. 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 hold…

73.0202 Negotiation subject to rescission

Negotiation is effective even if obtained: From an infant, a corporation exceeding its powers or a person without capacity; By fraud, duress or mistake; or In breach of duty or as part of an illegal transaction. 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 a…

73.0203 Transfer of instrument; rights acquired by transfer

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. 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 ho…

73.0204 Indorsement

“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 negotiating the instrument, restricting payment of the instrument or incurring indorser’s liability on the instrument. Regardless of the intent of the signer, a signature and its accom…

73.0205 Special indorsement; blank indorsement; anomalous indorsement

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…

73.0206 Restrictive indorsement

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. 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…

73.0207 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 negotiat…

73.0301 Person entitled to enforce instrument

“Person entitled to enforce” an instrument means the holder of the instrument, a nonholder in possession of the instrument who has the rights of a holder, or a person not in possession of the instrument who is entitled to enforce the instrument pursuant to ORS 73.0309 or 73.0418 (4). A person may be a person entitled to enforce the instrument even though the…

73.0302 Holder in due course

Subject to ORS 73.0106 (3) and (4), “holder in due course” means the holder of an instrument if: 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 The holder took the instrument: For value; In go…

73.0303 Value and consideration

An instrument is issued or transferred for value if: The instrument is issued or transferred for a promise of performance, to the extent the promise has been performed; The transferee acquires a security interest or other lien in the instrument other than a lien obtained by judicial proceeding; The instrument is issued or transferred as payment of, or as …

73.0304 Overdue instrument

An instrument payable on demand becomes overdue at the earliest of the following times: On the day after the day demand for payment is duly made; If the instrument is a check, 90 days after its date; or If the instrument is not a check, when the instrument has been outstanding for a period of time after its date which is unreasonably long under the circum…

73.0305 Defenses and claims in recoupment

Except as stated in subsection (2) of this section, the right to enforce the obligation of a party to pay an instrument is subject to the following: A defense of the obligor based on: Infancy of the obligor to the extent it is a defense to a simple contract; Duress, lack of legal capacity or illegality of the transaction which, under other law, nullifies …

73.0306 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 instrum…

73.0307 Notice of breach of fiduciary duty

In this section: “Fiduciary” means an agent, trustee, partner, corporate officer, director or other representative owing a fiduciary duty with respect to an instrument. “Represented person” means the principal, beneficiary, partnership, corporation or other person to whom the duty stated in paragraph (a) of this subsection is owed. If an instrument is tak…

73.0308 Proof of signatures and status as holder in due course

In an action with respect to an instrument, the authenticity of, and authority to make, each signature on the instrument is 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 a…

73.0309 Enforcement of lost, destroyed or stolen instrument

A person not in possession of an instrument is entitled to enforce the instrument if: The person was in possession of the instrument and entitled to enforce it when loss of possession occurred; The loss of possession was not the result of a transfer by the person or a lawful seizure; and The person cannot reasonably obtain possession of the instrument bec…

73.0310 Effect of instrument on obligation for which taken

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 …

73.0311 Accord and satisfaction

The negotiation of an instrument marked “paid in full,” “payment in full,” “full payment of a claim” or words of similar meaning, or the negotiation of an instrument accompanied by a statement containing such words or words of similar meaning, does not establish an accord and satisfaction that binds the payee or prevents the collection of any remaining amoun…

73.0312 Lost, destroyed or stolen cashier’s check, teller’s check or certified check

In this section: “Check” means a cashier’s check, teller’s check or certified check. “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. “Declaration of loss” means a written statement, made under penalty of perjury, to the effect that: The declar…

73.0401 Signature necessary for liability on instrument

A person is not liable on an instrument unless: The person signed the instrument; or The person is represented by an agent or representative who signed the instrument and the signature is binding on the represented person under ORS 73.0402.

73.0402 Signature by representative

If a person acting, or purporting to act, as a representative signs an instrument by signing either the name of the represented person or the name of the signer, the represented person is bound by the signature to the same extent the represented person would be bound if the signature were on a simple contract. If the represented person is bound, the signatur…

73.0403 Unauthorized signature

Unless otherwise provided in this chapter or ORS chapter 74, an unauthorized signature is ineffective except as the signature of the unauthorized signer in favor of a person who, in good faith, pays the instrument or takes it for value or for collection. An unauthorized signature may be ratified for all purposes of this chapter. If the signature of more tha…

73.0404 Impostors; fictitious payees

If an impostor, by use of the mails or otherwise, induces the issuer of an instrument to issue the instrument to the impostor, or to a person acting in concert with the impostor, by impersonating the payee of the instrument or a person authorized to act for the payee, an indorsement of the instrument by any person in the name of the payee is effective as the…

73.0405 Employer’s responsibility for fraudulent indorsement by employee

In this section: “Employee” includes an independent contractor and employee of an independent contractor retained by the employer. “Fraudulent indorsement” means: In the case of an instrument payable to the employer, a forged indorsement purporting to be that of the employer; or In the case of an instrument with respect to which the employer is the issue…

73.0406 Negligence contributing to forged signature or alteration of instrument

A person whose failure to exercise ordinary care substantially contributes to an alteration of an instrument or to the making of a forged signature on an instrument is precluded from asserting the alteration or the forgery against a person who, in good faith, pays the instrument or takes it for value or for collection. Under subsection (1) of this section, …

73.0407 Alteration

“Alteration” means: An unauthorized change in an instrument that purports to modify in any respect the obligation of a party; or An unauthorized addition of words or numbers or other change to an incomplete instrument relating to the obligation of a party. Except as provided in subsection (3) of this section, an alteration fraudulently made discharges a p…

73.0408 Drawee not liable on unaccepted draft

A check or other draft does not of itself operate as an assignment of funds in the hands of the drawee available for its payment, and the drawee is not liable on the instrument until the drawee accepts it.

73.0409 Acceptance of draft; certified check

“Acceptance” means the drawee’s signed agreement to pay a draft as presented. It must be written on the draft and may consist of the drawee’s signature alone. Acceptance may be made at any time and becomes effective when notification pursuant to instructions is given or the accepted draft is delivered for the purpose of giving rights on the acceptance to any…

73.0410 Acceptance varying draft

If the terms of a drawee’s acceptance vary from the terms of the draft as presented, the holder may refuse the acceptance and treat the draft as dishonored. In that case, the drawee may cancel the acceptance. The terms of a draft are not varied by an acceptance to pay at a particular bank or place in the United States, unless the acceptance states that the …

73.0411 Refusal to pay cashier’s checks, teller’s checks and certified checks

In this section, “obligated bank” means the acceptor of a certified check or the issuer of a cashier’s check or teller’s check bought from the issuer. If the obligated bank wrongfully refuses to pay a cashier’s check or certified check, stops payment of a teller’s check, or refuses to pay a dishonored teller’s check, the person asserting the right to enforc…

73.0412 Obligation of issuer of note or cashier’s check

The issuer of a note or cashier’s check or other draft drawn on the drawer is obliged to pay the instrument according to its terms at the time it was issued or, if not issued, at the time it first came into possession of a holder, or if the issuer signed an incomplete instrument, according to its terms when completed, to the extent stated in ORS 73.0115 and …

73.0413 Obligation of acceptor

The acceptor of a draft is obligated to pay the draft: According to its terms at the time it was accepted, even though the acceptance states that the draft is payable “as originally drawn” or equivalent terms; If the acceptance varies the terms of the draft, according to the terms of the draft as varied; or If the acceptance is of a draft that is an incom…

73.0414 Obligation of drawer

This section does not apply to cashier’s checks or other drafts drawn on the drawer. If an unaccepted draft is dishonored, the drawer is obliged to pay the draft according to its terms at the time it was issued or, if not issued, at the time it first came into possession of a holder, or if the drawer signed an incomplete instrument, according to its terms w…

73.0415 Obligation of indorser

Subject to subsections (2), (3) and (4) of this section and to ORS 73.0419 (4), if an instrument is dishonored, an indorser is obliged to pay the amount due on the instrument according to the terms of the instrument at the time it was indorsed, or if the indorser indorsed an incomplete instrument, according to its terms when completed, to the extent stated i…

73.0416 Transfer warranties

A person who transfers an instrument for consideration warrants to the transferee and, if the transfer is by indorsement, to any subsequent transferee that: The warrantor is a person entitled to enforce the instrument; All signatures on the instrument are authentic and authorized; The instrument has not been altered; The instrument is not subject to a de…

73.0417 Presentment warranties

If an unaccepted draft is presented to the drawee for payment or acceptance and the drawee pays or accepts the draft, the person obtaining payment or acceptance, at the time of presentment, and a previous transferor of the draft, at the time of transfer, warrant to the drawee making payment or accepting the draft in good faith that: The warrantor is, or was…

73.0418 Payment or acceptance by mistake

Except as provided in subsection (3) of this section, if the drawee of a draft pays or accepts the draft and the drawee acted on the mistaken belief that payment of the draft had not been stopped pursuant to ORS 73.0403 or the signature of the drawer of the draft was authorized, the drawee may recover the amount of the draft from the person to whom or for wh…

73.0419 Instruments signed for accommodation

If an instrument is issued for value given for the benefit of a party to the instrument (“accommodated party”) and another party to the instrument (“accommodation party”) signs the instrument for the purpose of incurring liability on the instrument without being a direct beneficiary of the value given for the instrument, the instrument is signed by the accom…

73.0420 Conversion of instrument

The law applicable to conversion of personal property applies to instruments. An instrument is also converted if it is taken by transfer, other than a negotiation, from a person not entitled to enforce the instrument or a bank makes or obtains payment with respect to the instrument for a person not entitled to enforce the instrument or receive payment. An ac…

73.0501 Presentment

“Presentment” means a demand made by or on behalf of a person entitled to enforce an instrument to pay the instrument made to the drawee or a party obliged to pay the instrument or, in the case of a note or accepted draft payable at a bank, to the bank, or to accept a draft made to the drawee. The following rules are subject to ORS chapter 74, agreement of …

73.0502 Dishonor

Dishonor of a note is governed by the following rules: If the note is payable on demand, the note is dishonored if presentment is duly made to the maker and the note is not paid on the day of presentment. If the note is not payable on demand and is payable at or through a bank or the terms of the note required presentment, the note is dishonored if present…

73.0503 Notice of dishonor

The obligation of an indorser stated in ORS 73.0415 (1) and the obligation of a drawer stated in ORS 73.0414 (4) may not be enforced unless the indorser or drawer is given notice of dishonor of the instrument complying with this section or notice of dishonor is excused under ORS 73.0504 (2). Notice of dishonor may be given by any person, may be given by any…

73.0504 Excused presentment and notice of dishonor

Presentment for payment or acceptance of an instrument is excused if: The person entitled to present the instrument cannot with reasonable diligence make presentment; The maker or acceptor has repudiated an obligation to pay the instrument or is dead or in insolvency proceedings; By the terms of the instrument presentment is not necessary to enforce the o…

73.0505 Evidence of dishonor

The following are admissible as evidence and create a presumption of dishonor and of any notice of dishonor stated: A document regular in form as provided in subsection (2) of this section which purports to be a protest; A purported stamp or writing of the drawee, payor bank or presenting bank on or accompanying the instrument stating that acceptance or pa…

73.0601 Discharge and effect of discharge

The obligation of a party to pay the instrument is discharged as stated in this chapter or by an act or agreement with the party which would discharge an obligation to pay money under a simple contract. Discharge of the obligation of a party is not effective against a person acquiring rights of a holder in due course of the instrument without notice of the …

73.0602 Payment

Subject to subsection (2) of this section, an instrument is paid to the extent payment is made by or on behalf of a party obliged to pay the instrument, and to a person entitled to enforce the instrument. To the extent of the payment, the obligation of the party obliged to pay the instrument is discharged even though payment is made with knowledge of a claim…

73.0603 Tender of payment

If tender of payment of an obligation to pay an instrument is made to a person entitled to enforce the instrument, the effect of tender is governed by principles of law applicable to tender of payment under a simple contract. If tender of payment of an obligation to pay an instrument is made to a person entitled to enforce the instrument and the tender is r…

73.0604 Discharge by cancellation or renunciation

A person entitled to enforce an instrument, with or without consideration, may discharge the obligation of a party to pay the instrument: By an intentional voluntary act, such as surrender of the instrument to the party, destruction, mutilation, or cancellation of the instrument, cancellation or striking out of the party’s signature, or the addition of word…

73.0605 Discharge of indorsers and accommodation parties

In this section, the term “indorser” includes a drawer having the obligation described in ORS 73.0414. Discharge, under ORS 73.0604, of the obligation of a party to pay an instrument does not discharge the obligation of an indorser or accommodation party having a right of recourse against the discharged party. If a person entitled to enforce an instrument …