§ 4-3-106 — Unconditional promise or order

(a) Except as provided in this
section, for the purposes of section 4-3-104 (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 4-3-104 (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 4-3-104 (a); but if
the promise or order is an instrument, there cannot be a holder in due course of the
instrument.

Legislative History

Source: L. 94: Entire article R&RE, p. 844, � 1, effective January 1, 1995.