§ 3106 — Unconditional promise or order

(a) When conditional.--Except as provided in this section, for the purposes of section 3104(a) (relating to negotiable instrument), a promise or order is unconditional unless it states:

(1) an express condition to payment;

(2) that the promise or order is subject to or governed by another writing; or

(3) 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) When promise or order not made conditional.--A promise or order is not made conditional:

(1) by a reference to another writing for a statement of rights with respect to collateral, prepayment or acceleration; or

(2) because payment is limited to resort to a particular fund or source.

(c) Promise or order not made conditional when countersignature as condition to payment is required.--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 3104(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) Promise or order not made conditional by containing certain statements required by law.--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 3104(a); but if the promise or order is an instrument, there cannot be a holder in due course of the instrument.

Legislative History

Cross References.Section 3106 is referred to in section 3302 of this title.