Under the Uniform Commercial Code, Article 3 governs negotiable instruments.
Article 3 covers instruments such as negotiable promissory notes and drafts, including checks, when they meet the UCC’s requirements. In general, a negotiable instrument contains an unconditional promise or order to pay a fixed amount of money, is payable to bearer or order, and is payable on demand or at a definite time. The article supplies rules for issuance, transfer, negotiation, enforcement, defenses, and holders in due course.
Article 3 is easy to confuse with other UCC provisions. Article 2 covers sales of goods, Article 4 addresses bank deposits and collections, and Article 9 primarily governs secured transactions. A check can involve both Article 3 and banking rules, but its negotiability is principally analyzed under Article 3.
The UCC is a model code adopted by the states, so local enactments can vary in wording and detail. Article 3 also excludes or interacts with other UCC articles in specific situations, including investment securities under Article 8 and certain electronic payment arrangements. Its central concern remains the legal treatment of negotiable payment instruments.