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84-3-104. Negotiable instrument. (a) Except as provided in subsections (c) and (d), "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:

(1) Is payable to bearer or to order at the time it is issued or first comes into possession of a holder;

(2) is payable on demand or at a definite time; and

(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, but the promise or order may contain (i) an undertaking or power to give, maintain, or protect collateral to secure payment, (ii) an authorization or power to the holder to confess judgment or realize on or dispose of collateral, or (iii) a waiver of the benefit of any law intended for the advantage or protection of an obligor.

(b) "Instrument" means a negotiable instrument.

(c) An order that meets all of the requirements of subsection (a), except paragraph (1), and otherwise falls within the definition of "check" in subsection (f) is a negotiable instrument and a check.

(d) 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 this article.

(e) An instrument is a "note" if it is a promise and is a "draft" if it is an order. If an instrument falls within the definition of both "note" and "draft," a person entitled to enforce the instrument may treat it as either.

(f) "Check" means (1) a draft, other than a documentary draft, payable on demand and drawn on a bank, (2) a cashier's check or teller's check, or (3) a demand draft. An instrument may be a check even though it is described on its face by another term, such as "money order."

(g) "Cashier's check" means a draft with respect to which the drawer and drawee are the same bank or branches of the same bank.

(h) "Teller's check" means a draft drawn by a bank (1) on another bank, or (2) payable at or through a bank.

(i) "Traveler's check" means an instrument that (1) is payable on demand, (2) is drawn on or payable at or through a bank, (3) is designated by the term "traveler's check" or by a substantially similar term, and (4) requires, as a condition to payment, a countersignature by a person whose specimen signature appears on the instrument.

(j) "Certificate of deposit" means an instrument containing an acknowledgment by a bank that a sum of money has been received by the bank and a promise by the bank to repay the sum of money. A certificate of deposit is a note of the bank.

(k) "Demand draft" means a writing not signed by a customer that is created by a third party under the purported authority of the customer for the purpose of charging the customer's account with a bank. A demand draft shall contain the customer's account number and may contain any or all of the following:

(1) The customer's printed or typewritten name.

(2) A notation that the customer authorized the draft.

(3) The statement "No Signature Required" or words to that effect. A demand draft shall not include a check purportedly drawn by and bearing the signature of a fiduciary, as defined in subsection (a)(1) of K.S.A. 84-3-307, and amendments thereto.

History: L. 1991, ch. 296, § 4; L. 2005, ch. 58, § 2; July 1.


This important section sets forth the elements of a negotiable instrument. It defines the distinctions between "note," "draft," "check," and "certificate of deposit," the four most important types of negotiable instruments, and defines several other common ones. The elements of negotiability as set forth in this section are treated in detail in the sections which follow. The present section is derived from the former 84-3-104, 84-3-106, 84-3-112 and 84-3-118.

It should be emphasized that although negotiability is still alive and well with respect to checks; as to drafts and notes executed by commercial parties, negotiable notes arising out of consumer credit sales are forbidden by the Kansas Consumer Credit Code, K.S.A. 16a-3-307, under penalties provided by K.S.A. 16a-5-201. Moreover, the doctrine of negotiability is dead in consumer credit transactions because the Consumer Credit Code expressly precludes holder in due course status to any creditor. See K.S.A. 16a-3-403, 16a-3-404 and 16a-3-405 and Kansas Comments to those sections. The federal government has also done away with much of negotiability through the Federal Trade Commission regulations. See 16 C.F.R. Part 433.

Subsection a. This subsection defines a negotiable instrument. The basic requirements are that it be an unconditional order or promise to pay a fixed sum of money to a person or that person's transferee at a definite date or on demand. It is often said "a negotiable instrument is a courier without luggage," and very few other terms are permitted.

Subsection b. This section makes it clear that any reference in Article 3 to an "instrument" refers only to negotiable instruments which meet those requirements.

Subsections c through j. Subsection (c) comports with the normal understanding that checks are negotiable instruments, even if the negotiability language is omitted. For other instruments, subsection (d) permits the issuer to opt out of Article 3 (and generally prevent holder in due course status of transferees) by conspicuously denying negotiability. The definitions of "cashier's checks," "teller's checks" and "traveler's checks" are new.

Revisor's Note:

Former section 84-3-104 was repealed by L. 1991, ch. 296, § 111 and the number reassigned to the current text.

Attorney General's Opinions:

Certificate of deposit defined. 2006-10.


1. Cited; whether demand for payment on letter of credit was nonconforming relieving bank of obligation to pay examined. Brul v. MidAmerican Bank & Trust Co., 820 F. Supp. 1311, 1314 (1993).

2. On certified question (60-3201 et seq.) whether article 4 of Kansas U.C.C. applies to electronic fund transfers examined. Sinclair Oil Corp. v. Sylvan State Bank, 254 Kan. 836, 843, 869 P.2d 675 (1994).

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