1-1 By: Armbrister S.B. No. 1297
1-2 (In the Senate - Filed March 19, 1993; March 22, 1993, read
1-3 first time and referred to Committee on Economic Development;
1-4 May 4, 1993, reported favorably by the following vote: Yeas 9,
1-5 Nays 0; May 4, 1993, sent to printer.)
1-6 COMMITTEE VOTE
1-7 Yea Nay PNV Absent
1-8 Parker x
1-9 Lucio x
1-10 Ellis x
1-11 Haley x
1-12 Harris of Dallas x
1-13 Harris of Tarrant x
1-14 Leedom x
1-15 Madla x
1-16 Rosson x
1-17 Shapiro x
1-18 Wentworth x
1-19 A BILL TO BE ENTITLED
1-20 AN ACT
1-21 relating to negotiable instruments.
1-22 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-23 SECTION 1. Section 1.207, Business & Commerce Code, is
1-24 amended to read as follows:
1-25 Sec. 1.207. Performance or Acceptance Under Reservation of
1-26 Rights. (a) A party who, with explicit reservation of rights,
1-27 performs or promises performance or assents to performance in a
1-28 manner demanded or offered by the other party does not thereby
1-29 prejudice the rights reserved. Such words as "without prejudice",
1-30 "under protest" or the like are sufficient.
1-31 (b) Subsection (a) does not apply to an accord and
1-32 satisfaction.
1-33 SECTION 2. Subsections (a) and (b), Section 3.102, Business
1-34 & Commerce Code, are amended to read as follows:
1-35 (a) In this chapter unless the context otherwise requires
1-36 (1) "Issue" means the first delivery of an instrument
1-37 to a holder or a remitter.
1-38 (2) An "order" is a written direction to pay and must
1-39 be more than an authorization or request. It must identify the
1-40 person to pay with reasonable certainty. It may be addressed to
1-41 one or more such persons jointly or in the alternative but not in
1-42 succession.
1-43 (3) A "promise" is a written <an> undertaking to pay
1-44 and must be more than an acknowledgment of an obligation.
1-45 (4) "Secondary party" means a drawer or indorser.
1-46 <(5) "Instrument" means a negotiable instrument.>
1-47 (b) Other definitions applying to this chapter and the
1-48 sections in which they appear are:
1-49 "Acceptance". Section 3.410.
1-50 "Accommodation party". Section 3.415.
1-51 "Alteration". Section 3.407.
1-52 "Cashier's check". Section 3.104.
1-53 "Certificate of deposit". Section 3.104.
1-54 "Certification". Section 3.411.
1-55 "Check". Section 3.104.
1-56 "Definite time". Section 3.109.
1-57 "Dishonor". Section 3.507.
1-58 "Draft". Section 3.104.
1-59 "Holder in due course". Section 3.302.
1-60 "Instrument". Section 3.104.
1-61 "Negotiable instrument". Section 3.104.
1-62 "Negotiation". Section 3.202.
1-63 "Note". Section 3.104.
1-64 "Notice of dishonor". Section 3.508.
1-65 "On demand". Section 3.108.
1-66 "Presentment". Section 3.504.
1-67 "Protest". Section 3.509.
1-68 "Restrictive Indorsement". Section 3.205.
2-1 "Signature". Section 3.401.
2-2 "Teller's check". Section 3.104.
2-3 "Traveler's check". Section 3.104.
2-4 SECTION 3. Section 3.104, Business & Commerce Code, is
2-5 amended to read as follows:
2-6 Sec. 3.104. <FORM OF> NEGOTIABLE INSTRUMENT <INSTRUMENTS;
2-7 "DRAFT"; "CHECK"; "CERTIFICATE OF DEPOSIT"; "NOTE">. (a) Except
2-8 as provided by Subsections (c) and (d), "negotiable instrument"
2-9 means an unconditional promise or order to pay a fixed amount of
2-10 money, with or without interest or other charges described in the
2-11 promise or order, if it: <Any writing to be a negotiable instrument
2-12 within this chapter must>
2-13 (1) is payable to bearer or to order at the time it is
2-14 issued or first comes into possession of a holder <be signed by the
2-15 maker or drawer>; <and>
2-16 (2) is payable on demand or at a definite time
2-17 <contain an unconditional promise or order to pay a sum certain in
2-18 money and no other promise, order, obligation or power given by the
2-19 maker or drawer except as authorized by this chapter>; and
2-20 (3) does not state any other undertaking or
2-21 instruction by the person promising or ordering payment to do any
2-22 act in addition to the payment of money, but the promise or order
2-23 may contain:
2-24 (A) an undertaking or power to give, maintain,
2-25 or protect collateral to secure payment;
2-26 (B) an authorization or power to the holder to
2-27 confess judgment or realize on or dispose of collateral; or
2-28 (C) a waiver of the benefit of any law intended
2-29 for the advantage or protection of an obligor <be payable on demand
2-30 or at a definite time; and>
2-31 <(4) be payable to order or to bearer>.
2-32 (b) "Instrument" means a negotiable instrument.
2-33 (c) An order that meets all of the requirements of
2-34 Subsection (a), other than Subdivision (1), and otherwise falls
2-35 within the definition of "check" in Subsection (f) is a negotiable
2-36 instrument and a check.
2-37 (d) A promise or order other than a check is not an
2-38 instrument if, at the time it is issued or first comes into
2-39 possession of a holder, it contains a conspicuous statement,
2-40 however expressed, to the effect that the promise or order is not
2-41 negotiable or is not an instrument governed by this chapter.
2-42 (e) An instrument is a "note" if it is a promise and is a
2-43 "draft" if it is an order. If an instrument falls within the
2-44 definition of both "note" and "draft," a person entitled to enforce
2-45 the instrument may treat it as either.
2-46 (f) "Check" means (i) a draft, other than a documentary
2-47 draft, payable on demand and drawn on a bank or (ii) a cashier's
2-48 check or teller's check. An instrument may be a check even though
2-49 it is described on its face by another term, such as "money order."
2-50 (g) "Cashier's check" means a draft with respect to which
2-51 the drawer and drawee are the same bank or branches of the same
2-52 bank.
2-53 (h) "Teller's check" means a draft drawn by a bank:
2-54 (1) on another bank; or
2-55 (2) payable at or through a bank.
2-56 (i) "Traveler's check" means an instrument that:
2-57 (1) is payable on demand;
2-58 (2) is drawn on or payable at or through a bank;
2-59 (3) is designated by the term "traveler's check" or by
2-60 a substantially similar term; and
2-61 (4) requires, as a condition to payment, a
2-62 countersignature by a person whose specimen signature appears on
2-63 the instrument.
2-64 (j) "Certificate of deposit" means an instrument containing
2-65 an acknowledgment by a bank that a sum of money has been received
2-66 by the bank and a promise by the bank to repay the sum of money. A
2-67 certificate of deposit is a note of the bank. <A writing which
2-68 complies with the requirements of this section is>
2-69 <(1) a "draft" ("bill of exchange") if it is an order;>
2-70 <(2) a "check" if it is a draft drawn on a bank and
3-1 payable on demand;>
3-2 <(3) a "certificate of deposit" if it is an
3-3 acknowledgment by a bank of receipt of money with an engagement to
3-4 repay it;>
3-5 <(4) a "note" if it is a promise other than a
3-6 certificate of deposit.>
3-7 <(c) As used in other chapters of this title, and as the
3-8 context may require, the terms "draft", "check", "certificate of
3-9 deposit" and "note" may refer to instruments which are not
3-10 negotiable within this chapter as well as to instruments which are
3-11 so negotiable.>
3-12 SECTION 4. Subchapter A, Chapter 3, Business & Commerce
3-13 Code, is amended by adding Section 3.123 to read as follows:
3-14 Sec. 3.123. INTEREST. (a) Unless otherwise provided in the
3-15 instrument:
3-16 (1) an instrument is not payable with interest; and
3-17 (2) interest on an interest-bearing instrument is
3-18 payable from the date of the instrument.
3-19 (b) Interest may be stated in an instrument as a fixed or
3-20 variable amount of money or it may be expressed as a fixed or
3-21 variable rate or rates. The amount or rate of interest may be
3-22 stated or described in the instrument in any manner and may require
3-23 reference to information not contained in the instrument. If an
3-24 instrument provides for interest, but the amount of interest
3-25 payable cannot be ascertained from the description, interest is
3-26 payable at the judgment rate in effect at the place of payment of
3-27 the instrument and at the time interest first accrues.
3-28 SECTION 5. Subchapter C, Chapter 3, Business & Commerce
3-29 Code, is amended by adding Section 3.311 to read as follows:
3-30 Sec. 3.311. ACCORD AND SATISFACTION BY USE OF INSTRUMENT.
3-31 (a) This section applies only if a person against whom a claim is
3-32 asserted proves that:
3-33 (1) the person in good faith tendered an instrument to
3-34 the claimant as full satisfaction of the claim;
3-35 (2) the amount of the claim was unliquidated or
3-36 subject to a bona fide dispute; and
3-37 (3) the claimant obtained payment of the instrument.
3-38 (b) Except as provided by Subsection (c), the claim is
3-39 discharged if the person against whom the claim is asserted proves
3-40 that the instrument or an accompanying written communication
3-41 contained a conspicuous statement to the effect that the instrument
3-42 was tendered as full satisfaction of the claim.
3-43 (c) Subject to Subsection (d), a claim is not discharged
3-44 under Subsection (b) if either of the following applies:
3-45 (1) The claimant, if an organization, proves that:
3-46 (A) within a reasonable time before the tender,
3-47 the claimant sent a conspicuous statement to the person against
3-48 whom the claim is asserted that communications concerning disputed
3-49 debts, including an instrument tendered as full satisfaction of a
3-50 debt, are to be sent to a designated person, office, or place; and
3-51 (B) the instrument or accompanying communication
3-52 was not received by that designated person, office, or place.
3-53 (2) The claimant, whether or not an organization,
3-54 proves that within 90 days after payment of the instrument the
3-55 claimant tendered repayment of the amount of the instrument to the
3-56 person against whom the claim is asserted. This subdivision does
3-57 not apply if the claimant is an organization that sent a statement
3-58 complying with Subdivision (1)(A).
3-59 (d) Subsection (c) is not applicable if the person against
3-60 whom the claim is asserted proves that within a reasonable time
3-61 before collection of the instrument was initiated, the claimant, or
3-62 an agent of the claimant having direct responsibility with respect
3-63 to the disputed obligation, knew that the instrument was tendered
3-64 in full satisfaction of the claim.
3-65 SECTION 6. Section 3.805, Business & Commerce Code, is
3-66 amended to read as follows:
3-67 Sec. 3.805. Instruments Not Payable to Order or to Bearer.
3-68 This chapter applies to any instrument whose terms do not preclude
3-69 transfer and which is otherwise negotiable within this chapter but
3-70 which is not payable to order or to bearer, except that there can
4-1 be no holder in due course of such an instrument other than a check
4-2 falling within the provisions of Section 3.104(c).
4-3 SECTION 7. The importance of this legislation and the
4-4 crowded condition of the calendars in both houses create an
4-5 emergency and an imperative public necessity that the
4-6 constitutional rule requiring bills to be read on three several
4-7 days in each house be suspended, and this rule is hereby suspended,
4-8 and that this Act take effect and be in force from and after its
4-9 passage, and it is so enacted.
4-10 * * * * *
4-11 Austin,
4-12 Texas
4-13 May 4, 1993
4-14 Hon. Bob Bullock
4-15 President of the Senate
4-16 Sir:
4-17 We, your Committee on Economic Development to which was referred
4-18 S.B. No. 1297, have had the same under consideration, and I am
4-19 instructed to report it back to the Senate with the recommendation
4-20 that it do pass and be printed.
4-21 Parker,
4-22 Chairman
4-23 * * * * *
4-24 WITNESSES
4-25 FOR AGAINST ON
4-26 ___________________________________________________________________
4-27 Name: Karen Neeley x
4-28 Representing: Ind. Bankers Assn. of Texas
4-29 City: Austin
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4-31 Name: Marion Sanford, Jr. x
4-32 Representing: TX Business Law Foundation
4-33 City: Austin
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