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Chapter 3 Negotiable Instruments | Houston Debt Collection Lawyer | Commercial Paper Dispute Lawyer

A negotiable instrument is a document guaranteeing the payment of a specific amount of money, either on demand, or at a set time. As payment of money can be promised on demand or subsequently, the instrument itself can be used for immediate value, or by the holder in due course as a store of value.

For business to run smoothly, people in Houston have to rely on more than just cash to pay for their goods and services. Daily, people and businesses must use checks, notes, and other negotiable instruments whenever using cash is not convenient or practical. Because transactions with negotiable instruments happen so often, disputes concerning these negotiable instruments also occur frequently. In Houston, Chapter 3 of the Texas Uniform Commercial Code or Texas UCC regulates negotiable instruments.

Whether you are a small business owner trying to make it in Houston's competitive economy or just a regular consumer, you should seek advice from a Houston attorney with experience in disputes involving negotiable instruments. A qualified, experienced attorney can make what was once a confusing mess into a much smoother process.

Chapter 3 Governs Negotiable Instruments in Texas

The most commonly known negotiable instrument is a check. When you write or receive a check you are covered by the law in Chapter 3 of the Texas UCC. If you have any issues with destroyed, lost, or stolen checks Chapter 3 may provide you some protection from having the bank debit your checking account if someone else tries to use them illegally. If you have an issue with a bank regarding the wrongful payment of checks on your account, call a Houston commercial lawyer for help getting that money back.

Additionally, if you are a business owner in the Houston area who writes and deposits checks as a part of your daily business routine, you should consider speaking with a competent attorney. In the long run, one small conversation could prove to be worth its weight in gold.

Cashing a Check is Easy

You can cash a check almost anywhere. Banks are not the only ones who will cash checks. In certain cases people go to gas stations, grocery stores, or to specialized money stores to cash checks. This is big business in Houston. Just by way of example there are over 50 Ace Cash Express stores in Houston. Some locations include:

Indorsements are Governed by Chapter 3 of the Texas UCC

According to Chapter 3 of the Texas UCC, persons other than the original obligor and obligee can become parties to a negotiable instrument. The most common manner in which this is done is by Indorsement. An indorsement is a signature, other than that of a signer as maker, drawer, or acceptor, that alone or accompanied by other words is made on an instrument for the purpose of negotiating the instrument, restricting payment of the instrument, or incurring indorser's liability on the instrument.

There are different methods of indorsements contemplated by the The Texas UCC. For example, an indorsement which purports to transfer the instrument to a specified person is a special indorsement; an indorsement by the payee or holder which does not contain any additional notation is an blank indorsement; an indorsement which purports to require that the funds be applied in a certain manner, like "for deposit only", or "for collection only" is a restrictive indorsement; and, an indorsement purporting to disclaim retroactive liability is called a qualified indorsement. For example, an indorsement with the words "without recourse" on it would be a qualified indorsement.

Promissory Notes Are Also Negotiable Instruments

Promissory notes are formal I.O.U.s. A promissory note is a written document which states the terms under which a person or a business loans money to someone else who agrees to repay it. Promissory notes are contracts and can also be negotiable instruments which are governed by Chapter 3 of Texas UCC. Promissory notes are often used with mortgages or for financing real estate, but they can be used for simple transactions as well like loaning a friend or family member some money.

The promissory note is perhaps the most common example of a negotiable instrument. Even someone with no legal training can understand the concept: If I lend you money and you sign a document promising to repay me at a certain time, then I should be entitled to enforce that document. If you have been involved in a transaction that includes the issuance of a promissory note and have questions or concerns, one of the Houston commercial lawyers on this site can help you through your struggle.

A Houston Commercial Lawyer Can Help You with Your Transaction or Dispute Concerning Negotiable Instruments

Disputes often arise over promissory notes when the party who received money does not pay it back or when the person who has repaid the loan wants the payment returned. If this happens to you, or you need some assistance to negotiate the terms of a promissory note, contact a Houston commercial lawyer. Houston commercial lawyers deal with issues under Texas UCC Chapter 3 regarding:

Negotiable Instruments Dispute and Transactions are Complicated

The law of negotiable instruments is complex. Chapter 3 of the Texas UCC sets out eight requirements for an instrument to negotiable. The requirements are that the instrument be: (1) in writing; (2) signed by the maker; (3) an unconditional promise to pay; (4) for money; (5) for a fixed amount; (6) payable on demand, or at a fixed time; (7) free from any additional encumbrances; and (8) contain words of negotiability.

Houston commercial lawyers are used to dealing with the complexity of Chapter 3 of the Texas UCC and can help you with your transactions and disputes regarding negotiable instruments.

Serving clients throughout Southeastern Texas, including Aldine, Baytown, Bellaire, Beaumont, Channelview, Cloverleaf, Conroe, Deer Park, Friendswood, Galena Park, Galveston, Hedwig Village, Highlands, Hilshire Village, Humble, Jacinto City, Katy, League City, Magnolia, Mission Bend, Missouri City, Pasadena, Pearland, Porter, Sealy, South Houston, Spring Valley, Stafford, The Meadows, The Woodlands, Waller, West University, and other communities in Fort Bend County, Harris County, and Montgomery County.

So, whether you are a bank, a business, or a consumer dealing with negotiable instruments, you will benefit from the advice and guidance of a commercial lawyer who is experienced in the law of negotiable instruments.  He or she can draft a legally enforceable promissory note, represent your interests if a party breaches the contract to pay, or resolve a dispute so you can stay on track with your business goals. Call for a free initial consultation to discuss your needs.