(a) In this article:
(1) “Acceptor” means a drawee who has accepted a draft.
(2) “Drawee” means a person ordered in a draft to make payment.
(3) “Drawer” means a person who signs or is identified in a draft as a person ordering payment.
(4) “Good faith” means honesty in fact in the conduct or transaction concerned.
(5) “Maker” means a person who signs or is identified in a note as a person undertaking to pay.
(6) “Order” means a written instruction to pay money signed by the person giving the instruction. The instruction may be addressed to any person, including the person giving the instruction, or to one or more persons jointly or in the alternative but not in succession. An authorization to pay is not an order unless the person authorized to pay is also instructed to pay.
(7) “Ordinary care” in the case of a person engaged in business means observance of reasonable commercial standards, prevailing in the area in which the person is located, with respect to the business in which the person is engaged. In the case of a bank that takes an instrument for processing for collection or payment by automated means, reasonable commercial standards do not require the bank to examine the instrument if the failure to examine does not violate the bank’s prescribed procedures and the bank’s procedures do not vary unreasonably from general banking usage not disapproved by this article or Article 4.
(8) “Party” means a party to an instrument.
(9) “Promise” means a written undertaking to pay money signed by the person undertaking to pay. An acknowledgment of an obligation by the obligor is not a promise unless the obligor also undertakes to pay the obligation.
(10) “Prove” with respect to a fact means to meet the burden of establishing the fact (Section 7-1-201(b)(8)).
(11) “Remitter” means a person who purchases an instrument from its issuer if the instrument is payable to an identified person other than the purchaser.
(b) Other definitions applying to this article and the sections in which they appear are:
“Acceptance.” Section 7-3-409.
“Accommodated party.” Section 7-3-419.
“Accommodation party.” Section 7-3-419.
“Alteration.” Section 7-3-407.
“Anomalous indorsement.” Section 7-3-205.
“Blank indorsement.” Section 7-3-205.
“Cashier’s check.” Section 7-3-104.
“Certificate of deposit.” Section 7-3-104.
“Certified check.” Section 7-3-409.
“Check.” Section 7-3-104.
“Consideration.” Section 7-3-303.
“Draft.” Section 7-3-104.
“Holder in due course.” Section 7-3-302.
“Incomplete instrument.” Section 7-3-115.
“Indorsement.” Section 7-3-204.
“Indorser.” Section 7-3-204.
“Instrument.” Section 7-3-104.
“Issue.” Section 7-3-105.
“Issuer.” Section 7-3-105.
“Negotiable instrument.” Section 7-3-104.
“Negotiation.” Section 7-3-201.
“Note.” Section 7-3-104.
“Payable at a definite time.” Section 7-3-108.
“Payable on demand.” Section 7-3-108.
“Payable to bearer.” Section 7-3-109.
“Payable to order.” Section 7-3-109.
“Payment.” Section 7-3-602.
“Person entitled to enforce.” Section 7-3-301.
“Presentment.” Section 7-3-501.
“Reacquisition.” Section 7-3-207.
“Special indorsement.” Section 7-3-205.
“Teller’s check.” Section 7-3-104.
“Transfer of instrument.” Section 7-3-203.
“Traveler’s check.” Section 7-3-104.
“Value.” Section 7-3-303.
(c) The following definitions in other articles apply to this article:
“Bank.” Section 7-4-105.
“Banking day.” Section 7-4-104.
“Clearing house.” Section 7-4-104.
“Collecting bank.” Section 7-4-105.
“Depositary bank.” Section 7-4-105.
“Documentary draft.” Section 7-4-104.
“Intermediary bank.” Section 7-4-105.
“Item.” Section 7-4-104.
“Payor bank.” Section 7-4-105.
“Suspends payments.” Section 7-4-104.
(d) In addition, Article 1 contains general definitions and principles of construction and interpretation applicable throughout this article.
(Acts 1995, No. 95-668, p. 1381, §1; Act 2004-524, p. 1070, §2.)
Notes of Decisions
Smith v. AmSouth Bank, Inc., 892 So. 2d 905 (Ala. 2004).
· cites it 3× “" Ala.Code 1975, § 7-3-103(a)(7). We know only that doing so violated AmSouth's policy, which could be far wider or narrower than "reasonable commercial standards.”
Cagle's Inc. v. Valley Nat'l Bank, 153 F. Supp. 2d 1288 (M.D. Ala. 2001).
· cites it 6× “Code § 7-3-103, Alabama Comment 1. As the Comment explains, the definition which was adopted sets a “‘subjective’ standard,” while the rejected proposed change provided more of an objective standard.”
Southland Health Servs., Inc. v. Bank of Vernon, 887 F. Supp. 2d 1158 (N.D. Ala. 2012).
· cites it 2× “” Ala. Code § 7-3-103 (4). This deliberate divergence from the UCC revisions makes it *1182 problematic to look for guidance in other jurisdictions.”
Braden Furniture Co. v. Union State Bank, 109 So. 3d 625 (Ala. 2012).
· cites it 4× “2 Braden Furniture’s bank, RBC Bank, was the drawee or “payor bank,” see § 7-3-103(2) 3 and § 7-4-105(3). 4 Union State Bank, which accepted the checks for payment, is the depository bank or collecting bank, see § 7-4-105(2) and (5).”
Wallace v. Wallace, 909 So. 2d 827 (Ala. Civ. App. 2005).
“" Section 7-3-103(a)(4), Ala.Code 1975, defines "good faith" as "honesty in fact in the conduct or transaction concerned.”
Owens v. Durden, 440 So. 2d 1079 (Ala. Civ. App. 1983).
“§ 7-3-103, Code 1975 (official comment). Specifically, § 7-3-403 applies to a signature on an “instrument,” which is defined in § 7-3-102(l)(e) to mean a “negotiable instrument.”
Brooks v. First Fed. Sav. & Loan Ass'n, 726 So. 2d 640 (Ala. 1998).
· cites it 3× “" § 7-3-103(6). "`Promise' means a written undertaking to pay money signed by the person undertaking to pay.”
Bennett v. CIT Bank, N.A. (N.D. Ala. 2021).
“2009) (concluding that a note was negotiable “[b]ecause it contains all of the characteristics of a negotiable instrument as described in § 7-3-103(a) and it stands on its own without reliance on another document”).”
— Ala. Code § 7-3-103(2) — 1 case
Braden Furniture Co. v. Union State Bank, 109 So. 3d 625 (Ala. 2012).
“2 Braden Furniture’s bank, RBC Bank, was the drawee or “payor bank,” see § 7-3-103(2) 3 and § 7-4-105(3). 4 Union State Bank, which accepted the checks for payment, is the depository bank or collecting bank, see § 7-4-105(2) and (5).”
— Ala. Code § 7-3-103(3) — 1 case
Braden Furniture Co. v. Union State Bank, 109 So. 3d 625 (Ala. 2012).
“2 Braden Furniture’s bank, RBC Bank, was the drawee or “payor bank,” see § 7-3-103(2) 3 and § 7-4-105(3). 4 Union State Bank, which accepted the checks for payment, is the depository bank or collecting bank, see § 7-4-105(2) and (5).”
— Ala. Code § 7-3-103(6) — 2 cases
— Ala. Code § 7-3-103(9) — 2 cases
— Ala. Code § 7-3-103(a) — 1 case
Bennett v. CIT Bank, N.A. (N.D. Ala. 2021).
“2009) (concluding that a note was negotiable “[b]ecause it contains all of the characteristics of a negotiable instrument as described in § 7-3-103(a) and it stands on its own without reliance on another document”).”
— Ala. Code § 7-3-103(a)(4) — 2 cases
Cagle's Inc. v. Valley Nat'l Bank, 153 F. Supp. 2d 1288 (M.D. Ala. 2001).
“Code § 7-3-103, Alabama Comment 1. As the Comment explains, the definition which was adopted sets a “‘subjective’ standard,” while the rejected proposed change provided more of an objective standard.”
Wallace v. Wallace, 909 So. 2d 827 (Ala. Civ. App. 2005).
“" Section 7-3-103(a)(4), Ala.Code 1975, defines "good faith" as "honesty in fact in the conduct or transaction concerned.”
— Ala. Code § 7-3-103(a)(7) — 1 case
Smith v. AmSouth Bank, Inc., 892 So. 2d 905 (Ala. 2004).
“" Ala.Code 1975, § 7-3-103(a)(7). We know only that doing so violated AmSouth's policy, which could be far wider or narrower than "reasonable commercial standards.”
— Ala. Code § 7-3-103(a)(9) — 2 cases
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