(a) Except as provided in this section, for the purposes of Section 7-3-104(a), a promise or order is unconditional unless it states (i) an express condition to payment, (ii) that the promise or order is subject to or governed by another writing, or (iii) that rights or obligations with respect to the promise or order are stated in another writing. A reference to another writing does not of itself make the promise or order conditional.
(b) A promise or order is not made conditional (i) by a reference to another writing for a statement of rights with respect to collateral, prepayment, or acceleration, or (ii) because payment is limited to resort to a particular fund or source.
(c) If a promise or order requires, as a condition to payment, a countersignature by a person whose specimen signature appears on the promise or order, the condition does not make the promise or order conditional for the purposes of Section 7-3-104(a). If the person whose specimen signature appears on an instrument fails to countersign the instrument, the failure to countersign is a defense to the obligation of the issuer, but the failure does not prevent a transferee of the instrument from becoming a holder of the instrument.
(d) If a promise or order at the time it is issued or first comes into possession of a holder contains a statement, required by applicable statutory or administrative law, to the effect that the rights of a holder or transferee are subject to claims or defenses that the issuer could assert against the original payee, the promise or order is not thereby made conditional for the purposes of Section 7-3-104(a); but if the promise or order is an instrument, there cannot be a holder in due course of the instrument.
(Acts 1995, No. 95-668, p. 1381, §1.)
Notes of Decisions
Blasco v. Money Servs. Ctr. (In Re Blasco), 352 B.R. 888 (Bankr. N.D. Ala. 2006).
· cites it 3× “1 Ala.Code § 7-3-106 explains that a promise or order is unconditional unless it contains an express condition to payment, or the order is subject to or governed by another writing, or the rights or obligations with respect to the order are stated in another writing.”
Foster v. Hacienda Nirvana, Inc., 32 So. 3d 1256 (Ala. 2009).
· cites it 4× “The Fosters observe that § 7-3-106, Ala.Code 1975, provides: “(a) Except as provided in this section, for the purposes of Section 7-3-104(a), a promise or order is unconditional unless it states (i) an express condition to payment, (ii) that the promise or order is subject to or…”
Bennett v. CIT Bank, N.A. (N.D. Ala. 2021).
· cites it 9× “The Code provides that “a promise or order is unconditional unless it states (i) an express condition to payment, (ii) that the promise or order is subject to or governed by another writing, or (iii) that rights or obligations with respect to the promise or order are stated in…”
Affinity First Fed. Credit Union v. Nat'l Credit Union Admin. Bd. (D. Kan. 2023).
“” Just because it was uncertain whether there would be extra money after satisfying all of Central’s liabilities does not mean that the Claim Receipt was “unfixed” or “unascertainable.” Rather, upon resolution of the estate, Central would discover how much money it had left to…”
— Ala. Code § 7-3-106(a) — 1 case
Blasco v. Money Servs. Ctr. (In Re Blasco), 352 B.R. 888 (Bankr. N.D. Ala. 2006).
“1 Ala.Code § 7-3-106 explains that a promise or order is unconditional unless it contains an express condition to payment, or the order is subject to or governed by another writing, or the rights or obligations with respect to the order are stated in another writing.”
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