Ark. Code Ann. § 4-3-104 (2026)
Negotiable instrument
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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:
- is payable to bearer or to order at the time it is issued or first comes into possession of a holder;
- is payable on demand or at a definite time; and
- 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.
- “Instrument” means a negotiable instrument.
- 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.
- 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 chapter.
- 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.
- “Check” means (i) a draft, other than a documentary draft, payable on demand and drawn on a bank or (ii) a cashier's check or teller's check. An instrument may be a check even though it is described on its face by another term, such as “money order.”
- “Cashier's check” means a draft with respect to which the drawer and drawee are the same bank or branches of the same bank.
- “Teller's check” means a draft drawn by a bank (i) on another bank, or (ii) payable at or through a bank.
- “Traveler's check” means an instrument that (i) is payable on demand, (ii) is drawn on or payable at or through a bank, (iii) is designated by the term “traveler's check” or by a substantially similar term, and (iv) requires, as a condition to payment, a countersignature by a person whose specimen signature appears on the instrument.
- “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.
History. Acts 1991, No. 572, § 5.
Research References
Ark. L. Notes.
Matthews, Interest Rate Provisions and the Negotiability of Commercial Paper, 1986 Ark. L. Notes 37.
U. Ark. Little Rock L.J.
Arkansas Law Survey, Harper, Business Law, 7 U. Ark. Little Rock L.J. 159.
Case Notes
Drafts.
Where a bill of exchange is drawn by the maker upon itself, the mere execution of the bill is deemed an acceptance of it and the holder has an option to treat the draft as an accepted bill or as a promissory note. Canal Ins. Co. v. First Nat'l Bank, 266 Ark. 1044, 596 S.W.2d 710 (Ct. App. 1979), aff'd, 268 Ark. 356, 596 S.W.2d 709 (1980) (decision under prior law).
Letter of Credit.
Letter of credit which did not contain an unconditional promise or order to pay, but, instead, payment was specifically conditioned upon receipt of a signed statement that the amount drawn was due in connection with a construction loan, was not a negotiable instrument. City Nat'l Bank v. First Nat'l Bank & Trust Co., 22 Ark. App. 5, 732 S.W.2d 489 (1987) (decision under prior law).
Mortgage Note.
The creditor, as an assignee of the defendant's mortgage note, could not sue on the underlying debt the defendants owed to the original mortgagor; and for the creditor to have prevailed in enforcing the note, it was required either to produce the original or satisfy the requirements for a lost negotiable instrument under § 4-3-309(a) and (b). McKay v. Capital Resources Co., 327 Ark. 737, 940 S.W.2d 869 (1997).
Signature.
No person is liable on a negotiable instrument unless his signature appears on it. Bank of Cave City v. Justice Farms, Inc., 297 Ark. 335, 761 S.W.2d 921 (1988) (decision under prior law).
One can be a holder in due course only of a negotiable instrument, and that instrument, among other things, must be signed by the maker or drawer. Bank of Cave City v. Justice Farms, Inc., 297 Ark. 335, 761 S.W.2d 921 (1988) (decision under prior law).
Where defendant, in signing two notes, added the handwritten title “V. Pres.” after his signatures on signature lines designated “individually”, appellate court held that, based on the language of the notes and other evidence introduced at trial, the added title was merely descriptive and did not insulate defendant from individual liability. Mollenhour v. State First Nat'l Bank, 27 Ark. App. 176, 769 S.W.2d 28 (1989) (decision under prior law).
Instrument executed by a company accountant constituted a check under subdivision (f)(i) of this section, and not a promissory note, because the owner of a company was the one who asked two creditors to delay presentment of the document for payment; therefore, summary judgment was properly granted in favor of the accountant, who was not personally liable for payment. Billingsley v. Smith, 85 Ark. App. 128, 147 S.W.3d 697 (2004).
Unconditional Promise to Pay.
An instrument cannot be a note unless it contains an absolute and unconditional promise to pay money; therefore, a contract for construction of a building was not a note where the promise to pay money was conditioned by its very terms upon the contractor's reciprocal promise to construct a metal building. Pack v. Hill, 18 Ark. App. 104, 710 S.W.2d 847 (1986) (decision under prior law).
Cited: A.C.E., Inc. v. Inland Mtg. Co., 333 Ark. 232, 969 S.W.2d 176 (1998).