Ark. Code Ann. § 4-3-106 (2026)
Unconditional promise or order
- Except as provided in this section, for the purposes of § 4-3-104(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 record, or (iii) that rights or obligations with respect to the promise or order are stated in another record. A reference to another record does not of itself make the promise or order conditional.
- A promise or order is not made conditional (i) by a reference to another record 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.
- 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 § 4-3-104(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.
- 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 § 4-3-104(a); but if the promise or order is an instrument, there cannot be a holder in due course of the instrument.
History. Acts 1991, No. 572, § 5; 2005, No. 856, § 28.
Research References
ALR.
What constitutes “fixed amount of money” for purposes of § 3-104 of Uniform Commercial Code providing that negotiable instrument must contain unconditional promise to pay fixed amount of money. 76 A.L.R.5th 289.
U. Ark. Little Rock L. Rev.
Survey of Legislation, 2005 Arkansas General Assembly, Business Law, 28 U. Ark. Little Rock L. Rev. 321.
Case Notes
Bank Draft.
The inclusion of the words “Upon Acceptance” and “Payable Through” a specified bank in a draft drawn upon its maker did not make the draft conditional. 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).
Conditional 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).