O.C.G.A. § 11-3-106 (2019)
Unconditional promise or order
(a) Except as provided in this Code section, for the purposes of subsection (a) of Code Section 11-3-104, 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 subsection (a) of Code Section 11-3-104. 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 subsection (a) of Code Section 11-3-104; but, if the promise or order is an instrument, there cannot be a holder in due course of the instrument.
History
Code 1981, § 11-3-106, enacted by Ga. L. 1996, p. 1306, § 3.
Annotations
JUDICIAL DECISIONS Editor’s notes. - In light of the similarity of the statutory provisions, decisions under former Code Section 11-3-105 are included in the annotations for this Code section. Enforceability of nonnegotiable note as between maker and payee. - In action by payee against maker of note, it is immaterial that conditions were placed on promise to pay sum certain in event of subsequent discovery of errors in accounting, thereby rendering sum uncertain and invalidating instrument as negotiable paper within requirements of this section, and it shall be enforced in accordance with its terms as between parties to it. Daniels v. Allen, 118 Ga. App. 722, 165 S.E.2d 449, 1968 Ga. App. LEXIS 1510 (1968) (decided under former Code Section 11-3-105). Admissibility of parole evidence. - Parol evidence is generally inadmissible
to alter unconditional nature of promissory note, absent fraud, accident, or mistake. Brice v. Northwest Ga. Bank, 186 Ga. App. 871, 368 S.E.2d 816, 1988 Ga. App. LEXIS 500 (1988) (decided under former Code Section 11-3-118). Bank not holder in due course. - In an action to revoke acceptance of a vehicle and for violation of the Georgia Fair Businesses Practice Act, O.C.G.A. § 10-1-390 et seq., and breach of various warranties, the trial court erred by granting summary judgment to the bank based on the court’s conclusion that the bank was a holder in due course because the contract stated that any holder of the contract was subject to all claims and defenses of the buyers and, thus, the bank was not a holder in due course. Timmons v. SunTrust Bank, 352 Ga. App. 175, 834 S.E.2d 298, 2019 Ga. App. LEXIS 547 (2019).
RESEARCH REFERENCES Am. Jur. 2d. 11 Am. Jur. 2d, Bills and Notes, §§ 52,
92, 95, 131. 64 Am. Jur. 2d, Public Securities and Obligations, §§ 17 et seq., 32.
C.J.S. 10 C.J.S., Bills and Notes, § 138 et seq. U.L.A. Uniform Commercial Code (U.L.A.) § 3106. ALR. Bills and notes: negotiability as affected by provision in relation to interest or discount, 51 A.L.R. 294; 58 A.L.R. 1281. Effect of words “without offset,” “without defalcation,” or the like, in negotiable paper, 79 A.L.R. 126. Negotiability under Uniform Negotiable Instruments Act as affected by provision for attorney’s fee, 91 A.L.R. 693.
Negotiability of paper as affected by provisions therein relating to future contingent fund or security for its payment, 134 A.L.R. 946. Validity of provision in promissory note or other evidence of indebtedness for payment, as attorneys’ fees, expenses, and costs of collection, of specified percentage of note, 17 A.L.R.2d 288. What constitutes unconditional promise to pay under Uniform Commercial Code § 3-104(1)(b), 88 A.L.R.3d 1100.