§ 3303 Value In Instrument Transfers

Key Takeaways

•If you get something (like money, a promise, or a trade) for a check or promise to pay, it’s called 'for value'.
•If someone gives you a check for a promise (like fixing their car), but you don’t do the work, they can say the check isn’t valid.
•If you trade one check for another, or get a check to pay off a debt, it counts as 'for value'.
•A check or promise to pay must have a real reason behind it (like a trade or debt), or it might not be valid.

Example

You fix someone’s bike, and they give you a check as payment.

The check is valid because you did the work (fixed the bike) before getting paid. If you didn’t fix the bike, they could say the check isn’t valid.

(a) An instrument is issued or transferred for value if any of the following apply: (1) The instrument is issued or transferred for a promise of performance, to the extent the promise has been performed. (2) The transferee acquires a security interest or other lien in the instrument other than a lien obtained by judicial proceeding. (3) The instrument is issued or transferred as payment of, or as security for, an antecedent claim against any person, whether or not the claim is due. (4) The instrument is issued or transferred in exchange for a negotiable instrument. (5) The instrument is issued or transferred in exchange for the incurring of an irrevocable obligation to a third party by the person taking the instrument. (b) “Consideration” means any consideration sufficient to support a simple contract. The drawer or maker of an instrument has a defense if the instrument is issued without consideration. If an instrument is issued for a promise of performance, the issuer has a defense to the extent performance of the promise is due and the promise has not been performed. If an instrument is issued for value as stated in subdivision (a), the instrument is also issued for consideration. (Repealed and added by Stats. 1992, Ch. 914, Sec. 6. Effective January 1, 1993.)

Key Takeaways

•If you get something (like money, a promise, or a trade) for a check or promise to pay, it’s called 'for value'.
•If someone gives you a check for a promise (like fixing their car), but you don’t do the work, they can say the check isn’t valid.
•If you trade one check for another, or get a check to pay off a debt, it counts as 'for value'.
•A check or promise to pay must have a real reason behind it (like a trade or debt), or it might not be valid.

Example

You fix someone’s bike, and they give you a check as payment.

The check is valid because you did the work (fixed the bike) before getting paid. If you didn’t fix the bike, they could say the check isn’t valid.

Key Takeaways

Example

Key Terms

References

§ 3303 Value In Instrument Transfers

Key Takeaways

Example

Key Terms

References

Key Takeaways

Example

Key Terms

Related Statutes

References

Key Takeaways

Example

Key Terms

Related Statutes

References