Colorado § 4-3-106 - Unconditional promise or order.

§ 4-3-106. Unconditional promise or order.

(a) Except as provided in this section, for the purposes of section 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 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 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.

(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 4-3-104 (a); but if the promise or order is an instrument, there cannot be a holder in due course of the instrument.

Source: L. 94: Entire article R&RE, p. 844, § 1, effective January 1, 1995.

Editor's note: This section is similar to former § 4-3-105 as it existed prior to 1994.

ANNOTATION

Annotator's note. The following annotations include cases decided under former provisions similar to this section.

If a note is conditional no recovery can be had unless the condition has been performed or the performance waived. Abercrombie v. Bear Canon Coal Co., 86 Colo. 169, 279 P. 42 (1929); Bank of Kimball v. Rostek, 161 Colo. 584, 423 P.2d 579 (1967).

Statement in a promissory note providing that the maker's obligation under the note was subject to the conditions of the bill of sale and covenants not to compete rendered the note nonnegotiable but not unenforceable. DBA Enter., Inc. v. Findlay, 923 P.2d 298 (Colo. App. 1996).

Evidence may be introduced to show that there was a conditional delivery of a check that has not been fulfilled where payee brings an action against the drawer, as such does not vary the terms of the written instrument, but shows want of an element essential to its character — unconditional delivery. Norman v. McCarthy, 56 Colo. 290, 138 P. 28 (1914).

Maker may show that note was never made or delivered unconditionally with the intention that it should be binding in all events according to its terms. Burenheide v. Wall, 131 Colo. 371, 281 P.2d 1000 (1955).

A parol agreement made contemporary with the execution of a note that it is to be paid only from the maker's share of dividends of a corporate payee is a valid defense in an action on the note by an assignee after maturity. George v. Williams, 27 Colo. App. 400, 149 P. 837 (1915).

Applied in West Greeley Nat'l Bank v. Wygant, 650 P.2d 1339 (Colo. App. 1982).