Okla. Stat. tit. 12A § 3-303

Current through Laws 2024, c. 453.

Section 3-303 - Value and Consideration

(a) An instrument is issued or transferred for value if:

(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; or

(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 subsection (a) of this section, the instrument is also issued for consideration.

Okla. Stat. tit. 12A, § 3-303

Laws 1961, p. 108, § 3-303; Amended by Laws 1991, SB 25, c. 117, § 54, eff. 1/1/1992.

Oklahoma Code Comment

Value relates to the issue of whether one is a holder in due course. Absent consideration, the maker or drawer has a defense to the payment of the obligation that may also prevent holder-in-due-course status. See UCC § 3-302(a)(2).

Outside Article 3, consideration constitutes value, but a different rule applies in Article 3. Under Section 3-303, an instrument issued for value is also issued for consideration; however, the opposite may true.

It is possible to have consideration for the issuance of an instrument without such consideration rising to the level of value. In such a situation, the payee would not be a holder for value, and thus could not be a holder in due course. For example, if A issues a check to B in consideration of B's promise to sell A a car there is consideration for the check, but there is value only if B transfers the car to A.

Forbearance to sue upon a past due promissory note constitutes sufficient consideration for a new promise to pay. A & 5 Distributing Co. v. Nall-Tucker, Inc., 428 P.2d 254 (Okla. 1967); Hudson Houston Lumber Co. v. First State Bank of Ringling, 132 Okla. 125, 269 P. 1054 (1928). Surrender however, of an unenforceable promissory note is not sufficient consideration for an accommodation indorser. Bradstreet v. Crosbie, 123 Okla. 1269, 253 P. 63 (1926).

A negotiable instrument taken in satisfaction of an antecedent debt is taken for value. Citizens Bank, Booneville, Ark. v. National Bank of Commerce, Tulsa, Okla., 334 F.2d 257 (10th Cir. 1964). The depository bank which advances and pays a payee's check has a security interest in the check, and thus takes the check for value. Peoples Bank of Aurora v. Haar, 421 P.2d 817 (Okla. 1966). Exchanging a note and mortgage for a new note and mortgage is both sufficient consideration and constitutes value, although the security may be worthless. Maze v. Austin, 135 Okla. 71 273 P 994 (1929).