Okla. Stat. tit. 12A § 3-407

Current through Laws 2024, c. 453.

Section 3-407 - Alteration

(a) "Alteration" means

(i) an unauthorized change in an instrument that purports to modify in any respect the obligation of a party, or

(ii) an unauthorized addition of words or numbers or other change to an incomplete instrument relating to the obligation of a party.

(b) Except as provided in subsection (c) of this section, an alteration fraudulently made discharges a party whose obligation is affected by the alteration unless that party assents or is precluded from asserting the alteration. No other alteration discharges a party, and the instrument may be enforced according to its original terms.

(c) A payor bank or drawee paying a fraudulently altered instrument or a person taking it for value, in good faith and without notice of the alteration, may enforce rights with respect to the instrument (i) according to its original terms, or (ii) in the case of an incomplete instrument altered by unauthorized completion, according to its terms as completed.

Okla. Stat. tit. 12A, § 3-407

Laws 1961, p. 111, § 3-407; Amended by Laws 1991, SB 25, c. 117, § 70, eff. 1/1/1992.

Oklahoma Code Comment

1. This Section makes no substantial change to Oklahoma law, although the 1992 revisions clarified this Section somewhat. Where Oklahoma cases under pre-revision Section 3-407 focused on whether an alteration was "material," post-revision cases will likely focus on whether there was an "alteration" at all, and then whether the alteration was "unauthorized" or "fraudulent." As under the pre-revision Section, a fraudulent alteration discharges a party whose obligation is affected by the alteration. See e.g. Inter-City Fin. Corp. v. Hooker, 168 Okla. 10, 32 P.2d 277 (1934) (materially altered note unenforceable by payee against non-consenting co maker), Campbell v. Vance, 118 Okla. 283, 248 P. 634 (1926) (material alteration of instrument by holder extinguished liability of non-consenting makers); German-American Bank v. Hennis, 54 Okla. 146, 153 P. 671 (1915) (payee erased one maker's name without consent of co-makers and then assigned note for value; note was void and assignee could not enforce against non-consenting co-makers). However, even a material alteration may be ratified or waived, making the instrument enforceable as to its altered terms. See, e.g., Swartz v. Bank of Haileyville, 169 Okla. 22, 35 P.2d 701 (1934); Campbell v. Vance, 118 Okla. 283, 248 P. 634 (1926).

2. Subsection (b) provides that only fraudulent alterations will effect a discharge. Thus, for example, if an instrument is mistakenly altered, even though the alteration is unauthorized, the instrument may still be enforced according to its original terms.