Okla. Stat. tit. 12A § 3-103

Current through Laws 2024, c. 453.
Section 3-103 - Definitions
(a) In this article:
(1) "Acceptor" means a drawee who has accepted a draft;
(2) "Drawee" means a person ordered in a draft to make payment;
(3) "Drawer" means a person who signs or is identified in a draft as a person ordering payment;
(4) Reserved;
(5) "Maker" means a person who signs or is identified in a note as a person undertaking to pay;
(6) "Order" means a written instruction to pay money signed by the person giving the instruction. The instruction may be addressed to any person, including the person giving the instruction, or to one or more persons jointly or in the alternative but not in succession. An authorization to pay is not an order unless the person authorized to pay is also instructed to pay;
(7) "Ordinary care" in the case of a person engaged in business means observance of reasonable commercial standards, prevailing in the area in which the person is located, with respect to the business in which the person is engaged. In the case of a bank that takes an instrument for processing for collection or payment by automated means, reasonable commercial standards do not require the bank to examine the instrument if the failure to examine does not violate the bank's prescribed procedures and the bank's procedures do not vary unreasonably from general banking usage not disapproved by this article or Article 4 of this title;
(8) "Party" means a party to an instrument;
(9) "Principal obligor", with respect to an instrument, means the accommodated party or any other party to the instrument against whom a secondary obligor has recourse under this article;
(10) "Promise" means a written undertaking to pay money signed by the person undertaking to pay. An acknowledgment of an obligation by the obligor is not a promise unless the obligor also undertakes to pay the obligation;
(11) "Prove", with respect to a fact, means to meet the burden of establishing the fact (subsection (8) of Section 1-201 of this title);
(12) Reserved;
(13) "Remitter" means a person who purchases an instrument from its issuer if the instrument is payable to an identified person other than the purchaser; and
(14) "Secondary obligor", with respect to an instrument, means
(i) an indorser or an accommodation party,
(ii) a drawer having the obligation described in subsection (d) of Section 3-414 of this title, or
(iii) any other party to the instrument that has recourse against another party to the instrument pursuant to subsection (b) of Section 3-116 of this title.
(b) Other definitions applying to this article and the sections in which they appear in this title are:

"Acceptance"

Section 3-409

"Accommodated party"

Section 3-419

"Accommodation party"

Section 3-419

"Account"

Section 4-104

"Alteration"

Section 3-407

"Anomalous indorsement"

Section 3-205

"Blank indorsement"

Section 3-205

"Cashier's check"

Section 3-104

"Certificate of deposit"

Section 3-104

"Certified check"

Section 3-409

"Check"

Section 3-104

"Consideration"

Section 3-303

"Draft"

Section 3-104

"Holder in due course"

Section 3-302

"Incomplete instrument"

Section 3-115

"Indorsement"

Section 3-204

"Indorser"

Section 3-204

"Instrument"

Section 3-104

"Issue"

Section 3-105

"Issuer"

Section 3-105

"Negotiable instrument"

Section 3-104

"Negotiation"

Section 3-201

"Note"

Section 3-104

"Payable at a definite time"

Section 3-108

"Payable on demand"

Section 3-108

"Payable to bearer"

Section 3-109

"Payable to order"

Section 3-109

"Payment"

Section 3-602

"Person entitled to enforce"

Section 3-301

"Presentment"

Section 3-501

"Reacquisition"

Section 3-207

"Special indorsement"

Section 3-205

"Teller's check"

Section 3-104

"Transfer of instrument"

Section 3-203

"Traveler's check"

Section 3-104

"Value"

Section 3-303

(c) The following definitions in other articles of this title apply to this article:

"Banking day"

Section 4-104

"Clearing house"

Section 4-104

"Collecting bank"

Section 4-105

"Depositary bank"

Section 4-105

"Documentary draft"

Section 4-104

"Intermediary bank"

Section 4-105

"Item"

Section 4-104

"Payor bank"

Section 4-105

"Suspends payments"

Section 4-104

(d) In addition, Article 1 of the Uniform Commercial Code, this title, contains general definitions and principles of construction and interpretation applicable throughout this article.

Okla. Stat. tit. 12A, § 3-103

Added by Laws 1961, SB 36, p. 102, § 3-103; Amended by Laws 1991, SB 25, c. 117, § 28, eff. 1/1/1992; Amended by Laws 2008 , SB 1708, c. 382, § 2, eff. 11/1/2008 (Laws 2008, SB 1708, c. 382 held unconstitutional and void by Weddington v. Henry, 2008 OK 102, 202 P.3d 143, and repealed by Laws 2009 , SB 991, c. 208, § 22, eff. 11/1/2009); Amended by Laws 2009 , SB 991, c. 208, § 2, eff. 11/1/2009.

Oklahoma Code Comment

Sub section 3-103(a)(7) provides in part: "In the case of a bank that takes an instrument for processing for collection or payment by automated means, reasonable commercial standards do not require the bank to examine the instrument if the failure to examine does not violate the bank's prescribed procedures and the bank's procedures do not vary unreasonably general general usage not disapproved by this article or Article 4 of this title."

It is clear that the UCC approves bank procedures that do not involve the manual examination by a bank, particularly a payor bank, of all instruments. See Official Comment 4 to Section 4-406 . But what is general banking usage in Oklahoma and elsewhere on this matter?

The 1992 American Bankers Association Check Fraud Survey indicated that forged signatures were reported much more frequently than check kiting, counterfeit instruments or other types of fraud involving "on us" instruments for paying banks. Further, and not surprisingly, while employee training was the most used action to prevent check fraud losses, signature verification on all checks over a specified amount was employed by 51.6% of the banks responding, with a minimum figure of $1,000 and a median figure of $3,000 being used.

An Oklahoma Bankers Association survey printed in the December 23, 1991, edition of Legal Update indicated, based on the responses of 264 banks, that many small banks ($5 - $50 million in assets) in small areas (10,000 population and under) still examine basically all checks, but larger banks in populous areas do not. Moreover, beyond very small banks ($10 million and less in assets) in very small areas (5,000 population and under) most banks do not examine all checks. This fatter pattern is repeated when the division is made by the amount of the check; most banks examine checks over a certain dollar amount. The minimum amount tends to be lower in Oklahoma than nationally, with some Oklahoma banks examining even $100-$500 checks, although as banks get larger, the $1,000 figure is popular, as is a figure of $5,000. The minimum figure tends to be higher as population size increases. Random sampling of checks that are not routinely examined does not seem to be a widespread practice however