(a) In this article:

1. (1) "acceptor" means a drawee who has accepted a draft;
2. (2) "consumer account" means an account established by an individual primarily for personal, family or household purposes;
3. (3) "consumer transaction" means a transaction in which an individual incurs an obligation primarily for personal, family or household purposes;
4. (4) "drawee" means a person ordered in a draft to make payment;
5. (5) "drawer" means a person who signs or is identified in a draft as a person ordering payment;
6. (6) [Reserved];
7. (7) "maker" means a person who signs or is identified in a note as a person undertaking to pay;
8. (8) "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;
9. (9) "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 Chapter 55, Article 4 NMSA 1978;
10. (10) "party" means a party to an instrument;
11. (11) "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 pursuant to this article;
12. (12) "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;
13. (13) "prove" with respect to a fact means to meet the burden of establishing the fact (Paragraph (8) of Subsection (b) of Section 55-1-201 NMSA 1978);
14. (14) [Reserved];
15. (15) "remitter" means a person who purchases an instrument from its issuer if the instrument is payable to an identified person other than the purchaser;
16. (16) [Reserved]; and

17. (17) "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 55-3-414 NMSA 1978; or (iii) any other party to the instrument that has recourse against another party to the instrument pursuant to Subsection (b) of Section 55-3-116 NMSA 1978.

    (b) Other definitions applying to this article and the sections in which they appear are:

    "acceptance" Section 55-3-409 NMSA 1978; "accommodated party" Section 55-3-419 NMSA 1978; "accommodation party" Section 55-3-419 NMSA 1978; "alteration" Section 55-3-407 NMSA 1978; "anomalous indorsement" Section 55-3-205 NMSA 1978; "blank indorsement" Section 55-3-205 NMSA 1978; "cashier's check" Section 55-3-104 NMSA 1978; "certificate of deposit" Section 55-3-104 NMSA 1978; "certified check" Section 55-3-409 NMSA 1978; "check" Section 55-3-104 NMSA 1978; "consideration" Section 55-3-303 NMSA 1978; "draft" Section 55-3-104 NMSA 1978; "holder in due course" Section 55-3-302 NMSA 1978; "incomplete instrument" Section 55-3-115 NMSA 1978; "indorsement" Section 55-3-204 NMSA 1978; "indorser" Section 55-3-204 NMSA 1978; "instrument" Section 55-3-104 NMSA 1978; "issue" Section 55-3-105 NMSA 1978; "issuer" Section 55-3-105 NMSA 1978; "negotiable instrument" Section 55-3-104 NMSA 1978; "negotiation" Section 55-3-201 NMSA 1978; "note" Section 55-3-104 NMSA 1978; "payable at a definite time" Section 55-3-108 NMSA 1978; "payable on demand" Section 55-3-108 NMSA 1978; "payable to bearer" Section 55-3-109 NMSA 1978; "payable to order" Section 55-3-109 NMSA 1978; "payment" Section 55-3-602 NMSA 1978; "person entitled to enforce" Section 55-3-301 NMSA 1978; "presentment" Section 55-3-501 NMSA 1978; "reacquisition" Section 55-3-207 NMSA 1978; "special indorsement" Section 55-3-205 NMSA 1978; "teller's check" Section 55-3-104 NMSA 1978; "transfer of instrument" Section 55-3-203 NMSA 1978; "traveler's check" Section 55-3-104 NMSA 1978; and "value" Section 55-3-303 NMSA 1978.

    "acceptance"

    Section 55-3-409 NMSA 1978;

    "accommodated party"

    Section 55-3-419 NMSA 1978;

    "accommodation party"

    Section 55-3-419 NMSA 1978;

    "alteration"

    Section 55-3-407 NMSA 1978;

    "anomalous indorsement"

    Section 55-3-205 NMSA 1978;

    "blank indorsement"

    Section 55-3-205 NMSA 1978;

    "cashier's check"

    Section 55-3-104 NMSA 1978;

    "certificate of deposit"

    Section 55-3-104 NMSA 1978;

    "certified check"

    Section 55-3-409 NMSA 1978;

    "check"

    Section 55-3-104 NMSA 1978;

    "consideration"

    Section 55-3-303 NMSA 1978;

    "draft"

    Section 55-3-104 NMSA 1978;

    "holder in due course"

    Section 55-3-302 NMSA 1978;

    "incomplete instrument"

    Section 55-3-115 NMSA 1978;

    "indorsement"

    Section 55-3-204 NMSA 1978;

    "indorser"

    Section 55-3-204 NMSA 1978;

    "instrument"

    Section 55-3-104 NMSA 1978;

    "issue"

    Section 55-3-105 NMSA 1978;

    "issuer"

    Section 55-3-105 NMSA 1978;

    "negotiable instrument"

    Section 55-3-104 NMSA 1978;

    "negotiation"

    Section 55-3-201 NMSA 1978;

    "note"

    Section 55-3-104 NMSA 1978;

    "payable at a definite time"

    Section 55-3-108 NMSA 1978;

    "payable on demand"

    Section 55-3-108 NMSA 1978;

    "payable to bearer"

    Section 55-3-109 NMSA 1978;

    "payable to order"

    Section 55-3-109 NMSA 1978;

    "payment"

    Section 55-3-602 NMSA 1978;

    "person entitled to enforce"

    Section 55-3-301 NMSA 1978;

    "presentment"

    Section 55-3-501 NMSA 1978;

    "reacquisition"

    Section 55-3-207 NMSA 1978;

    "special indorsement"

    Section 55-3-205 NMSA 1978;

    "teller's check"

    Section 55-3-104 NMSA 1978;

    "transfer of instrument"

    Section 55-3-203 NMSA 1978;

    "traveler's check"

    Section 55-3-104 NMSA 1978; and

    "value"

    Section 55-3-303 NMSA 1978.

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

    "account" Section 55-4-104 NMSA 1978; "banking day" Section 55-4-104 NMSA 1978; "clearing house" Section 55-4-104 NMSA 1978; "collecting bank" Section 55-4-105 NMSA 1978; "depositary bank" Section 55-4-105 NMSA 1978; "documentary draft" Section 55-4-104 NMSA 1978; "intermediary bank" Section 55-4-105 NMSA 1978; "item" Section 55-4-104 NMSA 1978; "payor bank" Section 55-4-105 NMSA 1978; and "suspends payments" Section 55-4-104 NMSA 1978.

    "account"

    Section 55-4-104 NMSA 1978;

    "banking day"

    Section 55-4-104 NMSA 1978;

    "clearing house"

    Section 55-4-104 NMSA 1978;

    "collecting bank"

    Section 55-4-105 NMSA 1978;

    "depositary bank"

    Section 55-4-105 NMSA 1978;

    "documentary draft"

    Section 55-4-104 NMSA 1978;

    "intermediary bank"

    Section 55-4-105 NMSA 1978;

    "item"

    Section 55-4-104 NMSA 1978;

    "payor bank"

    Section 55-4-105 NMSA 1978; and

    "suspends payments"

    Section 55-4-104 NMSA 1978.

    (d) In addition, Chapter 55, Article 1 NMSA 1978 contains general definitions and principles of construction and interpretation applicable throughout this article.

    OFFICIAL COMMENTS

18. UCC Official Comments © by ALI & the NCCUSL. Reproduced with permission of the PEB for the UCC. All rights reserved.
19. 1. Subsection (a) defines some common terms used throughout the Article that were not defined by former Article 3 and adds the definitions of "order" and "promise" found in former Section 3-102(1)(b) and (c).
20. 2. The definition of "order" includes an instruction given by the signer to itself. The most common example of this kind of order is a cashier's check: a draft with respect to which the drawer and the drawee are the same bank or branches of the same bank. Former Section 3-118(a) treated a cashier's check as a note. It stated "a draft drawn on the drawer is effective as a note." Although it is technically more correct to treat a cashier's check as a promise by the issuing bank to pay rather than an order to pay, a cashier's check is in the form of a check and it is normally referred to as a check. Thus, revised Article 3 follows banking practice in referring to a cashier's check as both a draft and a check rather than a note. Some insurance companies also follow the practice of issuing drafts in which the drawer draws on itself and makes the draft payable at or through a bank. These instruments are also treated as drafts. The obligation of the drawer of a cashier's check or other draft drawn on the drawer is stated in Section 3-412 [55-3-412 NMSA 1978].
21. An order may be addressed to more than one person as drawee either jointly or in the alternative. The authorization of alternative drawees follows former Section 3-102(1)(b) and recognizes the practice of drawers, such as corporations issuing dividend checks, who for commercial convenience name a number of drawees, usually in different parts of the country. Section 3-501(b)(1) [55-3-501 NMSA 1978] provides that presentment may be made to any one of multiple drawees. Drawees in succession are not permitted because the holder should not be required to make more than one presentment. Dishonor by any drawee named in the draft entitles the holder to rights of recourse against the drawer or indorsers.
22. 3. The last sentence of subsection (a)(9) is intended to make it clear that an I.O.U. or other written acknowledgement of indebtedness is not a note unless there is also an undertaking to pay the obligation.
23. 4. Subsection (a)(7) is a definition of ordinary care which is applicable not only to Article 3 but to Article 4 as well. See Section 4-104(c) [55-4-104(c) NMSA 1978]. The general rule is stated in the first sentence of Subsection (a)(7) and it applies both to banks and to persons engaged in businesses other than banking. Ordinary care means observance of reasonable commercial standards of the relevant businesses prevailing in the area in which the person is located. The second sentence of Subsection (a)(7) is a particular rule limited to the duty of a bank to examine an instrument taken by a bank for processing for collection or payment by automated means. This particular rule applies primarily to Section 4-406 [55-4-406 NMSA 1978] and it is discussed in Comment 4 to that section. Nothing in Section 3-103(a)(7) [55-3-103(a)(7) NMSA 1978] is intended to prevent a customer from proving that the procedures followed by a bank are unreasonable, arbitrary, or unfair.
24. 5. In Subsection (c) reference is made to a new definition of "bank" in amended Article 4.
25. 6. The definition of consumer account includes a joint account established by more than one individual. See Section 1-106(1) [55-1-106 NMSA 1978].

History: 1978 Comp., § 55-3-103, enacted by Laws 1992, ch. 114, § 90; 2005, ch. 144, § 45; 2009, ch. 234, § 2.

ANNOTATIONS

Repeals. — Laws 1992, ch. 114, § 237 repealed former 55-3-103 NMSA 1978, as enacted by Laws 1961, ch. 96, § 3-103, relating to limitations on scope of article, effective July 1, 1992. Laws 1992, ch. 114, § 90, enacted a new section, effective July 1, 1992. For provisions of former section, see the 1991 NMSA 1978 on NMOneSource.com. For present comparable provisions, see 55-3-102 NMSA 1978.

The 2009 amendment, effective January 1, 2010, added Paragraphs (2), (3), (11), (14), (16) and (17) of Subsection (a); and in Subsection (c), deleted the definition for "banks" and reference to Section 55-4-105 NMSA 1978 and deleted the definition for "account" and reference to Section 55-4-104 NMSA 1978.

The 2005 amendment, effective January 1, 2006, deleted the definition of "good faith" in Subsection (a)(4).

Law reviews. — For article, "Essential Attributes of Commercial Paper - Part I," see 1 N.M. L. Rev. 479 (1971).

For comment, "Negotiable Instruments - A Cause of Action on a Cashier's Check Accrues from the Date of Issuance," see 4 N.M. L. Rev. 253 (1974).

Am. Jur. 2d, A.L.R. and C.J.S. references. — 11 Am. Jur. 2d Bills and Notes §§ 48, 114, 139, 140, 269, 525, 589, 609.

Construction and effect of U.C.C. Article 3, dealing with commercial paper, 23 A.L.R.3d 932, 67 A.L.R.3d 144, 78 A.L.R.3d 1020, 88 A.L.R.3d 1100, 97 A.L.R.3d 798, 23 A.L.R.4th 855, 36 A.L.R.4th 212, 42 A.L.R.5th 137.

82 C.J.S. Statutes § 315.