§ 355-3-106

355.3 -106 Unconditional promise or order. (1) Except as provided in this section, for the purposes of KRS 355.3 -104(1), a promise or order is unconditional unless it states: (a) An express condition to payment; (b) That the promise or order is subject to or governed by another record; or (c) That righ ts or obligations with respect to the promise or order are stated in another record. A reference to another record does not of itself make the promise or order conditional. (2) A promise or order is not made conditional: (a) By a reference to another recor d for a statement of rights with respect to collateral, prepayment, or acceleration; or (b) Because payment is limited to resort to a particular fund or source. (3) If a promise or order requires, as a condition to payment, a countersignature by a person w hose specimen signature appears on the promise or order, the condition does not make the promise or order conditional for the purposes of KRS 355.3 - 104(1). 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

cimen 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. (4) If a promise or order at the time it is issued or first comes into posse ssion 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 o r order is not thereby made conditional for the purposes of KRS 355.3 -104(1); but if the promise or order is an instrument, there cannot be a holder in due course of the instrument. Effective: July 12, 2006 History: Amended 2006 Ky. Acts ch. 242, sec. 34, effective July 12, 2006. -- Repealed and reenacted 1996 Ky. Acts ch. 130, sec. 6, effective January 1, 1997. -- Amended 1990 Ky. Acts ch. 478, sec. 1, effective July 13, 1990. -- Amended 1964 Ky. Acts ch. 130, secs. 24 and 25, effective July 1, 1964. -- Created 1958 Ky. Acts ch. 77, sec. 3-106.