Also known as: order or bearer paper · order-or-bearer · negotiable instrument
Written by attorneys — see sources below.
Words in a promise or order to pay that designate the payee as bearer or as a specified person or order. These words satisfy the requirement for negotiability under commercial law when the instrument otherwise meets the statutory criteria.
Oakley Osei sold a parcel of land to Oliver Okeke and included a false statement about title in a promissory note payable to bearer. Oliver transferred the note to Oswald Orozco, who paid value and relied on the representation. When the title defect surfaced, Oswald suffered pecuniary loss and sued Oakley for the misrepresentation embodied in the instrument.
Orion Technologies sold equipment to Osprey Aviation on credit and took back a negotiable promissory note. Orion granted a security interest in its rights to payment to Overland Transport. When Osprey defaulted, Overland sought to collect directly, but Osprey was not an account debtor because the obligation was evidenced by the note.
Olivia Owens borrowed funds from Orchard Farms secured by a mortgage and executed a negotiable note. After a merger the note was lost during file transfer. The successor sought to foreclose but first had to establish it was the person entitled to enforce the instrument under UCC Section 3-301 and satisfy lost-instrument requirements.
Onyx O'Reilly signed a writing promising to pay a fixed sum to Orion Orlov or order at a definite time. Because the writing contained the required order words and met the other statutory conditions, it qualified as a negotiable instrument that could be transferred free of certain defenses.
Oliver Okeke received a check that met every requirement of negotiability except the order-or-bearer words. The writing was still treated as an instrument because it fell within the special rule for checks, allowing enforcement under Article 3 despite the missing language.
Oswald Orozco acquired a bill of exchange in good faith and for value before maturity. The court applied federal general common law rather than state decisions to determine whether Oswald took free of the drawer's fraud defenses, recognizing the special protections afforded holders of negotiable paper.
Swift, a citizen of Maine, instituted an action in the circuit court of New York against Tyson on a bill of exchange that Tyson had accepted in New York. The acceptance and indorsement of the bill were admitted at trial. Swift had taken the bill before it became due in payment of a promissory note due to him from Norton & Keith. He was a bona fide holder without notice who believed the bill was justly due. Tyson had accepted the bill as part consideration for lands sold by Norton & Keith, to which those parties had no title and which were of little or no value. The defendant offered to prove that the acceptance had been given under circumstances involving misrepresentation of the quality of the lands and imposition by fraud on the part of the drawer and co-owners. The circuit judges divided on the question of whether, under these facts, the defendant had available to him the same defense against Swift as he would have had against the original parties to the bill. This division resulted in certification of the question to the Supreme Court for resolution.
View caseThe words ensure the instrument can pass freely in commerce like cash by satisfying the statutory requirement that it be payable to bearer or to order. Without them the writing may still create an obligation but loses the special rules of negotiability that protect holders in due course.
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When a mortgage obligation is evidenced by a negotiable note, only the person entitled to enforce that instrument may commence foreclosure. The requirement ties enforcement rights to possession or compliance with lost-instrument rules rather than mere ownership of the debt.
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Yes. A writing that meets all other negotiability criteria except the order-or-bearer words is still a negotiable instrument and a check under the special rule for checks, allowing enforcement under Article 3.
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The person seeking to enforce must prove entitlement under UCC Section 3-301 and satisfy lost-instrument requirements, including proof of prior possession and adequate protection against double liability. Mere ownership of the debt is insufficient.
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…land and co-operators in the sale. The bill accepted had been received bona fide and before it was due. A bona fide holder of a negotiable instrument for a valuable consideration, without any notice of facts which implicate its validity as between the antecedent parties, who takes it under an indorsement made before it becomes due, holds…