Also known as: persons entitled to enforce instrument · PETEI · entitled to enforce
Written by attorneys · grounded in primary & secondary sources — see below
A party authorized to demand payment or performance on a negotiable instrument. The designation confers standing to enforce the obligation the instrument secures and shields the obligor from competing claims when payment is made to that party.
Global Structures issued a promissory note to Harbor Builders. Global sold the note to Coastal Development without indorsement. Harbor later demanded payment from Global. Global remained obligated because it had never been relieved by the person entitled to enforce the instrument.
Phoenix Technologies held a note secured by a mortgage on Paragon Construction's building. Phoenix transferred the note to Platinum Partners but kept physical possession. When Paragon defaulted, Platinum attempted foreclosure. The court dismissed the action because Platinum was not the person entitled to enforce the underlying obligation.
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Pioneer Energy held a negotiable note after a loan assignment. After the division of rights, SmallSub acquired an interest and ExcavateCo claimed separate enforcement. SmallSub sued to enforce the note. Each separately owned interest held the right to enforce only if qualifying as the person entitled to enforce the instrument.
Paula Pierce lost her home note after a bank merger. A successor bank sought to foreclose but could not produce the original instrument. The court required the bank to prove it was the person entitled to enforce the instrument under UCC rules or satisfy lost-instrument requirements before proceeding.
Pierce Patterson held a note from Paragon Construction. Paragon assigned the note to Platinum Partners. The assignment placed Platinum in position to enforce. Platinum became entitled to demand payment because it qualified as the person entitled to enforce the instrument under UCC rules.
The designation covers the holder of the instrument, a nonholder in possession with rights of a holder, or a person not in possession who is entitled to enforce under lost-instrument rules. Payment to that party discharges the obligor's liability even if another party later claims ownership.
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A transferee becomes the person entitled to enforce only when it qualifies as holder, nonholder in possession, or satisfies lost-instrument rules. Mere assignment without delivery or indorsement does not confer enforcement rights under the UCC.
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No. Enforcement of the mortgage is available only to or on behalf of the person entitled to enforce the secured obligation. A party lacking that status cannot maintain foreclosure even if it possesses the mortgage document.
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Only the party that meets the UCC definition of person entitled to enforce the instrument may sue. The rule applies unless the instrument terms provide otherwise, so a mere assignee without possession or lost-instrument proof cannot enforce.
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