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Elements of Negotiable Instruments
A check is a negotiable instrument involving three parties: the person writing the check (the drawer), the
person to whom the check is written (the payee), and the bank that holds the checking account (the drawee)
(see exhibit 4.2).
For drawers, the check is a convenient way to pay for goods, services, or other obligations. For payees, the
expectation is that checks will be exchanged for cash at a teller window or credited to their bank accounts. Both
parties take for granted the collection process and the governing laws.
As negotiable instruments, checks are governed by the legal requirements of UCC Article 3. To satisfy the
requirements of negotiability, checks must be:
•Payable to bearer or to order
•An unconditional order or promise to pay
•For a fixed amount of money
Parties to a Check
