Value and Consideration

1. Law
2. Georgia Code
3. Commercial Code
4. Negotiable Instruments
5. Enforcement of Instruments
6. Value and Consideration

1. An instrument is issued or transferred for value if:
   1. The instrument is issued or transferred for a promise of performance, to the extent the promise has been performed;
   2. The transferee acquires a security interest or other lien in the instrument other than a lien obtained by judicial proceeding;
   3. The instrument is issued or transferred as payment of, or as security for, an antecedent claim against any person, whether or not the claim is due;
   4. The instrument is issued or transferred in exchange for a negotiable instrument; or
   5. The instrument is issued or transferred in exchange for the incurring of an irrevocable obligation to a third party by the person taking the instrument.
2. "Consideration" means any consideration sufficient to support a simple contract. The drawer or maker of an instrument has a defense if the instrument is issued without consideration. If an instrument is issued for a promise of performance, the issuer has a defense to the extent performance of the promise is due and the promise has not been performed. If an instrument is issued for value as stated in subsection (a) of this Code section, the instrument is also issued for consideration.

(Code 1981, §11-3-303, enacted by Ga. L. 1996, p. 1306, § 3.)

Law reviews.

- For article discussing judicial activism in cases involving claims and defenses under the Uniform Commercial Code, see 17 Ga. L. Rev. 569 (1983).

JUDICIAL DECISIONS

Editor's notes.

- In light of the similarity of the provisions, decisions under former Code Section 11-3-303 are included in the annotations for this article.

Irrevocable payment to third person.

- Payee takes for value by irrevocable payment of consideration to third person at direction of maker. Ashburn Bank v. Childress, 120 Ga. App. 632, 171 S.E.2d 768 (1969) (decided under former Code Section11-3-303).

Lack of consideration not shown.

- There was no merit to the claim of a maker of a promissory note that the note failed for lack of consideration. The co-maker indicated that it was issued in payment of a debt owed by the co-makers and the maker's company; thus, it was issued for value as payment of an antecedent claim under O.C.G.A. § 11-3-303, and no new consideration needed to pass between the parties. Smith v. Thigpen, 298 Ga. App. 572, 680 S.E.2d 604 (2009).

Cited in Dal-Tile Corp. v. Cash N' Go, Inc., 226 Ga. App. 808, 487 S.E.2d 529 (1997); Fedeli v. UAPA Ag. Chem., Inc., 237 Ga. App. 337, 514 S.E.2d 684 (1999); Bonem v. Golf Club of Ga., Inc., 264 Ga. App. 573, 591 S.E.2d 462 (2003).

RESEARCH REFERENCES

Am. Jur. 2d.

- 11 Am. Jur. 2d, Banks and Financial Institutions, §§ 854, 855. 11 Am. Jur. 2d, Bills and Notes, §§ 141, 207, 268 et seq., 288, 389 et seq. 15A Am. Jur. 2d, Commercial Code, § 8.

C.J.S.

- 10 C.J.S., Bills and Notes, § 185.

U.L.A.

- Uniform Commercial Code (U.L.A.) § 3-303.

ALR.

- Right of purchaser of stolen bonds, 1 A.L.R. 717; 85 A.L.R. 357; 102 A.L.R. 28.

Cross notes, bills, or checks as consideration for each other, 7 A.L.R. 1569.

Effect of Negotiable Instruments Act on statute invalidating instrument given for gambling consideration, 8 A.L.R. 314; 11 A.L.R. 211; 37 A.L.R. 698; 46 A.L.R. 959.

Note or check itself as subject of levy and seizure under attachment or garnishment, 41 A.L.R. 1003.

One taking bill or note as a gift or in consideration of love and affection as a holder for value or in due course protected against defenses between prior parties, 48 A.L.R. 237.

Consideration for assumption of obligation as guarantor, surety, endorser, or indemnitor, after execution and delivery of principal contract, as predicable upon an antecedent promise to assume or furnish such obligation, 167 A.L.R. 1174.

Maturity of one or more of installments of note payable in installments as affecting status of purchaser as holder in due course, 170 A.L.R. 1029.

Crediting proceeds of negotiable paper to depositor's account, as constituting bank a holder in due course, 59 A.L.R.2d 1173.

When is instrument issued or transferred for "value" under UCC § 3-303, 77 A.L.R.5th 429.

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