This section is from the book "The Law Of Contracts", by William Herbert Page. Also available from Amazon: Commercial Contracts: A Practical Guide to Deals, Contracts, Agreements and Promises.
The recital of a consideration does not operate as notice to the indorsee of failure of consideration, or as notice of other defense which might arise thereon against the payee, and, accordingly, it does not make the payment of such instrument conditional upon performance. Accordingly, such a provision does not destroy negotiability.1 A provision to the effect that an instrument is as per contract,"2 or "on account of contract,"3 does not render it non-negotiable. The fact that the word "cotton" is printed upon a draft does not amount to such a reference to the plaintiff's bills of lading which are attached to the draft that it makes the draft conditional on the fact that such bills of lading are genuine.4 By the terms of the Negotiable Instruments Law, the negotiable character of an instrument is not affected by the fact that it contains a statement of the transaction which gives rise to the instrument on the one hand,5 or by the fact that it does not specify the value given or that any value has been given.6 A provision which not merely recites the consideration, but makes the payment of the instrument subject to the performance thereof, prevents it from being negotiable, since such payment is thus made conditional.7
12 White v. Wadhams, - Mich. - , 170 N. W. 60. Certificate of deposit. Hatch v. Bank, 94 Me. 348, 80 Am. St. Rep. 401, 47 Atl. 908.
40 Neb. 484, 42 Am. St. Rep. 683.. 24
L. R. A. 444, 58 N. W. 1016.
So where the certificate of deposit was to bear interest at a certain rate if left six months, and interest was to cease after one year unless renewed. White v. Wadhams, - Mich. - , 170 N. W. 60.
13 Klots Throwing Co. v. Manufacturers' Commercial Co., 179 Fed. 813, 103 C. C. A. 305, 30 L. R. A. (N.S.) 40.
1 Alabama. People's Bank v. Moore, - Ala. - , 78 So. 789.
Illinois. Siegel v. Bank, 131 111. 569, 19 Am. St. Rep. 51, 7 L. R. A. 537, 23 N. E. 417.
Indiana. Clanin v. Machine Co., 118 Ind. 372, 3 L. R. A. 863, 21 N. E. 35.
Kansas. First National Bank v. Lightner, 74 Kan. 736, 8 L. R. A. (N.S.) 231, 88 Pac. 59.
Louisiana. Continental Bank & Trust Co. v. Times Publishing Co., 142 La. 209, L. R. A. 1918B, 632, 76 So. 612 (obiter).
. Minnesota. Snelling State Bank v. Clasen, 132 Minn. 404. 157 N. W. 643. '
New York. Springs v. Hanover National Bank, 209 N. Y. 224, 52 L. R. A. (N.S.) 241, 103 N. E. 156.
South Dakota. Coleman v. Valentin, 39 S. D. 323, 164 N. W. 67.
Tennessee. Ferris v. Tavel, 87 Tenn. 386, 3 L. R. A. 414, 11 S. W. 93.
Washington. Peninsula National Bank v. Pederson Const. Co., 91 Wash. 621, 15S Pac. 246.
West Virginia. Dollar Savings & Trust Co. v. Crawford, 69 W. Va. 109, 33 L. R. A. (N.S.) 587, 70 S. E. 1089.
2 Continental Bank & Trust Co. v. Times Pub. Co., 142 La. 209, L. R. A. 1918B, 632, 76 So. 612; Snelling State Bank v. Clasen, 132 Minn. 404, 157 N. W. 643.
3 First National Bank v. Lightner, 74 Kan. 736, 118 Am. St. Rep. 353, 8 L. R. A. (N.S.) 231, 88 Pac. 59.