Acceptance for Value Law and Legal Definition

Acceptance for value is a commercial right that is obtained through instruments such as tax bills and violation tickets. It is a qualified endorsement or modified signature on an instrument. By accepting an instrument for value, one becomes the holder in due course of the instrument and can enforce the instrument on the issuer.

As per U.C.C. § 3-303, 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.

Acceptance and Acceptance for Value is not same. Accepting an instrument without a qualified endorsement waives all defects there may be in the instrument, including the value, or lack of value, that comes with it. Accepting an instrument for value and returning it is notice to the issuer that the endorser is not providing new value, but is converting the issuer’s obligation to pay the instrument into the value, thereby making the instrument negotiable.