Exam 25: Negotiable Instruments

A promise that states an express condition to payment is negotiable if the condition is stated in writing on the instrument.

Because negotiable instruments were originally paper documents, they are sometimes referred to as a commercial paper.

In response to an order for flour from Good Eating LLC, Harvest Mill creates a draft ordering Good to pay Harvest for the flour within sixty days and sends it with the delivery to Good. On receipt, the buyer signs the draft. On this instrument, Harvest is

Marin writes on a piece of paper, "I owe you $600," signs it, and gives it to Nye. This instrument is

A check is not a demand instrument, because by definition a check is not payable for a period of time after its issue.

Special requirements for the form and content of negotiable instruments are imposed by

An instrument is not negotiable unless it is "payable to order or to bearer" at the time it is issued or first comes into the possession of a holder.

Tree Nursery signs an instrument that states with certainty a fixed amount to be paid at the time the instrument is payable. Fixed amount means that the amount must be

Wen writes an instrument that states it is "payable to X." The instrument is

Fresh Fruit Company accepts a check from Grocers Mart in payment on a shipment of apples, but Harvest Meat LLC will not accept a check for a beef order. Fewer checks are written today because

On an instrument, a mere reference to another writing-"As per contract"- does not render the instrument nonnegotiable.

In a domestic sale of goods, Boxes LLC, the seller, and Containers Inc., the buyer, use a trade acceptance. Essentially, this instrument

A promissory note signed to obtain a student loan is a negotiable instrument that functions as an extension of credit.

In an international sale of goods, Cielo SA, the buyer, and Drones Inc., the seller, use a banker's acceptance. Essentially, this instrument

Fern has six nieces, ages five to sixteen. She writes an instrument for $50 that states, "Pay to the order of my niece." The instrument is

Edie deposits funds with First National Bank, which issues an instrument that promises to repay the funds, with interest, on a certain date. Before the maturity date, Edie wants to access the funds. Edie can

When a note is lost, impaired, or destroyed, the owner loses the right to be paid its value, even if its existence can be proved with a copy.

On the back of an envelope, Phoebe writes, "I promise to pay Quint or bearer $600 on demand. [Signed] Phoebe." What type of instrument is this? Is it negotiable? If not, why not?

If the numerical and written amounts on a check differ, the check is payable in the written amount.

The nature of an instrument, such as a check, may indicate that it is payable on demand.