Exam 25: Negotiable Instruments

On a sheet of paper, Elle writes, without her signature, "I acknowledge that I owe Frank $600, payable out of the proceeds of the sale of my car, a 1995 Honda Civic, which I promise to advertise 'For Sale' next week. Payment is to be made on or before six months from today." What type of instrument is this? Is it negotiable? If not, why not?

An unusual signature clearly increases the marketability of an instrument because it creates distinction and uniqueness.

A person can sign an instrument as an authorized agent of the drawer, but the instrument is not negotiable unless the drawer also signs it.

App Corporation obtains a loan from Backer Bank and signs a note for the amount. For a certain price, the bank transfers the note to Credit Company. Promissory notes are commonly assigned, negotiated, or transferred from one party to another. This is possible because

A promissory note is both a debt and evidence of the debt.

Fertile Farm Corporation and Grain Commodities Inc. enter a contract for a sale of soybeans. Fertile draws a draft unconditionally ordering Grain to pay $75,000 to Fertile's order in ninety days. Grain signs and dates the draft. Before payment is due, Fertile needs cash. The drawer can

The assignment of a promissory note from one payee to another changes the maker's obligation to pay the note as promised.

Direct Connect Company orders a quantity of wire from Electric Supply Inc. To finance the purchase, Direct signs a note that includes a reference to the parties' contract, a payment schedule, and a security agreement. This note is

Brownies Inc. signs an instrument that promises to pay Chocolate Company a certain price, with interest, for a shipment of refined cocoa. By the terms of the instrument, it must be paid on its presentment, but no time for payment is specified. This instrument is

To determine the value of an instrument, it is necessary to know when the maker, drawer, or acceptor is required to pay.

Veggie Bowl Café signs an instrument in favor of Whole Wheat Company that states it is "subject to a certain agreement between buyer and seller." This instrument is

Steel Mill Inc. signs an instrument that states with certainty a fixed amount to be paid at the time the instrument is payable. This ensures that