Business Law II Exam I Review
As part of a loan to pay for improvements to her restaurant, Courtney executes a negotiable instrument in favor of Tim. They are the only parties to the instrument. A negotiable instrument that has only two parties is
The promissory note is the simplest form of commercial paper; it is simply a promise to pay money. A promissory note is a two-party instrument in which one person(known as the maker) makes an unconditional promise in writing to pay another person (the payee) a person specified by that person, or the bearer of instrument, a fixed amount of money, with or without interest, either on demand or at a specified, future time
John's oral promise to pay $300 to Paul is not a negotiable instrument because
For an instrument to be negotiable, it must:
Be in writing
Be signed by the issuer (the maker in the case of a person undertaking to pay ot the drawer in the case of a person giving an order or instrument to pay) 3.
Contain an unconditional promise or order to pay a fixed amount of money, with or without interest or other charges described in the promise or order. 4.
Be payable to order or to bearer
Be payable on demand or at a definite time
Not state any other undertaking or instruction by the person promising or ordering to do any act in addition to the payment of money( however, it may contain (a) an undertaking or promise relative to collateral to secure payment , (b) an authorization for confession of judgment, or (c) a waiver of benefit of any law intended for the advantage or protection of an obligator)
Ferdinand owes $8,000 in unpaid taxes. Using the back of an old shirt, he executes an instrument for $8,000 that otherwise meets the requirements for negotiability. This instrument is likely
To be negotiable, an instrument must be in writing. An instrument that is handwritten, typed, or printed is considered to be in writing. The writing does not have to be on any particular material; all that is required is that the instrument be in writing.
Josephine owes $7,000 in unpaid taxes. Using the flank of her prized sow, she executes an instrument for $7,000 that otherwise meets the requirements for negotiability. This instrument is likely
Nonnegotiable, because a pig is not freely transferable
Suzanne signs an instrument using an "S" with a circle around it. With this mark for a signature, the instrument is
| Negotiable because an instrument has been signed if the maker or drawer has put a name or other symbol on it with the intention of validating it.
Kent writes on a piece of paper, "I owe you $500," signs it, and gives it to Lane. This instrument is
| Nonnegotiable, because it does not include an express promise to pay
Steve signs an instrument promising to pay $5,000 in gold bullion to Tina. This instrument is
Nonnegotiable, because gold bullion does not meet the definition of "money". Money is a medium of exchange authorized or adopted by a domestic or foreign government and includes a monetary unit of account established by an intergovernmental organization or by agreement between two or more nations.
Jeanne possesses an instrument "payable to bearer." She loses the instrument, but Jake finds it. Jake may
Collect payment on the instrument. An instrument payable “to bearer” is known as bearer paper it can be negotiable or transferred only by delivery of possession without indorsement.
Carol wishes to negotiate a bearer instrument in her possession to Jim for an order instrument that Jim holds. Indorsements are required to negotiate
| Order instruments only. If an instrument is payable to the order of a specific payee, it is called order paper and it can be negotiated by transfer of possession of the instrument...
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