Negotiable Instrument
AAMPLE Practice Essay 1
ISSUE: In exchange for Sally Johnson’s 1990 Plymouth Horizon automobile, John Lebowski gave Sally a handwritten note which stated the following: “I promise to pay $500 in two equal installments on July 1, 2013 and August 1, 2013. The following language was included on the back of the writing: The 1990 Plymouth Horizon which is the subject of this transaction serves as collateral to secure repayment of this note. The maker agrees not to sell or otherwise dispose of the collateral. Please see the corresponding security agreement for rights and obligations pertinent thereto. Is this a negotiable instrument?
RULE: § 3-106 permits the instrument to mention the details of the underlying contract without destroying negotiability as long as payment of the note is not made “subject to” the performance of that contract.
ANALYSIS: In exchange for Sally Johnson’s 1990 Plymouth Horizon automobile, John Lebowski gave Sally a handwritten note which stated the following: “I promise to pay $500 in two equal installments on July 1, 2013 and August 1, 2013. The following language was included on the back of the writing: The 1990 Plymouth Horizon which is the subject of this transaction serves as collateral to secure repayment of this note. The maker agrees not to sell or otherwise dispose of the collateral. Please see the corresponding security agreement for rights and obligations pertinent thereto. Is this a negotiable instrument?
§ 3-106 permits the instrument to mention the details of the underlying contract without destroying negotiability as long as payment of the note is not made “subject to” the performance of that contract.
CONCLUSION: The instruments is negotiable because it reference the content of the contract regarding rights to repayment and acceleration.
ISSUE: In exchange for Sally Johnson’s 1990 Plymouth Horizon automobile, John Lebowski gave Sally a handwritten note which stated the following: “I promise to pay $500 in two equal installments on July 1, 2013 and August 1, 2013. The following language was included on the back of the writing: The 1990 Plymouth Horizon which is the subject of this transaction serves as collateral to secure repayment of this note. The maker agrees not to sell or otherwise dispose of the collateral. Please see the corresponding security agreement for rights and obligations pertinent thereto. Is this a negotiable instrument?
RULE: § 3-106 permits the instrument to mention the details of the underlying contract without destroying negotiability as long as payment of the note is not made “subject to” the performance of that contract.
ANALYSIS: In exchange for Sally Johnson’s 1990 Plymouth Horizon automobile, John Lebowski gave Sally a handwritten note which stated the following: “I promise to pay $500 in two equal installments on July 1, 2013 and August 1, 2013. The following language was included on the back of the writing: The 1990 Plymouth Horizon which is the subject of this transaction serves as collateral to secure repayment of this note. The maker agrees not to sell or otherwise dispose of the collateral. Please see the corresponding security agreement for rights and obligations pertinent thereto. Is this a negotiable instrument?
§ 3-106 permits the instrument to mention the details of the underlying contract without destroying negotiability as long as payment of the note is not made “subject to” the performance of that contract.
CONCLUSION: The instruments is negotiable because it reference the content of the contract regarding rights to repayment and acceleration.