Exam 24: Form and Content

If Sam writes a check drawn on his account at First Bank to State University to pay his tuition:

A draft involves three parties: a drawer, a drawee, and a payee.

The vital importance of negotiable instruments and electronic transfers as methods of payment cannot be overstated.

Bill's car broke down on a dark, rainy night. Along came Andy in his service station's four-wheel drive truck with tools and supplies in the back. Bill didn't have any credit cards and only $3.25 cash, so Andy told him to write a check or an IOU. Neither Andy nor Bill had any paper, so Bill wrote on the cover of Andy's lunchbox: "If my car is fixed right by Andy Walcott, I will pay him $150. (Signed) Bill Boyd." Andy indorses the note and takes it to a commercial factor for negotiation. The factor refuses, saying it is non-negotiable because it:

Revised Article 3 eliminates the particular fund doctrine by providing that a promise or order is not made conditional because payment is to be made only out of a particular fund.

Would an instrument containing the following language be negotiable? "Harold T. Stone, as President, hereby promises to pay $12,348 to the order of Joe Jones Furniture for office equipment for Redtyn Corporation, payable from its corporate assets. (Signed) Harold T. Stone as President, Redtyn Corporation."

A maker must sign in the lower right-hand corner of the instrument.