Exam 24: The Function Creation of Negotiable Instruments

Ray signs a promissory note for $10,000 in favor of State University (SU). The note does not specify the date of its payment. Ray defaults. In SU's suit to collect on the note, the court will most likely rule in favor of

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

A draft is an unconditional written order that involves two parties.

To be negotiable, an instrument must be signed in the lower right-hand corner.

A cashier's check drawn by a bank on itself is an instrument in which the bank is both the drawer and the drawee.

Lucy signs a $1,000 note payable, at 6 percent interest, on May 1 to Metro Bank and writes on its face that it is "nonnegotiable." This note is

Beck draws a check payable to "County Farm Supply" to buy a quantity of fertilizer to deposit in Beck's field. This check is

A promissory note payable to "bearer" is not negotiable.

A conditional promise to pay is not a negotiable instrument.

An acknowledgment of indebtedness is sufficient to create a ne?gotiable instrument.

A time draft is payable at a definite future time.

Rubber stamp signatures can be legally binding signatures.

To finance the purchase of a car from Giant Auto Sales, Hoppy signs an instrument promising to pay to "Ideal Credit Union" $18,000 with interest in installments with the final payment due May 15, 2014. To be negotiable, this instrument must include on its face

Fact Pattern 24-1B Dominion Sales Ltd. in Canada and Eagle Buying Company in the United States enter a contract for a sale of forestry products. Dominion draws a draft unconditionally ordering Great Federal Bank, Eagle's bank, to pay $60,000 to Dominion's order in sixty days. Eagle signs and dates the draft. -Refer to Fact Pattern 24-1B. This instrument is

Stating on an instrument that it is "as per contract" renders it nonnegotiable.

Tyrone draws a check payable to "Cash" and presents it to United Bank for payment. This instrument is

Donna gets her paycheck from Eagle Financial Services, Inc., her em?ployer, and attempts to deposit it in her account at First National Bank. Greg, the bank's teller, notices that on the check the amount stated in words is different from the amount stated in numerals. Which amount can the bank lawfully credit to Donna's account?

Fact Pattern 24-1B Dominion Sales Ltd. in Canada and Eagle Buying Company in the United States enter a contract for a sale of forestry products. Dominion draws a draft unconditionally ordering Great Federal Bank, Eagle's bank, to pay $60,000 to Dominion's order in sixty days. Eagle signs and dates the draft. -Refer to Fact Pattern 24-1B. With respect to this instrument, Dominion is

Opal signs a promissory note payable to the order of Payday Loan Company. The note states that it is payable "with interest at the legal rate." This note is

Fact Pattern 24-2A Quantity Sales Corporation and Resources Purchasing Company enter a contract for a sale of processed silver. Quantity Sales draws a draft unconditionally ordering Resources Purchasing to pay $50,000 to Quantity Sales's order in sixty days. Resources Purchasing signs and dates the draft. -Refer to Fact Pattern 24-2A. This instrument is