Asked by Kylyah Mercurius on Jul 06, 2024
Verified
On the back of an envelope, Phoebe writes, "I promise to pay Quint or bearer $600 on demand. [Signed] Phoebe." What type of instrument is this? Is it negotiable? If not, why not?
Bearer
A person in the possession of an instrument payable to bearer or indorsed in blank.
Negotiable
Capable of being transferred or modified in terms of agreement or ownership through endorsement or delivery.
On Demand
A service or product made available whenever requested by a customer, often implying immediate or quick delivery.
- Comprehend the principle of negotiability along with the conditions that render an instrument negotiable.
- Learn the effect that having or lacking certain features (like a signature or a particular payee) exerts on the transferability of an instrument.
Verified Answer
KS
Kayla SuttonJul 06, 2024
Final Answer :
This instrument is a promissory note and a bearer note, and it is negotiable. A promissory note is an instrument with two parties: a maker and a payee. The maker of this note is Phoebe. The payee is "Quint or bearer." A note that is payable to a specific payee "or bearer" is a bearer note.
To be negotiable, an instrument must be in writing, be signed by the maker or drawer, be an unconditional promise or order to pay, state a fixed amount of money, be payable on demand or at a definite time, and be payable to order or to bearer (unless it is a check). This instrument meets all of these requirements. It is handwritten on the back of an envelope, which has permanence and is transferable. The maker signed it. Its payment is not conditional and includes the maker's definite promise to pay. Also, "$600" is a fixed amount payable in money, and the instrument is payable on demand and to "bearer."
To be negotiable, an instrument must be in writing, be signed by the maker or drawer, be an unconditional promise or order to pay, state a fixed amount of money, be payable on demand or at a definite time, and be payable to order or to bearer (unless it is a check). This instrument meets all of these requirements. It is handwritten on the back of an envelope, which has permanence and is transferable. The maker signed it. Its payment is not conditional and includes the maker's definite promise to pay. Also, "$600" is a fixed amount payable in money, and the instrument is payable on demand and to "bearer."
Learning Objectives
- Comprehend the principle of negotiability along with the conditions that render an instrument negotiable.
- Learn the effect that having or lacking certain features (like a signature or a particular payee) exerts on the transferability of an instrument.