Which of the following is true regarding an IOU instrument containing the language "payable on demand"?

A) The instrument is not negotiable because it does not contain an unconditional promise or order to pay, but it may be an enforceable contract.
B) The instrument contains an unconditional promise to pay; and, therefore, the fact that it is an IOU instrument does not affect negotiability.
C) The instrument contains an unconditional promise to pay but nevertheless is not negotiable because it is an IOU instrument.
D) The instrument is not negotiable because the words "payable on demand" are included; otherwise, the IOU instrument would contain an unconditional promise to pay.
E) The instrument is not negotiable, nor could it be an enforceable contract, because it does not contain an unconditional promise to pay.

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Jessika Yarina · Accepted Answer

Final Answer : B, Explanation :  The presence of payable on demand in an IOU instrument indicates an unconditional promise to pay, which is a key criterion for negotiability under the Uniform Commercial Code (UCC). The fact that it is an IOU does not inherently affect its negotiability.

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