3-104 Negotiable Instruments

Question 1

Subsection (a)

Answer 1

an unconditional promise or order to pay a fixed amount of money, with or without interest or other charges described in the promise or order, if it:

(1) is payable to bearer or to order at the time it is issued or first comes into possession of a holder;
(2) is payable on demand or at a definite time; and
(3) does not state any other undertaking or instruction by the person promising or ordering payment to do any act in addition to the payment of money, but the promise or order may contain:
(i) an undertaking or power to give, maintain, or protect collateral to secure payment,
(ii) an authorization or power to the holder to confess judgment or realize on or dispose of collateral, or
(iii) a waiver of the benefit of any law intended for the advantage or protection of an obligor.

Question 2

Subsection (b)

Answer 2

instrument means a negotiable instrument

Question 3

Subsection (c)

Answer 3

an order that meets all of the requirements of subsection (a) except paragraph (1) (“is payable to bearer or to order at the time it is issued or first comes into possession of a holder”), and otherwise falls within the definition of “check” in subsection (f) (“a draft, other than a documentary draft, payable on demand and drawn on a bank, or a cashier’s check or teller’s check. An instrument may be a check even though it is described on its face by another term, such as “money order””) is a negotiable instrument and a check.

Question 4

Subsection (d)

Answer 4

A promise or order other than a check is not an instrument if, at the time it is issued or first comes into possession of a holder, it contains a conspicuous statement, however expressed, to the effect that the promise or order is not negotiable or is not an instrument governed by Article 3.

Question 5

Note

Answer 5

a promise

Question 6

Draft

Answer 6

an order

Question 7

Identifies as both a note and a draft

Answer 7

a person entitled to enforce the instrument can treat it as either

Question 8

Check

Answer 8

a draft, other than a documentary draft, payable on demand and drawn on a bank. Even if it is described on its face by another name such as money order, it is still a check.

Question 9

Cashier’s check

Answer 9

a draft with respect to which the drawer and drawee are the same bank or branches of the same bank

Question 10

Teller’s check

Answer 10

a draft drawn by a bank (i) on another bank, or (ii) payable at or through another bank

Question 11

Traveler’s check

Answer 11

an instrument that:

(i) is payable on demand,
(ii) is drawn on or payable at or through a bank,
(iii) is designated by the term “traveler’s check” and,
(iv) requires, as a condition of payment, a countersignature by a person whose specimen signature appears on the instrument

Question 12

Certificate of deposit

Answer 12

an instrument containing an acknowledgement by a bank that a sum of money has been received by the bank and a promise by the bank to repay the sum of money. A certificate of deposit is a note of the bank.