CP: Types of Negotiable Instruments Flashcards
“I promise to pay to the order of Cameron Diaz FIFTY THOUSAND DOLLARS /s/ Justin Timberlake.” is what kind of document?
A promissory note.
“Pay to the order of Tommy Franks Fifty thousand and 00/000 dollars. First Bank of Denver. /s/ Colin Powell” is what kind of document?
A draft.
Is an IOU a promissory note?
No - there must be an affirmative promise to pay for a document to be a promissory note.
How do you know whether a writing is a negotiable instrument?
WOSSUPP: WRITING Payable to ORDER or bearer SIGNED by the maker or drawer Recites a SUM certain Contains an UNCONDITIONAL promise or order PAYABLE on demand or at a definite time PAYABLE in currency
What if the maker puts his initials on the upper right hand corner of the note - is that a sufficient signing?
Yes - the maker of a note or drawer of a draft can sign, initial, mark, or write their nickname anywhere on the document to authenticate it.
If the promise to pay is conditional, can it be a negotiable instrument?
No - the promise must be UNCONDITIONAL, otherwise it’s just a contract and not governed by Art. 3
Does reference to an outside document make a promise to pay conditional?
Not necessarily.
If the writing limits the payment to a particular source, is it a negotiable instrument?
No - because this means the payment is conditioned on there being funds in the source named.
Does foreign currency count as “payable in currency”?
Yes - US or foreign money counts as currency. Goods do not count as currency.
If you have to do a calculation to figure out what the sum is - can the document be a negotiable instrument?
Yes - so long as you can get to an ascertainable sum.
If the document says “payable with interest” - is that a sum certain?
Yes - because you can figure out what the interest is by looking at a state statute.
If the writing contains any additional promises other than to pay currency, is it negotiable?
No! Two’s a crowd. You can only make one unconditional promise in currency.
If an instrument is silent as to payment, is it negotiable?
It can be - silence regarding payment is read as “payable on demand.”
If the instrument is to be paid at a particular time, does it have to have a date, or can it also point to an event?
An instrument can be negotiable whether it specifies an exact date or make a reference to an event.
“On or before Feb. 1, but immediately due and payable before then if the Saints win the superbowl.” Can that be a negotiable instrument?
Yes - this is not conditional because the money will be paid at some point, and that point is either the day the Saints win the superbowl or Feb. 1.
If the document says “payable when my first child is born” can it be a negotiable instrument?
No - because this is not linked to a date certain (too imprecise), so it is non-negotiable and is a contract instead.
If a writing says “payable to cash” can it be a negotiable instrument?
Yes because payable to cash is the same as payable to bearer.
If the writing says “Payable to Ruth Bader Ginsburg” is it a negotiable instrument?
No - if you name an individual, you have to have the words “to the order of” or else it’s not a negotiable instrument, it’s a contract.
