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.
