Negotiable Instruments Class Examples (Chapter 2)

Question 1

Answer 1

1. Account name- not legally required–but it is identifying who the drawer is that is ordering payment to payee
2. This is the magic language of “order to pay.” –It is legally required under 3-104(a)(1), which specifies that the instrument must be either payable to bearer or payable to order.
3. This is the fixed amount spelled out, which is legally required under 3-104(a). This may include interest charges. If thre are discrepancies between the handwriting and numerical terms, turn to 3-114, which says the handwritten language prevails.
4. This is the fixed amount numerically given, which is legally required under 3-104(a). This may include interest charges. If thre are discrepancies between the handwriting and numerical terms, turn to 3-114, which says the handwritten language prevails.
5. Date, legally required under 3-113. 3-104(a)(1) also specifies that the date is needed to determine the time first came into possession.
6. Identifying the payee– 3-110 requires this and also specifies what to do when discrepancies exist.
7. Bank’s routing number- not legally required, but convenient. Goes along with the federal reserve system.
8. Check number- not legally required by a convenience of the bank.
9. This bank serves as the “drawee” or entity legally holding the money – person ordered in a draft to make payment, as defined in 3-103(a)(4). Also, 3-104(c) specifies that this check may still be a negotiable instrument.
10. Signature under 3-104(a) that is legally required. Indorsement defined by 3-103(a)(8).
11. Memo line is not legally required
12. Routing number again that isn’t legally required, but a convenience to the federal reserve system.

Question 2

Answer 2

This item is a negotiable note that satisfies all requirements of 3-104(a).

Question 3

Answer 3

Even though the “order” language has switched, this item is still a negotiable note.

Question 4

Answer 4

This item makes a promise, which makes it a note. However, the item is non-negotiable because it does not use the “payable to order” language anywhere in the catch phrase. Requirement of 3-104(a)(1).