A draft is payable "to the order of Joe Jones or to bearer." Sally finds it and demands payment.Should the drawer pay Sally?
A) No,unless Joe Jones' name is crossed off
B) No,unless "bearer" is handwritten
C) Yes,an instrument made payable both to order and to bearer is payable to bearer
D) Yes,since the instrument is ambiguous,Joe Jones has no right to payment and only the bearer has the right to demand payment

Question

Quizplus · Accepted Answer

An instrument payable both to order and to bearer is considered payable to bearer. Because the draft is payable to Joe Jones or bearer, Sally can demand payment as a bearer. There is no need to cross out Joe Jones' name or handwritten the word "bearer." Thus, the drawer is obligated to pay Sally.

A Draft Is Payable "To the Order of Joe Jones