Question 1

What is the difference between a demand instrument and a time instrument?

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Question 2

Set forth the definition of a traveler's check.

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Question 3

Anne orally promises Judy that in return for Judy washing Anne's dog, Anne unconditionally promises to pay Judy $50 the next Wednesday. Is a contract formed, is it negotiable, and why or why not?

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Question 4

Set forth the seven requirements for an instrument to be negotiable.

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Question 5

Set forth the two exceptions to the time-certain requirement for negotiability discussed in the text.

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Question 6

Which of the following is the most likely result if Phil attempts to require that the bank reimburse him for the value of the check cashed by Helen?

Accepted Answer

Negotiable instruments payable to whoever is bearing them are bearer instruments [UCC 3-109(a)] and are treated like cash. Anyone who comes into possession of a bearer instrument by any means, including theft, may claim the payment due on it. Endorsing an order instrument, such as a check, converts it into a bearer instrument that may be claimed by anyone in possession of it.

Quiz 26: Negotiable Instruments: Negotiability and Transferability