When an instrument fails to meet the technical requirements necessary to qualify as a negotiable instrument, which of the following statements is true?
A) The instrument is still enforced as a negotiable instrument if it has been transferred to a holder in due course.
B) The instrument is still enforced as a negotiable instrument if it has been accepted by a bank.
C) The instrument is still enforced as a negotiable instrument if the holder can establish detrimental reliance based on a reasonable belief that the instrument qualified as a negotiable instrument.
D) The instrument may qualify as an enforceable contract.
E) The instrument is null and void and of no use to the holder.

Question

Quizplus · Accepted Answer

An instrument that fails to meet the technical requirements for negotiability may still be enforced as a contract if the parties involved intended to enter into a contract and the instrument meets the general requirements for contract enforceability. Negotiability adds specific rights and protections, but the absence of negotiability does not automatically invalidate the underlying agreement.

When an Instrument Fails to Meet the Technical Requirements Necessary