[Used Car Commission] William promised to sell Caileen's car for her, but he wanted a commission of 10%. Caileen signed an instrument promising to pay William a 10% commission if he sold her car. William assigned the agreement to Mehdi. Caileen's car was sold and the buyer paid Caileen. A dispute ensued between Caileen and William regarding whether William found the buyer or the buyer found Caileen. When Mehdi asked Caileen for payment on the instrument, Caileen refused. William, Caileen, and Mehdi settled their dispute without going to court and Caileen wrote Mehdi a check for $3,000. Mehdi endorsed the check on the back by signing his name planning to take it to the bank the next day. Unfortunately, Mehdi lost the check which was found by Caileen and cashed by the local bank. Caileen then left town.
-Before Mehdi endorsed the check it was a[n] ________ instrument; and after he endorsed it, the check was a[n] ________ instrument.

Question

Quizplus · Accepted Answer

Before Mehdi endorsed the check, it was an order instrument because it was payable to a specific person (Mehdi). After Mehdi endorsed the check by signing his name on the back without designating a new payee, it became a bearer instrument, meaning it could be cashed by whoever held it.

[Used Car Commission] William Promised to Sell Caileen's Car for Her