Sport Souvenir LLC orders a gross of printed shirts from T-Shirt Company. To finance the purchase, the buyer signs a note to pay the seller from the funds paid to the buyer on the sale of the shirts at a certain event. This note is nonnegotiable because
A)the note is not a three-party instrument, such as a draft.
B)payment is to be made from a fund that does not yet exist.
C)the instrument does not contain an express promise to pay.
D)the note appears not to state a rate of interest.

Question

Quizplus · Accepted Answer

The note is nonnegotiable because payment is contingent upon a specific event (the sale of the shirts at a certain event), which means the funds from which the note is to be paid do not yet exist. Negotiable instruments must contain an unconditional promise or order to pay.

Sport Souvenir LLC Orders a Gross of Printed Shirts from T-Shirt