Donut Shop signs a promissory note for $50,000 in favor of Enterprise Lending Inc. The note includes an acceleration clause. This note is
A)negotiable.
B)nonnegotiable, because the maker can move up the payment date.
C)nonnegotiable, because payment can be demanded early if a specified event occurs.
D)nonnegotiable, because the maturity may be extended into the future.

Question

Quizplus · Accepted Answer

The presence of an acceleration clause does not affect the negotiability of a promissory note. A negotiable instrument can include an acceleration clause, which allows the payee to demand full payment before the original due date under specific conditions, without compromising its negotiability.

Donut Shop Signs a Promissory Note for $50,000 in Favor