If an instrument is nonnegotiable, the rights of the parties are governed by the general principles of contract law.

Question

Quizplus · Accepted Answer

This statement is true. Nonnegotiable instruments are governed by the principles of contract law because they cannot be transferred or negotiated to another party like negotiable instruments can be. Therefore, the rights and obligations of the parties are based on the terms of the contract and the general principles of contract law.

If an Instrument Is Nonnegotiable, the Rights of the Parties