A negotiable instrument may be transferred in two basic ways. If the instrument is made "to the order" of the payee, the payee must (1) endorse the instrument and (2) deliver the instrument to a third party. If the instrument is made "to bearer," the party in possession of the instrument is required only to deliver it to transfer it.

Question

Quizplus · Accepted Answer

This statement accurately describes the two basic ways in which a negotiable instrument can be transferred. "To the order" instruments require endorsement and delivery to transfer, while "to bearer" instruments only require delivery.

A Negotiable Instrument May Be Transferred in Two Basic Ways