Ricardo borrowed $5,000 from his friend, Lorenzo. Ricardo signed a handwritten note stating, "I promise to pay $5,000 to Lorenzo on or before August 1, 2001, in return for the same amount borrowed from him on May 1, 2001." Under these circumstances, the note is _____.

Question

Quizplus · Accepted Answer

An instrument such as a check or a note must meet certain formal requirements to be a negotiable instrument. If the instrument does not meet these requirements, it is nonnegotiable; that is, it is treated as a simple contract, not as a negotiable instrument. Under the given circumstances, the note signed by Ricardo is not negotiable because it is not payable to order or to bearer.

Ricardo Borrowed $5,000 from His Friend, Lorenzo