Payday Loans, Inc., signs an instrument payable to the order of Qiana that states, "The maker of this note at the date of maturity, April 1, 2016, can extend the time of pay?ment, but for no more than a rea?sonable time." This instrument is
A) negotiable.
B) nonnegotiable, because it includes an extension clause.
C) nonnegotiable, because it is not payable within a definite time.
D) nonnegotiable, because it is payable to a specific payee.

Question

Quizplus · Accepted Answer

The instrument is nonnegotiable because it is not payable within a definite time. The extension clause does not affect its negotiability. However, the absence of a definite maturity date makes it impossible to determine the time of payment, which is a requirement for negotiability. Additionally, the fact that it is payable to a specific payee rather than "to order" (i.e., "payable to the order of Qiana") is not relevant to its negotiability.