Incomplete Negotiable Instrument

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Sub: Business Management                                                                 Topic: Business Law

Incomplete Negotiable Instrument

Question:
On the back of an envelope, Phoebe writes, “I promise to pay Quint or bearer $600 on demand.
[Signed] Phoebe.” What type of instrument is this? Is it negotiable? If not, why not?




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Sub: Business Management                                                                 Topic: Business Law

Solution:
This is Incomplete Negotiable instrument because:-

        Reasons for Negotiability

        1.     An unconditional promise to pay debt: - For constituting an instrument to be Negotiable
               Instrument, there must be an unconditional promise to pay a certain sum of money
               [UCC 3103(a)(9)]. The or maker executor must assume obligation to pay. Merely an
               acknowledgement of debt is not sufficient. If there are certain conditions attached to
               the obligation to pay money, then the instrument is not treated as negotiable
               instrument.
               In the given case, Phoebe has given an unconditional promise to pay debt or sum or
               money, hence it fulfills the first essential condition of Negotiable instrument.

        2.     Payable on demand or Specific date. The Negotiable instrument must be payable on
               demand or on specific date. The above instrument satisfies this feature also as it is
               payable on demand.
        3.     In Writing. The Negotiable instrument must be in writing. No specific format of
               Negotiable Instrument as such but it must contain an unconditional promise to pay in
               writing, which should be clear and concise. The above instrument fulfils these criteria
               also.
        4.     Specific sum of Money. The obligation to pay must be for a specific sum of money. The
               amount payable must be specific not ambiguous or based on certain factors, which may
               restrict its negotiability. The above case satisfies this criteria also as it specifies to pay
               sum of $ 600.




                    www.classof1.com/homework-help/BusinessManagement
 *The Homework solutions from Classof1 are intended to help students understand the approach to solving the problem and not for
                              submitting the same in lieu of their academic submissions for grades.
Sub: Business Management                                                                 Topic: Business Law
        5.     Transfer by delivery or transfer of possession. The Negotiable instrument must be
               transferrable by delivery (Order Instruments) or transfer of possession (bearer
               instruments). The above instrument fulfils these criteria also.


Reasons for Inchoate

Stamping. The Negotiable instrument (other than cheques) must be stampe
				
DOCUMENT INFO
Description: On the back of an envelope, Phoebe writes, “I promise to pay Quint or bearer $600 on de�mand. [Signed] Phoebe.” What type of instrument is this? Is it nego�tiable? If not, why not?
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