THIS IS A MULTIPLE CHOICE ANSWER
Abby Novel signed a handwritten note that read, "Glen Gallwitz 1-8-2002 loaned me $5,000 at 6 percent interest a total of $10,000.00." The note did not state a time for repayment. Abby used the funds to manufacture and market a patented jewelry display design. More than three years after Abby signed the note, Glen filed a suit to recover the stated amount. Abby claimed that she did not have to pay because the note was not negotiable - it was incomplete.
The UCC specifies four types of negotiable instruments:
a. drafts, b. financing statements, c. security statements, d. UCC-1s, e. commercial paper
a. checks, b. financing statements, c. security statements, d. UCC-1s, e. commercial papera. notes, b. financing statements, c. security statements, d. UCC-1s, e. commercial papera. certificate of deposits, b. financing statements, c. security statements, d. UCC-1s, e. commercial paper
The type of negotiable instrument in this case is a (A. draft B. Check C. Note D. Certificate of Deposit)
The UCC classifies a negotiable instrument as a (A. demand instrument B. time instrument) instrument, meaning it is payable on demand and thereafter for a reasonable period of time, or a (A. time instrument, B. demand instrument), meaning it is payable on (A. a future date, B. demand).
The instrument in this case is a (A. demand instrument, B. time instrument) because (A. it does not include a definite date, b. it is payable on a future date).
The instrument in this case includes two parties:
(a. Abby or b. Glen) is the maker and (a. Abby b. Glen) is the payee.
The UCC has six requirements for an instrument to be negotiable:
The instrument must be (A. in writing, b. oral)
2. The instrument must be signed by the (A. maker, b. payee)
3. The instrument must include (A. an unconditional promise B. a conditional order) to pay;
4. The instrument must state a (A. fixed B. Variable) amount of money;
5. The instrument must be payable (A. on demand B. at some point in the future) or (A. at a definite time B. at an unknown time); and
6. The instrument must be payable to order or to (A. bearer B. maker C. payee).
Based on the case stated above:
1. The instrument was (A. oral B. in writing);
2. The instrument was signed by (A. Abby B. Glen), the maker;
3. There was a/n (A. unconditional B. conditional) promise to pay;
4. The instrument includes the principal, interest, and total payment, which is a (A. fixed amount of money B. variable amount of money);
5. The instrument does not include a specific or definite repayment date, which means that it is (A. payable on demand B. payable at a future date); and
6. The instrument was payable to (A. Glen B. Abby).
Therefore, Abby is (A. correct B. incorrect), the instrument (A. is B. is not) a negotiable instrument and she (A. is B. is not) required to pay Glen.
What if the facts were differently?
Abby orally agreed to repay Glen $5,000 plus interest, but only on the condition that the business venture succeeded.
This (A. is B. is not) a negotiable instrument because it is (A. oral B. in writing) and includes a/n (A. unconditional B. conditional promise to pay).