- A negotiable instrument is a written document signed by a person who makes an
unconditional promise to pay a specific sum of money on demand or at a certain time to the
holder of the instrument; an acceptable medium for exchanging value from one person to
another. A good example of this are checks, as they make it a lot easier to move large sums of
money without having to actually carry many dollar bills around. The convenience of these
instruments also create a sense of safety and consistency, as you’re able to replace payments and
keep a paper trail of these transactions. - I believe negotiable instruments are more similar to contracts because they contain more
information than money, such as reason for payment, the date the check was cut, check number,
etc. Also, checks are only good if it’s written from a sufficient account and if the services are
complete, which carries similar conditions to a contract.
3.
● The instrument is a written document – The agreement or promise isn’t a verbal
agreement (i.e., handshake or spoken), but it is put on paper so there’s a paper trail of the
agreement taking place.
● It is signed by the creator of the instrument – The party that is making the agreement
must put their signature on paper, which shows a clear commitment to the document.
● The instrument has an unconditional promise or order to pay – The promise or order
to pay must be specific and not implied. The language must be affirmative in nature.
● The amount to be paid is a sum certain in money – Negotiable instruments must
promise or order payment to be made in a national currency (Euros, US Dollars, English
pounds, etc.)
● Payment is to be made either on demand or at a fixed future time (a time certain) –
Must be payable on demand or at a specific time that can be computed from the
instrument itself. It could be on demand or at a future/definite date.
● The document must contain either the words of negotiability – “to the order of” – or
words indicating that it is a better instrument – Must clearly state who receives the
money. The payment must be directed to a specific person or entity.
4.
● “Order Paper” – Refers to a type of negotiable instrument, like a check. The check must
be made payable to someone receiving it, which consists of endorsing the paper and then
handing it to the new holder.
● “Bearer paper” – Refers to whoever holds the paper. No endorsement is needed. The
bearer only needs to deliver the paper to a new holder, as they’re entitled to payment.
● “Must be delivered to be negotiated” – Refers to both types of paper being transferred
from one party to another, as the new holder obtains the right to receive payment. This
step allows an efficient and easy flow of commerce between the two parties.
5.
● Drawer – The party that writes an order or the person who writes a check
● Drawee – The party that must obey an order. In the context of banking, the drawee is the
bank that must pay the funds ordered by a customer’s check
● Payee – The party that receives the benefit of an order - The two main reasons for why customers have a duty to examine their bank statements is
to ensure accuracy and help with managing money. It’s possible that banks may charge a
customer twice for an item and go unnoticed. Or, someone gets a hold of the customer’s banking
information and purchases items for themselves. Therefore, customers can check to see if they
are being billed accurately. In addition, tracking to see if one’s spending is within reason or out
of proportion allows the customer to make fixes to their spending pattern. - While banks can be held responsible for cashing forged checks, customers can be liable
for negligence. For example, if a customer gives their check book to a friend, and the friend
starts writing checks to themself, the bank isn’t responsible for the customer doing this.
However, if a customer’s check book is stolen and the customer alerts the bank of this, and the
bank still allows checks to be cashed on behalf of the customer, then the bank would be
responsible. - Yes, this agreement fulfills the Sum Certain in Money element of negotiable instruments,
as the promissory note states that Matthew D. Wiggins is promised $55,000 and interest of 10%
per year. These are clearly defined terms, as the court ruled in favor of Matthew D. Wiggins, as
the note was an unconditional promise for payment. - In order to enforce the right of possessing the note, the party must actually “hold” the
note. Deutsche Bank failed to prove how it came into possession of the note as well as failed to
show that it was in their control when it was moved from IndyMac. Since the note was intended
to IndyMac and not Deutsche Bank, the note needs to be endorsed over to Deutsche Bank for
them to have possession of the note. If Deutsche Bank cannot prove that the note was in their
possession, then the court should side with Janice Logan. - Yes, the non recourse provision does shield Cooper from having to pay beyond the agreed
upon collateral. This provision coexists with an unconditional promise to pay required by
negotiable instruments, as The Mullen Co can’t recover the note’s balance, which is considered
an asset of Cooper. The Mullen Co can only obtain specified collateral in the agreement.
Created by Mikael La Ferla
Mikael La Ferla 