Question

                State whether the following provisions impair or preclude negotiability, the instrument in each instance being otherwise in proper form. Answer each statement with either he word “Negotiable” or “Nonnegotiable” and explain why.

4.             A instrument reciting “I.O.U., Mark Noble, $1,000.00”
5.             A note executed by Pierre Janvier, a resident of Chicago, for $2,000, payable in Swiss francs.
6.             An undated note for $1,000 payable “six months after date.”

i.              A note

Answer 1

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(a) A instrument reciting “I.O.U., Mark Noble, $1,000.00”.

Non-negotiable. An "I.O.U." is not a promise, but a mere acknowledgment of indebtedness. A promise is not implied from the fact that the existence of the debt is admitted.

(b) A note executed by Pierre Janvier, a resident of Chicago, for $2,000, payable in Swiss francs.

Negotiable. One of the requirements of negotiability is payment of a fixed amount of money. Section 1-201(24) defines "money" in terms of "a medium of exchange authorized or adopted by a domestic or foreign government as part of its currency." The test of "money" is thus one of governmental sanction, whether the government be foreign or domestic. Accordingly, an instrument payable in Swiss francs would be payable in money, even though the instrument were executed in the United States by persons having no connection with Switzerland.

(c) An undated note for $1,000 payable “six months after date.”

Non-negotiable. It is not payable at a definite time since the time of payment cannot be determined from its face. It is, however, by Section 3-115 of the UCC, an incomplete instrument. Section 3-115 provides upon completion it may be enforced as a negotiable instrument.