Question

                Paul agreed to lend Marsha $500. Thereupon Marsha made and delivered her note for $500 payable to Paul or order “ten days after my marriage.” Shortly thereafter Marsha was married. Is the instrument negotiable? Explain.

Answer 1

Case summary:

Mr. P lends $500 to Ms. M. Over this, Ms. M drafted a note payable to P or order which is to be paid 10 days after her marriage. Shortly after that M got married.

Negotiability stands for a legal concept that makes written instruments freely transferrable in high manner and thereby it provides for the readily available and accepted form of payment which is the substitution for money.

The following are the formal requirements that an instrument must meet to be negotiable:

• An instrument must be in writing to be negotiable; • An instrument must be signed;

• It should contain a promise or order to pay;

• It should be unconditional;

• An instrument should be for a fixed amount;

• It should be created for money;

• An instrument should not carry any other undertaking or instructions other than description of the amount of money that is to be paid; • It should be payable either on demand or at definite stated time in the instrument; and

• It should either be payable to order of the instrument or to the bearer of the instrument.

Conclusion: In the above mentioned case, the instrument drawn by Ms. M is non-negotiable because it carries conditions in its payment procedure by stating that it should be paid 10 days after she gets married. But as general rule, an instrument should be unconditional and should not carry any other undertaking or instructions other than description of the amount of money that is to be paid. Thus, to conclude it could be said that the instrument drawn by Ms. M is non-negotiable.