Question

Chapter 25- Briggs Case

Briggs signed a note that read in part as follows: “Ninety days after date, I, we, or either of us, promise to pay to the order of Three Thousand Four Hundred Ninety-Eight and 45/100—Dollars.” The words and symbols in italics were typed, and the rest of the words were preprinted. No blanks had been left on the face of the instrument; any unused space had been filled in with hy­phens. The note contained several clauses that permitted acceleration in the event the holder deemed itself insecure.

When the note was not paid at maturity, Broadway Management Corp. brought suit on the note for full payment, claiming that it (Broadway) was a holder. Is this an order or bearer instrument? What changes, if any, would have to be made on the note for it to be a negotiable instrument?

Answer 1

Negotiable instrument:

A negotiable instrument is a signed document promising payment to a specified person or the assignee. It is a bearer instrument. It includes the words "Promise to Pay" Or Payable to the bearer or to the order of bearer" and should not just include the words "to the order of.

However, the above instrument can not be considered as negotiable insrument as it contained the words "to the order of" besides "Promise to pay".

Order:

An order should be mention the specified person "Payee" to whom the amount is payable.

The above instrument is an incomplete order as it doesn't contain the name of the specific person to whom the amount is payable though it contains the words "to the order of "

Therefore, the instrument is neither an order nor a negotiable instrument.

Changes to be made to make the instrument negotiable:

In the statement after the words promise to pay, "to the order of" should be removed to make it a negotiable instrument. The revised statement follows as given below.

: “Ninety days after date, I, we, or either of us, promise to pay to the bearer or to the order of the bearer, Three Thousand Four Hundred Ninety-Eight and 45/100—Dollars.”