Question

in each of these independent situations please decide whether the following items on the fact of an OTHERWISE negotiable instrument renders the instrument non-negotiable?

a) Note signed in the upper left hand corner
b) Draft directing to pay out of next month's sales
c) Note promising to pay in accordance with the mortgage terms
d) Draft payable in 1000 euros
e) Note payable upon your death
f) Draft payable whenevr you present it to drawee
g) Note promising to "Pay my Favorite Business Law Professor"

Answer 1

a.Note signed in the upper left hand corner - NEGOTIABLE

Reason:

Promissory note generally means a signed document containing a written promise to pay a stated sum to a specified person or the bearer at a specified date or on demand

Requisitie of a promissory note is that it should be signed irrespective of the place of signature on the document once signed a note is Negotiable.

Conclusion : Hence a note signed in the upper left hand corner is negotiable.

b.Draft directing to pay out of next month's sale - Non Negotiable

Reason :

Draft is an instrument in writing containing an unconditional order, signed by the maker, directing a certain person to pay a certain sum of money only to, or to the order of a certain person or to the bearer of the instrument.

The following features of a bill of exchange emerge out of this definition.
•It must be in writing.
• It is an order to make payment.
• The order to make payment is unconditional.
• The maker of the bill of exchange must sign it.
• The payment to be made must be certain.
• The date on which payment is made must also be certain

Conclusion : From the above highlighted point it is clear that a draft must specify the repayment date failing to do so the draft is considered Non negotiable

c.Note promising to pay in accordance with the mortgage terms - Non negotiable

Reason :

Promissory notes that are unconditional and saleable become negotiable instruments that are extensively used in business transactions in numerous countries.

Conclusion :Hence Note promising to pay in accordance with the mortgage terms shall not be Negotiable

d.Draft payable in 1000 Euros : Negotiable

Reason :

Draft, besides others, is a negotiable instrument all the more for one reason that is "guaranteeing payment of specific amount of money".The specification of amount i.e 1000euros makes it more evident that it is negotiable.

Conclusion : Hence Draft payable in 1000euros is negotiable

e.Note payable upon your death-Non Negotiable

reason :Any condition placed on the note makes it non negotiable.

Conclusion :Since it specifies a condition it is non negotiable

f.Draft payable whenever you present it to drawee - NEGOTIABLE

The best example of above situation is a Demand draft which can be encashed at any time when presented to drawee but still it is negotiable.This feature doesnt make it non negotiable.

Conclusion : It is Negotiable

g.Note promising to "Pay my Favorite Business Law Professor" - Non negotiable

Reason :

One of the requisite for a note to be negotiable is that it must be payable to or to the order of a certain person or to bearer.It cannot be randomly written.Note promissing to pay favourite business law professor is vague and cannot be termed as negotiable

Conclusion : Non Negotibale instrument