BUS 607 Week 4 Discussion 1 Negotiability

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A negotiable instrument is an unconditional promise or order to pay a fixed amount of money, with or without interest or other charges described in the promise or order. As stated by Miller, 2014, “Negotiable instruments may also be classified as either demand instruments or time instruments. A demand instrument is payable on demand—that is, it is payable immediately after it is issued and thereafter for a reasonable period of time" (pg, 221). An example of a negotiable instrument a promissory note. Negotiable instrument can be classified into two groups, orders to pay (drafts and checks) and promises to pay (promissory notes and CDs). Negotiable instruments can be considered as a small piece of paper given from one person to another person (negotiation) which serves as an agreement for the exchange for money. A promissory note is an example of a negotiable instrument. It is a promise to pay money by one individual to another or to a bearer. For a promissory note to be considered a negotiable instrument they must meet certain requirements. It should “be in writing, be signed by the maker or the drawer, be an unconditional promise or order to pay, state a fixed amount of money, be payable on demand or at a definite time, be payable to order or to bearer" (Miller, 2014). One of the simplest ways to make a negotiable instrument into a non-negotiable instrument would be a writing which does not contain the words "to the order of" (within the four corners of the instrument or in endorsement on the note or in allonge). The instrument should indicate that it is payable to the individual holding the contract document (analogous to the holder in due course). If someone writes non-negotiable on the instrument, then it not negotiable. This does not apply to a check. Another change you could make would be to change the person who the check is payable to to a company that does not exist this would take the negotiable instrument and make it a non-negotiable instrument. There are certain factors that does not affect negotiability. Three factors that the UCC have develop that does not generally affect negotiability are the date on the face of the instrument. Having no date or having a negotiable instrument post-dated does not affect the negotiability. The second factor involves business negotiations that can sometimes be lengthy, the negotiable instruments will be modified after they are initially drawn up. Lastly, if the negotiable instrument specifically has a note on it that says that it is "non-negotiable" or "not governed by Article 3," it still may remain negotiable if it is a check” (Business law.com).

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