Negotiable Instruments - Explained

A negotiable instrument is a commercial document that must be in writing, signed, and contain an unconditional promise or order to pay a fixed amount of money. It should be payable on demand or at a specified time and can be payable to a specific person or bearer. Common types include drafts, checks, promissory notes, and certificates of deposit.

What is a key requirement for a document to be considered a negotiable instrument?

• It must be in writing and signed.

• It must be a digital document.

• It must be a government-issued document.

• It must be verbal.

What does 'payable on demand' mean in the context of negotiable instruments?

• Payment is made only after a year.

• Payment is made only to the government.

• Payment is made at any time upon request.

• Payment is made only on weekends.

What is the difference between 'payable to order' and 'payable to bearer'?

• 'Payable to order' is for a specific person, while 'payable to bearer' is for anyone holding the instrument.

• 'Payable to order' is for banks only, while 'payable to bearer' is for individuals.

• 'Payable to order' requires a signature, while 'payable to bearer' does not.

• 'Payable to order' is for international transactions, while 'payable to bearer' is for domestic transactions.

Which of the following is an example of a negotiable instrument?

• A grocery list

• A verbal agreement

• A promissory note

• A business card

What is a check considered in terms of negotiable instruments?

• A verbal promise

• A digital currency

• A non-negotiable document

• A type of draft or order to pay