You are interested in buying a new car and Bob let's you borrow one of the new cars on his lot for a week to test drive. You decide you like the car and when you visit Bob to drop off the car, he hands you the following document and a pen:
May 1, 201x
I promise to pay to the order of Bob's Auto Emporium $20,000 (Twenty thousand dollars) with interest at the rate of 7% per annum.
What type of instrument is this? Does this instrument meet the requirements for negotiability under the UCC?
Too many unanswered questions:
11. When is the 1st payment due?
2. When is the final payment due.?
3. How much will the loan cost?
4. Any penalties or late fees?
5. The note doesn't say what you are
getting for the $20,000.
there is no instrument
Everest
The document you were given by Bob is called a promissory note. A promissory note is a written promise by one party, called the maker, to pay a specific sum of money to another party, called the payee, on demand or at a specified future date.
To determine whether this instrument meets the requirements for negotiability under the Uniform Commercial Code (UCC), we need to refer to the specific requirements outlined by the UCC. According to UCC Section 3-104, a negotiable instrument must meet the following requirements:
1. Writing: The instrument must be in writing.
2. Unconditional Promise or Order: The instrument must contain an unconditional promise or order to pay a fixed amount of money.
3. Signed by Maker or Drawer: The instrument must be signed by the maker or drawer (person making the promise to pay).
4. Payable on Demand or at a Definite Time: The instrument must be payable on demand or at a definite time.
5. Payee Must Be Named or Order Unconditionally: The instrument must either name a specific payee or be payable to the order of a specific payee.
6. No Additional Promises or Orders: The instrument must not contain any additional promises, orders, or terms apart from the required elements.
Based on the information provided, the document meets most of the requirements for negotiability under the UCC. It is in writing, contains an unconditional promise to pay $20,000, and is signed by the maker. However, it does not specify a definite time for payment or mention whether it is payable on demand. Without this information, it may not meet the requirement of being payable at a definite time. Therefore, it may not meet all the requirements for negotiability under the UCC.