Business Law II – Week 6 Assignment
For each assignment in business law, students should utilize the IRAC method. Introduce the concepts from a particular week, state the Rule of law making sure to include all elements of any law, Analyze the problem using both the facts of the case and the rule of law and finally make a Conclusion on the problem that week.
On a sheet of paper, Elle writes, without her signature, “I acknowledge that I owe Frank $600, payable out of the proceeds of the sale of my car, a 2005 Honda Civic, which I promise to advertise ‘For Sale’ next week. Payment is to be made on or before six months from today.” What type of instrument is this? Is it negotiable? If not, why not? Be sure to list all elements required for a note to be negotiable.
You should complete this assignment in a 500 word traditional paper.
Elle writes and gives frank a non-signed promissory note acknowledging that owed him $600. In the promissory note, Elle promises that she would settle the amount upon the sale proceeds of her car a 2005 Honda Civic. She promised to advertise the car in the following week upon writing the promissory note. Additionally, she promised that the payment for the money owed was to be made on or before the end of six months. The issue arising, in this case, was that the promissory was not signed thus raising questions if it met the basic elements and conditions of a negotiable instrument.
Article 3 and 4 of the Uniform Commercial Code of the United States
The article defines a negotiable instrument as well as guiding on the transfer and issuing of negotiable instruments between different parties (Geva, 2006). Furthermore, the article gives the legal requirements of a negotiable instrument that is enforceable.
First, a negotiable instrument entails a document with characteristics that allow it to be freely and legally sealable, assignable and saleable such as checks, bill of exchange, promissory note, and draft (Geva, 2006). A negotiable allows the passing of ownership from one party (transferor) to another (transferee) by way of delivery or endorsement.
There are requirements and elements that a negotiable instrument must meet to be legally enforceable in a court of law. In this case, the negotiable document must be done in writing as a record on the details of the money owed and other vital aspects (Geva, 2006). The document must be signed by the maker or the transferor as an acknowledgment and evidence that they are committed to honoring the aspects of the document. The document needs to be an order to pay or an unconditional promise meaning that the transferor will make the payments freely. The document needs to indicate the fixed amount of money to be paid to the transferee under the agreement. The document must be payable at a specified time or at or on-demand. Finally, the document must be payable to bearer or order except for checks. The fulfillment of the stated elements and requirements means that the negotiable instrument can be enforceable or negotiable.
In the case, of a promissory note given by Elle to Frank, it meets some vital requirements while it misses on others. The promissory notes have indicated the fixed amount to be paid to frank which is $600 upon the sale of a car. The document has indicated the specific period or date that the amount of money owed to Frank will be settled which is within the sixth month on the day the document was written. The document is unconditional and it has indicated the person to receive the money. However, the promissory note did not meet the signature requirements. Elle did not append her signature on the document thus disqualifying it as a negotiable document.
A negotiable document must meet or the requirement and elements stated under article 3 and 4 of the Uniform Commercial code for it to be legally enforceable. The promissory not given by Elle to Frank has met all the requirements except one requirement thus disqualifying it. The fact that Elle did not sign the promissory notes denies the document its authenticity and thus it cannot be negotiable.
Geva, B. (2006). Recent international developments in the law of negotiable instruments and payment and settlement systems. Tex. Int’l LJ, 42, 685.