Book Opener

Unconditional Promise or OrderThe promise in the note, or the order in the draft, must be unconditional.If either is qualified in any way, the instrument is not negotiable.Example 2. Jasmine’s uncle gave her a promissory note for$3,000. The note was complete and regular in every way, exceptthat it bore the statement, “Payable only on Jasmine Sullivan’sgraduation from high school.”This note is a valid promise to pay. When Jasmine graduates fromhigh school, her uncle will owe her $3,000. The note, however, is not negotiablebecause it is conditional on its face. Statements requiring thatcertain things be done or that specific events take place make the instrumenta simple contract rather than a negotiable instrument.Fixed Sum of MoneyA negotiable instrument must be payable in a fixed sum of money.Usually it can be payable in any money that has a known or establishedvalue. An instrument payable in a foreign currency or any medium ofexchange accepted by a foreign government is negotiable.Payable on Demand or at a Definite TimeNegotiable instruments must be payable on demand or at a definitetime. This requirement makes it possible to determine when the debtoror promisor can be compelled to pay.Rubber ChecksManaging a checkingaccount can be done intwo easy steps. Thefirst step is to balanceyour checkbookregularly to minimizethe risk of bouncing acheck. Most banks andretailers charge a feefor bounced checks.The fee is usually takenfrom your accountwhen funds are available.The second stepis to resist the temptationto spend moremoney than you havein your account. Whatdo you think is a fairfee for bouncing acheck?Get InvolvedRead the returnedcheck policy displays ofthe stores you shop in.Call different banks inyour area and ask themhow much they chargetheir customers forbounced checks.CONDITIONAL PROMISEA promissory note with a condition(such as graduating from highschool) is not negotiable. Is this trueeven when the condition is met?Chapter 23: Negotiable Instruments 513