d. Thomas indorsed a negotiable promissory note payable to the order of Thomas, “(signed) Thomas,” and delivered it to Sally. Sally then wrote above Thomas’s signature, “Pay to Sally.”

d. Thomas indorsed a negotiable promissory note payable to the order of Thomas, “(signed) Thomas,” and delivered it to Sally. Sally then wrote above Thomas’s signature, “Pay to Sally.”

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June 9, 2021
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Explain whether each of the following transactions results in a valid negotiation:
a. Arnold gives a negotiable check payable to bearer to Betsy without indorsing it.

Explain whether each of the following transactions results in a valid negotiation:
b. Golden indorses a negotiable promissory note payable to the order of Golden, “Pay to Chambers and Rambis, (signed) Golden.”

Explain whether each of the following transactions results in a valid negotiation:
 
c. Porter lost a negotiable check payable to his order. Kersey found it and indorsed the back of the check as follows: “Pay to Drexler, (signed) Kersey.”

Explain whether each of the following transactions results in a valid negotiation:
d. Thomas indorsed a negotiable promissory note payable to the order of Thomas, “(signed) Thomas,” and delivered it to Sally. Sally then wrote above Thomas’s signature, “Pay to Sally.”

Explain whether each of the following transactions results in a valid negotiation:
e. Margarita issued to Poncho a negotiable promissory note payable to the order of Poncho. Poncho indorsed the note “Pay to Randy only, (signed) Poncho” and sold it to Randy. Randy then sold the note to Stephanie after indorsing it “Pay to Stephanie, (signed) Randy.”

Answer and ExplanationSolution by a verified expert

Explanation

The check is a financial negotiable instrument that carries an amount required to be paid directly to the bearer mentioned in the check.For this reason,the delivery of the check to the bearer without endorsing by the drawer is a valid transfer.

Verified Answer

The transaction between Individuals A and B is the right negotiation because the check is a negotiable instrument and can directly be delivered to the bearer.

Explanation

Individuals C and R had equal rights over the instrument. In such a case, the negotiation of a promissory note is valid even though it is addressed to two individuals. If Individuals C and R were not co-owners of the instrument, then the negotiation would have not been valid.

Verified Answer

Yes, the transaction results in the right negotiation. The instrument was payable to both Individuals C and R as they are the co-owners of the instrument.

Explanation

Individual K found the check, which was not endorsed by Individual P. It was Individual K who endorsed the check without the knowledge or permission of Individual P. This makes the transaction invalid. Again, Individual P did not deliver the check to Individual K either. If Individual P had endorsed the check or delivered it to Individual K, the transaction would have been valid.

Verified Answer

The transaction does not result in a valid negotiation as the instrument was neither endorsed nor negotiated by delivery by Individual P.

Explanation

Individual T gave a blank endorsement to Individual S, making it possible for Individual S to convert it into a special endorsement. The instrument was delivered to Individual S by Individual T, which makes it a valid negotiation.

Verified Answer

The transaction results in a valid negotiation as Individual T delivered the check to Individual S in a blank form. Further, Individual S has the right to endorse it by conversion into a special instrument.

Explanation

Individual M gave the promissory note to Individual P, which was then given to Individual R, thereby restricting Individual R to further transfer the instrument according to Section 3-206 under Act U. However,Individual R has the right to further endorse the instrument to Individual S. Individual S then becomes the holder of the instrument, thereby making the transaction valid.

Verified Answer

Individual M could further deliver the instrument to Individual P, who is the owner of the instrument. Individual P has the right to endorse the instrument to Individual R after which Individual R endorses it to Individual S,which makes Individual S the main owner.

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