Negotiable Instrument - Factors Affecting Negotiability

The video tutorial explains the factors that make a commercial instrument negotiable. It covers the essential elements such as being in writing, signed by the maker, containing an unconditional promise to pay, and being payable on demand or at a specific time. The tutorial also discusses factors that do not affect negotiability, like the absence of a date, handwritten or typed format, and alterations that do not change core elements. Additionally, it addresses the role of interest rates and the specific case of checks, emphasizing that writing 'non-negotiable' on a check limits its use to presentment or deposit only.

What is one of the essential requirements for a commercial instrument to be considered negotiable?

• It must be written in a specific color of ink.

• It must be approved by a financial institution.

• It must be in writing and signed by the creator.

• It must be issued in a specific country.

Which of the following does NOT affect the negotiability of an instrument?

• The instrument is signed by a third party.

• The instrument is postdated.

• The instrument is issued by a bank.

• The instrument is written in pencil.

Which of the following is a valid alteration that could affect negotiability?

• Switching from typed to handwritten text.

• Changing the date of the instrument.

• Adding a decorative border.

• Altering the amount payable.

How does the presence or absence of an interest rate affect the negotiability of an instrument?

• It makes the instrument non-negotiable.

• It has no effect on negotiability.

• It changes the currency of the instrument.

• It requires additional approval from a bank.

What happens if 'non-negotiable' is written on a check?

• The check must be returned to the issuer.

• The check can only be used for deposit or presentment.

• The check becomes void.

• The check requires a co-signer.