Negotiable Instrument - Order or Bearer Paper

The video tutorial explains the concept of negotiable instruments, focusing on two main types: order paper and bearer paper. Order paper must include the word 'order' and be made out to a named person or their order, allowing transferability. Bearer paper, on the other hand, is made out to 'bearer' or no one specific, making it transferable by possession. The tutorial highlights the importance of specific wording in determining the type of negotiable instrument and its transferability.

What is a key requirement for an instrument to be considered order paper?

• It must be left blank.

• It must be made out to bearer.

• It must include the word 'order'.

• It must be made out to a specific person only.

How is bearer paper different from order paper?

• Bearer paper can be made out to no one at all.

• Bearer paper is made out to a specific person.

• Bearer paper must include the word 'order'.

• Bearer paper cannot be transferred.

Which of the following scenarios would result in an instrument being considered bearer paper?

• Made out to 'order of a named person'.

• Made out to 'order of cash'.

• Made out to a specific person only.

• Made out to 'order of a specific person'.

What happens if an instrument is made out to 'order of' with a blank space?

• It becomes non-negotiable.

• It cannot be transferred.

• It is considered order paper.

• It is considered bearer paper.

Who is entitled to present bearer paper for payment?

• Anyone in possession of the paper.

• Only the person named on the paper.

• The original issuer of the paper.

• A bank or financial institution.