The accounting department of Delta Sales Company receives an instrument that sta

Question

The accounting department of Delta Sales Company receives an instrument that states, “March 16, 2001. Thirty days after date, I promise to pay to the order of cash, $700 (seven hundred and 00/100 dollars), in Denver, Colorado, with interest at the rate of 7% (seven percent) per year. This in­strument is secured by a contract for the sale of a computer. Due April 15, 2001. [Signed] Edward Jones.” Delta Sales Company negotiates the instrument to ABC Investments to cover an outstanding bill. When ABC attempted to collect from Edward Jones on April 16, 2001, he refused to pay stating the instrument was not negotiable. ABC sued Edward Jones and Jones asked the judge for a summary judgment. [ABC Investments v. Edward Jones, 939 F.2d 376 (6th Cir. 2001)] Was this a negotiable instrument? Why or why not?

Explanation / Answer

If an instrument has to qualify as negotiable the following conditions to be satisfied - a) it has to be in writing, b) it should be signed by the maker of the instrument c) there should be unconditional promise or order to pay d) it should state a fixed amount that is to be paid e) it should be payable on demand or at a definite time f) it should be payable to order or bearer As the instrument involved in the question meets all the above requirements, it is negotiable.

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