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Chapter 22
Creation of Negotiable Instruments
VI. Answers to Critical Legal Thinking Cases
22.1 Negotiable Instrument
Yes, the note executed by Dr. Bailey was a negotiable instrument. To be a negotiable instrument, a
writing must contain either an unconditional promise, or order to pay. To be negotiable, a promise to pay
must be an affirmative undertaking. The mere acknowledgment of a debt or an implied promise to pay is
not sufficient. Negotiable instruments must also be payable either to order or to bearer. An instrument is
22.2 Formal Requirements
Yes, a check printed on an envelope meets the requirements of the UCC for classification as a negotiable
instrument. Three requirements are necessary for a negotiable instrument: (1) the instrument be in writing,
(2) be permanent, and (3) be portable. The requisite writing is often on a preprinted form. Most writings
on paper meet the permanency requirement. The portability requirement is intended to insure free transfer
22.3 Reference to Another Agreement
Yes, the reference to the mortgage set forth in the promissory note caused the note to be nonnegotiable.
The UCC allows negotiable instruments to be secured by mortgages. However, the negotiability of an
not negotiable.” Holly Hill Acres, Ltd. v. Charter Bank of Gainesville, 314 So.2d 209, 1975 Fla. App.
Lexis 13715 (Court of Appeals of Florida)
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VII. Answer to Ethics Case
22.4 Ethics Case
language which referred to monthly payments was an additional agreement. The court stated: “The
notation [about monthly payments] was indicative of a collateral agreement made by the parties to
provide for monthly installments but did not destroy the demand nature of the note.” Since the monthly
installments provided for in the note did not destroy the demand nature of the instrument, the note was a
