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Negotiable Instruments

Negotiable instruments are written legal documents that emerged in the thirteenth century in England (Ellinger, Lomnicka, & Hare, 2011). The documents function as unconditional orders for a transfer of a specific monetary amount. Negotiable instruments can take the form of checks, promissory notes, and certificates of deposit among others (Miller, 2014). The aim of this paper is to analyze the validity of three checks.

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The drawee or a party that makes the first check payable is Class Store. Cristina Blasco is the drawer or a person who signed the check. The payee in the negotiable instrument under discussion is Money Services Center. The check satisfies key requirements of validity; therefore, Cristina Blasco cannot have her account credited by Class Store. These requirements are a written form, signature, an unconditional promise, definite sum, definite date, and payee (Miller, 2014).

The conditions of the validity of a negotiable instrument take a prominent place in the law because they reflect essential stages in the negotiation of commercial paper (Miller, 2014). The requirements are outlined in the Article 3 of the Uniform Commercial Code (UCC) (“Negotiable instruments,” n.d.).

The second negotiable instrument is a two-party check. Such checks are payable to either one or two parties. The deposition of two-party checks depends entirely on their wording. The checks can be made payable to both parties indicated in the ‘pay to the order of’ line if the word ‘and’ appears between the names of the two parties (Davidson, Forsythe, & Knowles, 2015). It should be mentioned that the rule also applies to the ampersand symbol (Davidson et al., 2015). The word ‘or,’ on the other hand, indicates that the presence and endorsement of only one party is necessary to deposit a check.

When analyzing the second case, it has to be borne in mind that the paper indicates ‘or’ in the ‘pay to the order of’ line. It follows that Linus Van Pelt was able to deposit it without the signature of another payee, which was Lucy Van Pelt. Therefore, the girl will not be successful if she tries to demand the deposited amount back. It must be added that according to the Article 3 of the UCC, if the check had not included the words ‘and’ or ‘or’ it would be considered ambiguous (“Identification of person,” n.d.). Such checks are “payable to the persons alternatively” (“Identification of person,” n.d., para. 9). It means that either Lucy or Linus or both of them would be able to negotiate the instrument.

Upon critically examining the third check, it is clear that it does not satisfy all requirements for negotiable instruments. For the check to be negotiable a pledge to transfer a definite amount of money has to be unconditional (Miller, 2014). However, the instrument states that the transfer is predicated on a condition of receiving top grades. Taking into consideration that the drawer’s check is accompanied by the condition, it cannot constitute a valid negotiable instrument. Therefore, the cashier refused to accept the check.


The paper has analyzed the validity of the three negotiable instruments. It has been argued that the validly of the first check cannot be disputed by the drawer because it satisfies all requirements stipulated in the Article 3 of the UCC. The analysis of the second check has shown that Lucy does not have the right to claim the money back. Finally, the third check is invalid because it includes a condition.

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Davidson, D., Forsythe, L., & Knowles, B. (2015). Business law: Principles and cases in the legal environment. New York, NY: Wolters Kluwer Law & Business.

Ellinger, E., Lomnicka, E., & Hare, C. (2011). Ellinger’s modern banking law. Oxford, England: OUP Oxford.

Identification of person to whom instrument is payable. (n.d.). Web.

Miller, R. L. (2014). Business law: The first course—Summarized case edition. Boston, MA: Cengage Learning.

Negotiable instruments. (n.d.). Web.

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