Question

Muriel Evans writes the following note on the back of an envelope: “I, Muriel Evans, promise to pay Karen Marvin or bearer $100 on demand.” Is this a negotiable instrument?

Answer 1

Yes, this is a negotiable instrument, given that the envelope contains money or is a proxy for real money ie has a legal standing.

A negotiable instrument is one which is a promise to pay a specific person who should be named. Also, an instrument of this sort is transferable. Karen can given this note to a lender and subsequently the lender can demand this amount of $100 from Muriel.

In this case there is clear distinction as to who is the lender and bearer and also the amount promised must be paid in full at demand. Draft or checks are examples of commonly used negotiable instruments.