Venice writes a promissory note in favor of his creditor, Milan. It says: "Subject to my option, I promise to pay Milan Php10 Million or his order or give Php10 Million worth of coffee beans or to authorize him to sell my Ferrari worth Php10 Million. Signed, Venice." Is the note negotiable?
Venice writes a promissory note in favor of his creditor, Milan. It says: "Subject to my option, I promise to pay Milan Php10 Million or his order or give Php10 Million worth of coffee beans or to authorize him to sell my Ferrari worth Php10 Million. Signed, Venice." Is the note negotiable?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Venice writes a promissory note in favor of his creditor, Milan. It says: "Subject to my option, I promise to pay Milan Php10 Million or his order or give Php10 Million worth of coffee beans or to authorize him to sell my Ferrari worth Php10 Million. Signed, Venice." Is the note negotiable?
a. No, because it authorizes the sale of collateral securities in case the note is not paid at maturity.
b. No, because the exercise of the option to pay lies with Venice, the maker and debtor.
c. Yes, because the note is really payable to Milan or his order, the other provisions being merely optional.
d. Yes, because an election to require something to be done in lieu of payment of money does not affect negotiability.
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