On a sheet of paper, Elle writes, without her signature, "I acknowledge that I owe Frank $600, payable out of the proceeds of the sale of my car, a 1995 Honda Civic, which I promise to advertise 'For Sale' next week. Payment is to be made on or before six months from today." What type of instrument is this? Is it negotiable? If not, why not?
What will be an ideal response?
This instrument is a promissory note, but it is nonnegotiable. A promissory note is an instrument with two parties¾a maker and a payee. The maker of this note is Elle. The payee is Frank. The note is nonnegotiable because (1) Elle did not sign it; (2) it does not include a definite promise to pay but only acknowledges that a debt is owed; (3) it is undated, which means that the end of the six-month period is uncertain, making the note not payable at a definite time; and (4) it is payable only to Frank, not to his order or to bearer. Any of these alone would make the note nonnegotiable. (Payment is also conditioned on the sale of Elle's car, but this does not make the note nonnegotiable [UCC 3-106(b)(ii)].)
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