Which of the following will result in an instrument being nonnegotiable?
A) It contains a variable interest rate such that the amount of interest that will be due cannot be determined at the time the note is created.
B) It states that the payment of funds will come from the proceeds of a specific contract.
C) It states that the entire balance will become immediately due in the event of a default by the maker.
D) It states that the rights of the payee to receive payment are subject to the terms of a separate agreement.
E) It is secured by collateral, and the agreement about the collateral is in a separate agreement.

Question

Quizplus · Accepted Answer

A negotiable instrument must contain all the terms and conditions of the payment, including the time and amount of payment, and must be payable to order or bearer. A statement that the rights of the payee to receive payment are subject to the terms of a separate agreement would make the instrument nonnegotiable, as it would not contain all the terms necessary for payment.

Which of the Following Will Result in an Instrument Being