A draft is payable "to the order of Joe Jones or to bearer." Sally finds it and demands payment. Should the drawer pay Sally?
A) No, unless Joe Jones's name is crossed off.
B) No, unless "bearer" is handwritten.
C) Yes, since the word "or" is contained in the instrument, either Joe Jones or the bearer of the draft may obtain payment.
D) No, the terminology is ambiguous and therefore the draft must be paid only to the order of Joe Jones.

Question

Quizplus · Accepted Answer

The draft is payable to either Joe Jones or the bearer because of the use of "or" in the instrument. This means that whoever is in possession of the draft (in this case, Sally, as the bearer) can demand payment.

A Draft Is Payable "To the Order of Joe Jones