Kelly signs an instrument in favor of Leo that states it is "subject to a cer?tain agreement between Kelly and Mona." This instru?ment is
A)negotiable.
B)nonnegotiable,because it is made subject to a separate agreement.
C)nonnegotiable,because it refers to a separate agreement.
D)nonnegotiable,because Kelly and Mona are not the same persons.

Question

Quizplus · Accepted Answer

The instrument is nonnegotiable because it is made subject to a separate agreement. This means that the rights and obligations under the instrument are dependent on the terms of the separate agreement between Kelly and Mona. As a result, the instrument cannot be freely transferred or assigned to another party, which is a key characteristic of negotiable instruments.

Kelly Signs an Instrument in Favor of Leo That States