For an instrument to be negotiable,a person must be able to take it free of many of the risks assumed by the assignee of a regular contract.

Question

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A negotiable instrument must meet certain requirements, such as being payable to the bearer or to a named payee, being unconditional, and being transferable by endorsement or delivery. When these requirements are met, a person who takes the instrument in good faith and for value can take it free of many of the risks that might be associated with the underlying contract between the parties who created the instrument. This includes risks such as disputes over performance, defenses based on fraud or mistake, or setoffs or counterclaims that the debtor might have against the payee.

For an Instrument to Be Negotiable,a Person Must Be Able