Which instrument is negotiable?

Which instrument is negotiable?

• A. Pay to bearer, D P10,000. Reimburse yourself out of the rental of my house in Manila. To B. Sgd. E
• B. Pay to the order of D P10,000. Reimburse yourself out of the rental of my house in Manila. To B. Sgd. E
• C. Pay to D P10,000 or his order out of the rental of my house in Manila. To B. Sgd. E
• D. Pay to D P10,000 and reimburse yourself out of the rental of my house in Manila. To B. Sgd. E

Answer: (B)

Negotiable instruments must contain an unconditional promise or order to pay a definite sum of money, payable to bearer or to order, on demand or at a fixed date, with no extra conditions or undertakings. The best form is the one that clearly states a sum to be paid to a named payee or to the order of that payee, without tying the payment to any other event or source of funds. Here, “Pay to the order of D P10,000” meets all the essential elements: a definite amount (P10,000), payable to order (D), and an unconditional promise to pay. The line about reimbursing yourself from the rental income introduces a contingent element, which would violate the unconditional requirement and thus would not be negotiable. The other forms either mix conflicting payee language or add conditions (such as reimbursement from a specific fund), which undermines negotiability.

Negotiable instruments must contain an unconditional promise or order to pay a definite sum of money, payable to bearer or to order, on demand or at a fixed date, with no extra conditions or undertakings.

The best form is the one that clearly states a sum to be paid to a named payee or to the order of that payee, without tying the payment to any other event or source of funds. Here, “Pay to the order of D P10,000” meets all the essential elements: a definite amount (P10,000), payable to order (D), and an unconditional promise to pay. The line about reimbursing yourself from the rental income introduces a contingent element, which would violate the unconditional requirement and thus would not be negotiable. The other forms either mix conflicting payee language or add conditions (such as reimbursement from a specific fund), which undermines negotiability.