Under the Negotiable Instruments Article of the UCC, which of the following circ
ID: 2747190 • Letter: U
Question
Under the Negotiable Instruments Article of the UCC, which of the following circumstances will prevent a promissory note from being negotiable?
A. An extension clause that allows the maker to elect to extend the time for payment to a date specified in the note.
B. An acceleration clause that allows the holder to move up the maturity date of the note in the event of default.
C. A person having a power of attorney signs the note on behalf of the maker.
D. A clause that allows the maker to satisfy the note by the performance of services or the payment of money.
Explanation / Answer
Answer: D
Explanation:
To be negotiable, a note must be payable in money and only in money. Anote that allows the maker to pay by performing services is not negotiable. UCC 3-104
Extension clause will not affect negotiability as to be negotiable, an instrument must be payable on demand or at adefinite time. If the latest date for payment can be determined from the face of a demandinstrument, it is considered to be payable at a definite time even if that latest date can be reachedonly through an extension clause. UCC 3-109
Acceleartion clause will not affect negotiability as to be negotiable, an instrument must be payable on demand or at adefinite time. If the latest date for payment can be determined from the face of a demandinstrument, it is considered to be payable at a definite time even if it includes an accelerationclause. UCC 3-109
An agent, such as a person having a power of attorney, can sign anegotiable instrument on behalf of a principal.
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