Question

When is a negotiable instrument payable to order?

A. When payable to the order of a specified person or to him or his order
B. When payable to the order of a fictitious person or non-existing person and such fact was known to the person making it so payable
C. When the name of the payee does not purport to be the name of a person
D. When only or last indorsement is in blank

Answer 1

A negotiable instrument is payable to order when it contains an order or direction to pay a specified person or their order. In the case of a blank indorsement, the instrument becomes payable to anyone who possesses it.

Step-by-step explanation:

A negotiable instrument is payable to order when it contains an order or direction to pay a specified person or their order. This means that the instrument must be payable to a designated individual or their authorized representative.

In the case mentioned, the negotiable instrument states 'Pay the bearer on demand', which means it is payable to the person who possesses or bears the instrument and presents it for payment. This wording makes the instrument payable to order.

However, it is important to note that if the instrument contains a blank indorsement, where the last indorsement is left blank, it becomes payable to anyone who possesses it, regardless of whether they are the original payee or not.