Which of the Following Is True Regarding an IOU Instrument

question 4

Multiple Choice

Which of the following is true regarding an IOU instrument containing the language "payable on demand"?

• A) The instrument is not negotiable because it does not contain an unconditional promise or order to pay, but it may be an enforceable contract.
• B) The instrument contains an unconditional promise to pay; and, therefore, the fact that it is an IOU instrument does not affect negotiability.
• C) The instrument contains an unconditional promise to pay but nevertheless is not negotiable because it is an IOU instrument.
• D) The instrument is not negotiable because the words "payable on demand" are included; otherwise, the IOU instrument would contain an unconditional promise to pay.
• E) The instrument is not negotiable, nor could it be an enforceable contract, because it does not contain an unconditional promise to pay.