The scenario involves a promissory note payable to “bearer” and later specially indorsed. Under Louisiana law, which largely follows the Uniform Commercial Code (UCC) Article 3, a bearer instrument is negotiated by delivery alone. However, once a bearer instrument is specially indorsed, it becomes a specially indorsed instrument. To negotiate a specially indorsed instrument, it must be indorsed by the special indorsee. In this case, the note was initially payable to bearer, meaning anyone in possession could negotiate it. When Ms. Dubois specially indorsed it to Mr. Moreau, the instrument transformed into an instrument payable to Mr. Moreau. Subsequent negotiation requires Mr. Moreau’s indorsement. Therefore, if Mr. Moreau delivers the note to Ms. Dubois without indorsing it, Ms. Dubois cannot negotiate it to a third party because she is not the holder of a specially indorsed instrument. The instrument remains payable to Mr. Moreau, and Ms. Dubois’s possession does not grant her the right to negotiate it. The key principle here is that a special indorsement restricts further negotiation to the named indorsee or their subsequent indorsees. Louisiana Civil Code articles, particularly those concerning obligations and transfers, also inform the principles of negotiation and property rights in such instruments, reinforcing the UCC’s framework. The UCC’s emphasis on the chain of title is paramount; a break in that chain, such as an unindorsed special indorsement, prevents further negotiation.

The core issue here revolves around the negotiability of an instrument that contains a promise to pay a sum certain but also includes a condition precedent to payment. Under Louisiana’s Uniform Commercial Code (UCC) Article 3, specifically R.S. 10:3-104(a), for an instrument to be negotiable, it must contain an unconditional promise or order to pay a sum certain in money and be payable on demand or at a definite time. Furthermore, R.S. 10:3-105(b) states that an instrument may be made payable to order or to bearer. A promise or order is conditional if it states an obligation to do any act in addition to the payment of money, except that a promise or order is not conditional if it: (1) states an otherwise unconditional promise or order to pay from the general assets of the maker or drawer; (2) is theכרit of a bank by means of a bank draft or teller’s check; (3) requires a yield of interest or other charges at a rate that cannot be determined by reference to the instrument; or (4) states that it is payable from a particular fund or source of money unless the statement is a limitation on the right to payment. In this scenario, the phrase “upon the successful completion of the architectural plans for the Lakeside Development Project” creates a condition precedent to payment. The maker’s obligation to pay is contingent on an external event, the successful completion of the plans, rather than being solely tied to the passage of time or a demand. This external contingency renders the promise conditional, thus destroying the negotiability of the instrument under UCC Article 3. Therefore, the instrument is not a negotiable instrument.

The scenario involves a promissory note that is payable on demand. According to Louisiana Civil Code Article 2949, a loan payable on demand is due immediately upon the lender’s request. In this case, the note explicitly states it is payable “on demand.” Therefore, when the lender, Ms. Dubois, presented the note for payment to Mr. Chen, the obligation became immediately due. Mr. Chen’s argument that he needs a reasonable time to find the funds is not a valid defense against a demand instrument. Louisiana law, consistent with UCC § 3-108, treats instruments payable on demand as due upon presentation. The concept of “reasonable time” for performance typically applies to obligations where no specific time for performance is stated, or where performance is to be made within a reasonable time after a specified event. However, for demand instruments, the demand itself creates the presentment and the obligation to pay. The fact that the note was made in Louisiana, governed by Louisiana law which incorporates UCC Article 3, means that the principles of negotiable instruments law are applicable. The absence of a specific maturity date, coupled with the “on demand” clause, triggers immediate enforceability upon presentation.

The scenario involves a promissory note that contains a clause for acceleration upon the occurrence of a specified event, namely the maker’s failure to pay an installment. Under UCC Article 3, as adopted in Louisiana, an instrument is negotiable if it contains an unconditional promise to pay a fixed amount of money, payable on demand or at a definite time, and payable to order or to bearer. A clause that accelerates the due date upon the happening of a specified event, such as default in payment of an installment, does not make the promise conditional in a manner that destroys negotiability. Louisiana Revised Statute 10:3-108(b)(2) explicitly states that a promise or order is for a fixed amount, even if it contains a statement that the due date is accelerated if the maker or a person against whom the promise or order is effective fails to pay an amount when due or otherwise commits a specified act. Therefore, the presence of the acceleration clause does not prevent the note from being a negotiable instrument. The key is that the acceleration is triggered by an event that is tied to the performance of the payment obligation itself, not an external condition. The note, by its terms, is payable at a definite time because the ultimate maturity date is fixed, even though it can be accelerated.

The core issue here is determining whether a holder in due course status can be maintained when a negotiable instrument is transferred by a party who is not in possession of the instrument. Under UCC Article 3, specifically concerning transfer and negotiation, a transfer requires the physical delivery of the instrument. If an agent, acting without authority or possession, purports to transfer a negotiable instrument on behalf of the principal, this transfer is generally ineffective. The agent must possess the instrument to effect a valid negotiation. Without possession, the agent cannot be considered a “transferor” in the legal sense required for negotiation. Therefore, any subsequent holder, even if they paid value and took in good faith, would not have received the instrument through a valid negotiation from the prior holder. This means the subsequent holder cannot acquire the rights of a holder in due course, as the chain of negotiation is broken at the point where the instrument was not physically transferred by the rightful possessor. Louisiana law, following UCC Article 3, requires this physical delivery for negotiation.

This scenario tests the concept of holder in due course (HDC) status and the defenses available against a holder. Under Louisiana law, which largely follows the Uniform Commercial Code (UCC) Article 3, a holder in due course takes an instrument free from all defenses of any party to the instrument with whom the holder has not dealt, except for real defenses. Real defenses are those that can be asserted against any holder, including an HDC. Examples of real defenses include infancy, duress, fraud in the execution (or “the making”), discharge in insolvency proceedings, and material alteration. Personal defenses, such as breach of contract, failure of consideration, or fraud in the inducement, are generally not effective against an HDC. In this case, Armand received the promissory note from Beatrice. Beatrice’s defense is that Armand breached a separate contract for the sale of antique furniture, which constitutes a personal defense (failure of consideration or breach of contract). Armand, by taking the note for value, in good faith, and without notice of any defense or claim to the instrument, qualifies as a holder in due course. Therefore, Beatrice cannot assert her breach of contract claim against Armand. The correct answer is the defense that is not a real defense.

The scenario describes a promissory note that is payable on demand. A key aspect of demand instruments is that they are immediately due upon presentment to the maker. Article 3 of the Uniform Commercial Code (UCC), as adopted in Louisiana, addresses the negotiability and enforcement of such instruments. Specifically, UCC § 3-108(a) states that a promise to pay is “on demand” if it states that it is payable on demand, at sight, or on presentation, or if it contains no other statement of time of payment. For a demand instrument, the statute of limitations begins to run from the date of issue or, if the instrument is a draft, from the date of issuance. For a note payable on demand, the statute of limitations generally begins to run at the time of issuance, as it is considered due immediately. Louisiana Civil Code Article 3494 specifies that an action for payment of a promissory note, whether negotiable or not, is subject to a prescriptive period of five years. This period commences from the day the obligation is due. For a demand note, the obligation is due on the date of its issuance. Therefore, if a demand promissory note was issued on January 15, 2019, the five-year prescriptive period would commence on that date. The action would prescribe on January 15, 2024. The question asks about the prescriptive period for a promissory note payable on demand. Under Louisiana law, this period is five years from the date of issuance.

The scenario describes a promissory note that is payable to “bearer.” Under UCC Article 3, a negotiable instrument that is payable to bearer is negotiated by transfer of possession alone. This means that physical delivery is sufficient to transfer ownership of the note. The fact that the note is not endorsed does not affect the validity of the negotiation because bearer paper does not require endorsement for negotiation. The UCC specifically addresses bearer instruments and their negotiation in Section 3-205. Therefore, when Antoine physically delivers the note to Celeste, she becomes the holder of the note. The question of whether Antoine intended to make a gift or a sale is irrelevant to the negotiation of a bearer instrument; the transfer of possession is the operative act.

The scenario describes a draft presented for acceptance. Under Louisiana law, specifically as governed by UCC Article 3, a draft is an order to pay money. Acceptance is the drawee’s signed engagement to pay the draft as presented. For a draft to be accepted, it must be written on the draft itself or a separate document, and it must be signed by the drawee. The drawee’s signature alone on the draft is generally sufficient to constitute acceptance. Furthermore, the UCC distinguishes between different types of acceptance. A presentment for acceptance occurs when a draft is shown to the drawee for their agreement to pay it. If the drawee, on presentment, signs the draft, this constitutes acceptance. The question hinges on whether the drawee’s signature on the draft, without any additional language indicating acceptance, is sufficient. UCC § 3-409(a) states that acceptance of a draft is an undertaking by the drawee to pay the draft as presented. UCC § 3-409(b) clarifies that if a draft is presented for acceptance, and it is signed by the drawee, the drawee is liable on the draft if the draft is presented for payment or for honor. Therefore, a drawee’s signature on the draft itself, when presented for acceptance, signifies their engagement to pay. In this case, the drawee’s signature on the promissory note (which is a type of draft in this context) fulfills the requirement for acceptance. The fact that the drawee did not write “accepted” or any other specific phrase is irrelevant as the signature itself, in the context of presentment for acceptance, serves as the acceptance. The note is a negotiable instrument, and the drawee’s signature binds them as an acceptor.

The scenario involves a promissory note payable to “cash or order.” Under Louisiana Revised Statutes § 10:3-109, an instrument is payable to bearer if it states that it is payable to “cash,” “the order of cash,” or any other indication that does not purport to name a specific payee. When an instrument is payable to bearer, it can be negotiated by mere delivery. The question asks about the effect of the payee’s endorsement on the note. An endorsement on a bearer instrument is not required for negotiation. Therefore, if the note is payable to bearer, any holder in due course who takes possession of the note through physical delivery, without any endorsement, would be considered a holder in due course. The absence of an endorsement does not affect the validity of negotiation or the rights of a holder in due course when the instrument is payable to bearer. The core concept tested here is the distinction between instruments payable to order and instruments payable to bearer and how negotiation occurs for each under UCC Article 3, as adopted and interpreted in Louisiana. Specifically, Louisiana Revised Statutes § 10:3-201 outlines that negotiation of an instrument payable to bearer is by delivery.

The core concept tested here is the enforceability of a promise to pay when the instrument is not payable to order or to bearer. Under Louisiana Revised Statutes § 10:3-104(a), a negotiable instrument must be payable to order or to bearer. If an instrument is payable to a specific person and contains no words of negotiability, it is generally considered a non-negotiable instrument, essentially a simple contract for the payment of money. In Louisiana, as in other states following the Uniform Commercial Code (UCC) Article 3, the holder of a non-negotiable instrument generally cannot enforce it as a negotiable instrument. However, the holder may still be able to enforce it as a contract under general contract law principles, provided all elements of a valid contract are present. The question specifically asks about enforcement *as a negotiable instrument*. Since the note is payable only to “Mr. Antoine Dubois” and lacks words like “or his order” or “or bearer,” it fails to meet the requirements of negotiability under UCC § 3-104. Therefore, it cannot be enforced by a subsequent holder in due course or even by the original payee under the specific rules governing negotiable instruments. The scenario describes a situation where the instrument is a promise to pay a specific sum to a specific individual, but without the necessary language of negotiability. This renders it a simple contract, not a negotiable instrument subject to Article 3 of the UCC. Thus, enforcement as a negotiable instrument is not possible.

The core issue here revolves around the concept of a holder in due course (HDC) and the defenses available against such a holder under Louisiana’s version of UCC Article 3. A negotiable instrument is taken by a holder in due course if it is taken for value, in good faith, and without notice that it is overdue or has been dishonored or of any defense or claim to it on the part of any person. In this scenario, Ms. Dubois purchased the promissory note from Mr. Antoine. She paid value for it, as she gave Mr. Antoine $9,500 for a note with a face value of $10,000. Assuming she had no knowledge of the underlying dispute between Mr. Antoine and the maker, Mr. Beauregard, she took it in good faith. The critical element is notice of defenses. Mr. Beauregard’s defense is that the note was procured by fraud in the inducement. Fraud in the inducement is a personal defense, meaning it is generally cut off by a holder in due course. However, if Ms. Dubois had notice of this defense at the time she acquired the note, she would not be a holder in due course. The fact that the note was due on demand, and she acquired it one month after its date, does not automatically make it overdue for the purpose of cutting off HDC status, especially if it was a standard demand note where immediate demand was not necessarily expected. Louisiana law, consistent with UCC § 3-302, defines a holder in due course by taking the instrument for value, in good faith, and without notice of any defense or claim. Fraud in the inducement is a defense that a holder in due course can take free from, unless the holder had notice. The question implies Ms. Dubois acted in good faith and gave value. The crucial point is whether she had notice of the fraud in the inducement. If she did not have notice, she is an HDC and can enforce the note against Mr. Beauregard, despite the fraud. If she did have notice, she is subject to Mr. Beauregard’s defense of fraud in the inducement. Since the question does not provide any information suggesting Ms. Dubois had notice of the fraud, the presumption is that she took the note without notice. Therefore, she can enforce the note.

The core issue here revolves around the concept of holder in due course (HDC) status and the defenses available against such a holder. A negotiable instrument, to be taken by an HDC, must be taken for value, in good faith, and without notice of any defense or claim. Louisiana law, following UCC Article 3, defines these terms. The maker of a note has certain real defenses that can be asserted even against an HDC, such as fraud in the execution, forgery, or material alteration. Personal defenses, like fraud in the inducement, breach of contract, or want or failure of consideration, are generally not available against an HDC. In this scenario, the note was originally executed for a legitimate business purpose. However, the subsequent misrepresentation by the payee regarding the quality of the goods delivered constitutes fraud in the inducement, a personal defense. The payee negotiated the note to a third party, Bayou Bank. To determine if Bayou Bank is an HDC, we must assess if it took the note for value, in good faith, and without notice. Bayou Bank provided value by crediting the payee’s account. The critical factor is whether Bayou Bank had notice of the payee’s fraud. The question states that Bayou Bank had no knowledge of any infirmity or defect in the instrument or the transaction. Therefore, Bayou Bank qualifies as a holder in due course. Since fraud in the inducement is a personal defense, it cannot be asserted against Bayou Bank, an HDC. Thus, the maker, Mr. Dubois, remains obligated to pay the note to Bayou Bank.

The core issue here is whether the endorsement of the promissory note by “Baton Rouge Investments LLC” without specifying the payee’s name, but clearly intending it for a specific individual, constitutes a valid negotiation. Under Louisiana Revised Statute 10:3-205, an instrument payable to an identified person can be specially indorsed to that person. However, if an instrument is payable to an organization, it may be indorsed to any representative of the organization or to the organization itself. In this scenario, the note is payable to “Baton Rouge Investments LLC.” The endorsement reads “Pay to the order of: [blank space] Baton Rouge Investments LLC.” This is not a special endorsement to a specific individual, nor is it a blank endorsement as it specifies the organization. Louisiana Revised Statute 10:3-205(b) states that an indorsement in blank is one that is made by the indorser specifying no indorsee and the instrument becomes payable to bearer. Conversely, a special indorsement specifies a particular indorsee. Since the indorsement does not specify a particular indorsee, it would typically be considered a blank endorsement, making the note payable to bearer. However, the inclusion of the organization’s name after the blank space, even without a clear indication of the individual representative, suggests an attempt to direct the payment. The critical factor is that the note is payable *to* Baton Rouge Investments LLC. An endorsement *by* Baton Rouge Investments LLC to an unnamed individual, while potentially problematic for clarity, does not automatically render the negotiation invalid if the intent is clear and the instrument can be negotiated further. The UCC’s aim is to promote negotiability. If the note was payable to an individual, and the LLC endorsed it in blank, it would be payable to bearer. But here, the note is payable to the LLC. The endorsement by the LLC, even with the blank, is an endorsement *by* the entity. The question is whether the LLC can effectively transfer its rights to an unnamed party. Under UCC 3-205, an instrument payable to an organization and indorsed to a representative of the organization, or to the organization itself, is effective. The endorsement here is by the organization. The blank space before the organization’s name is the crux. If it were simply “Baton Rouge Investments LLC,” it would be a special endorsement to the organization itself, which is permissible. The blank space, however, creates ambiguity. The UCC favors negotiability. An endorsement in blank makes an instrument payable to bearer. If the endorsement is “Baton Rouge Investments LLC,” it’s a special endorsement to the organization. The blank space is problematic. However, the most accurate interpretation is that the LLC, as the payee, is endorsing the note. The blank space before the organization’s name, followed by the organization’s name, does not create a special endorsement to a specific individual. Instead, it functions as an endorsement by the organization. The question hinges on whether an endorsement by an organization to an unnamed party, where the organization is the payee, is valid. UCC 3-205(c) states that an indorsement that is neither a special indorsement nor a blank indorsement is a “anomalous indorsement.” However, anomalous indorsements are typically made by someone not a party to the instrument. Here, the payee is endorsing. The most plausible interpretation that favors negotiability, given the context of commercial paper, is that the endorsement, by specifying the organization’s name, is intended to be a special endorsement to the organization itself, and the blank space is an error or an attempt to designate a representative, which doesn’t invalidate the endorsement by the entity. Therefore, the note is still negotiable, but the ambiguity in the endorsement means it could be argued as a blank endorsement if the intent was to make it bearer paper. However, the presence of the organization’s name at the end of the endorsement is key. It’s an endorsement by the entity that is the payee. The note is payable to the LLC. The endorsement is by the LLC. The blank space before the LLC’s name is the critical element. If it was payable to “John Smith” and endorsed “Pay to the order of: [blank] John Smith,” it would be a special endorsement to John Smith. Here, it’s payable to the LLC and endorsed “Pay to the order of: [blank] Baton Rouge Investments LLC.” This is an endorsement by the LLC. The blank space does not convert it to a bearer instrument if the intent is to endorse to a specific entity (the LLC itself). Thus, the note remains negotiable, but the specific named payee is the organization. The most precise legal interpretation is that the endorsement, by naming the organization as the indorsee after the blank, functions as a special endorsement to the organization itself. Final Answer Calculation: The note is payable to “Baton Rouge Investments LLC.” The endorsement is “Pay to the order of: [blank space] Baton Rouge Investments LLC.” This is an endorsement by the payee (Baton Rouge Investments LLC) to itself. According to UCC 3-205(c), an indorsement that specifies the indorsee is a special indorsement. Here, the indorsee specified is “Baton Rouge Investments LLC.” Therefore, it is a special indorsement to the organization. An instrument specially indorsed to a named indorsee is negotiable. The presence of the blank space before the named indorsee does not alter the fact that a specific indorsee is named. Thus, the note remains negotiable. Final Answer is: The instrument remains negotiable.

The core issue here is whether a holder in due course status can be established under Louisiana law when a negotiable instrument is transferred with a restrictive endorsement that limits its use. Article 3 of the Uniform Commercial Code, as adopted and potentially modified by Louisiana, governs negotiable instruments. A holder in due course (HDC) generally takes an instrument free from most defenses and claims that a prior party might have against a holder. However, to qualify as an HDC, the holder must take the instrument for value, in good faith, and without notice of any defense or claim. Louisiana Revised Statute 10:3-206 addresses restrictive endorsements. This statute states that a person who takes an instrument with a restrictive endorsement is subject to the terms of the endorsement. If the endorsement states “for deposit only” or “pay any bank for collection,” the endorsee (typically a bank) can become a holder in due course only to the extent that the instrument is applied to the depositor’s account. If the endorsement is more restrictive, such as “pay to the order of [specific payee] only,” it may prevent the endorsee from becoming an HDC, as it conditions the right to payment. In this scenario, the endorsement “for deposit only to the account of [specific individual]” is a restrictive endorsement. While it allows for deposit, it specifically limits the disposition of the funds to a particular account. A subsequent holder who receives the instrument under this endorsement cannot claim HDC status if they violate the terms of the endorsement or if the endorsement fundamentally alters the negotiability or the holder’s rights in a way that constitutes notice of a claim or defense. The endorsement “for deposit only to the account of Amelia Dubois” restricts the instrument’s use to a specific purpose and account, thereby putting any subsequent holder on notice of this restriction. Therefore, a subsequent holder, even if they paid value and acted in good faith, would be subject to the terms of the endorsement and could not claim HDC status if they failed to adhere to it or if the restriction itself constitutes notice of a claim or defense against the instrument. The statute implies that such restrictions bind the holder.

The scenario involves a promissory note that is payable to “bearer.” Under UCC Article 3, a bearer instrument is payable to anyone in possession of it who has the right to enforce it. Negotiation of a bearer instrument is accomplished by mere delivery. Therefore, when Antoine delivers the note to Celeste without endorsement, Celeste becomes the holder of the bearer instrument. The question asks about the proper method of negotiation for this instrument. Since it is a bearer instrument, delivery alone is sufficient for negotiation. The fact that the note was originally issued in Louisiana and is governed by Louisiana law (which follows UCC Article 3) is relevant, but the core principle of negotiating bearer paper remains consistent under the UCC. The other options are incorrect because endorsement is required for order instruments, not bearer instruments, and specific methods of endorsement or transfer are not applicable to simple delivery of a bearer instrument.

In Louisiana, under UCC Article 3, a holder in due course (HDC) takes an instrument free from most defenses and claims that a prior party could assert against the original payee. To qualify as an HDC, a person must take the instrument for value, in good faith, and without notice that it is overdue or dishonored or that it has any defense or claim against it. The scenario involves a promissory note payable to “Bayou Holdings, LLC” which is subsequently negotiated to Ms. Celeste Dubois. Bayou Holdings, LLC had obtained the note from Mr. Antoine Moreau by fraud in the inducement, a personal defense. Ms. Dubois purchased the note for $9,500, which is less than its face value of $10,000. The question is whether this discount, representing $500, impacts her HDC status. Louisiana law, consistent with UCC § 3-302, defines “value” broadly. Taking an instrument for less than its face amount does not automatically preclude HDC status, provided the amount paid is not so grossly inadequate as to shock the conscience or indicate bad faith. The $500 discount, representing 5% of the note’s face value, is generally considered a reasonable business discount and does not, by itself, constitute notice of a defense or claim or evidence a lack of good faith. Therefore, assuming Ms. Dubois acted in good faith and had no notice of the fraud, she would likely be considered an HDC despite the discount. The key is that the discount was not so substantial as to imply knowledge of underlying issues. The UCC does not require the purchaser to pay the full face value for an instrument to attain HDC status; rather, it requires that value be given in good faith and without notice.

The scenario involves a promissory note payable to “cash or order.” Under UCC Article 3, as adopted in Louisiana, an instrument payable to “cash” is payable to bearer. When an instrument is payable to bearer, it can be negotiated by mere delivery. The holder of a bearer instrument can transfer it to another party without endorsement. Therefore, when Ms. Dubois delivers the note to Mr. Moreau, the negotiation is complete and valid. Mr. Moreau, as the holder in due course, can enforce the instrument. The critical concept here is the distinction between instruments payable to a specific payee (“order”) and those payable to cash or a generic description (“bearer”). Louisiana Revised Statute 10:3-109(a)(3) defines an instrument as payable to bearer if it is payable to “cash” or if it is payable to a person identified in a way that does not identify the person. Consequently, the delivery of the note to Mr. Moreau constitutes a valid negotiation, and he acquires the rights of a holder.

The scenario involves a promissory note that is payable to “bearer.” Under UCC Article 3, as adopted in Louisiana, a negotiable instrument that is payable to bearer is negotiated by delivery alone. No endorsement is required. The question asks about the proper method of negotiation for such an instrument. Therefore, delivery of the note to a new holder constitutes a valid negotiation. The other options are incorrect because they either require endorsement (which is for instruments payable to a specific person) or describe methods that are not applicable to bearer instruments. The core principle here is the distinction between order paper and bearer paper in terms of negotiation requirements. Specifically, Louisiana Revised Statutes § 10:3-201(b) states that if an instrument is payable to bearer, it is negotiated by delivery of the instrument. There is no calculation required for this question; it tests the understanding of negotiation rules for different types of instruments.

The scenario involves a promissory note that is initially payable to “bearer.” Under Louisiana law, as governed by UCC Article 3, an instrument is payable to bearer if it states that it is payable to bearer or to a specific person or bearer, or to an identifiable person or bearer. Once an instrument is payable to bearer, it remains so until it is specially indorsed. A special indorsement occurs when the instrument is indorsed with the name of a specific payee. In this case, the note is made payable to “bearer.” The first indorsement by Mr. Dubois states “Pay to the order of C. Moreau.” This indorsement, by naming a specific payee (C. Moreau), converts the bearer instrument into an order instrument. Subsequent indorsements on an order instrument must be by the named payee to be effective for negotiation. Therefore, the indorsement by Mr. Dubois effectively changes the character of the instrument from bearer to order paper. The question asks about the legal effect of the initial wording and the subsequent indorsement. The initial wording “Payable to bearer” makes it a bearer instrument. However, the subsequent indorsement by Dubois, specifying “Pay to the order of C. Moreau,” transforms it into an order instrument, requiring Moreau’s indorsement for further negotiation. Thus, the instrument is no longer payable to bearer after Dubois’s indorsement.

The scenario involves a promissory note that contains an acceleration clause and a provision for attorney’s fees. Under UCC Article 3, as adopted in Louisiana, a promise to pay a fixed sum of money is a key characteristic of negotiability. An acceleration clause, which permits the holder to demand payment of the entire unpaid balance upon the occurrence of a specified event (like default on an installment), does not destroy negotiability because the amount due, while subject to acceleration, is still determinable at any given time. Similarly, a provision for reasonable attorney’s fees and costs of collection, if the note is not paid when due, also does not destroy negotiability. Louisiana Revised Statute 10:3-104(a) defines a negotiable instrument as an unconditional promise or order to pay a fixed amount of money. Louisiana Revised Statute 10:3-104(c) further clarifies that an instrument is a “note” if it is a promise to pay. Louisiana Revised Statute 10:3-108(a) states that a note is payable at a definite time if it is payable on demand or at a fixed period after sight or after date. An acceleration clause makes the note payable at a definite time. Louisiana Revised Statute 10:3-104(a)(1) states that an instrument must contain an unconditional promise or order. The attorney’s fees provision, being a consequence of default rather than a condition to payment, is generally considered an accessory obligation that does not render the promise conditional in a way that would impair negotiability. Therefore, the presence of both an acceleration clause and a provision for attorney’s fees does not prevent the instrument from being a negotiable promissory note.

The core issue revolves around whether the document presented by the assignee of the payee qualifies as a negotiable instrument under UCC Article 3, specifically concerning the requirement of an unconditional promise or order. Louisiana law, like other states, follows UCC Article 3. A key element for negotiability is that the promise or order must be unconditional. An order or promise to pay is conditional if it states that payment is subject to performance of a condition. In this scenario, the promissory note explicitly states, “Payment of this note is subject to the successful completion of the renovation project as certified by the contractor.” This clause makes the payment contingent upon an external event – the successful completion and certification of the renovation project. Such a condition directly impacts the certainty of payment. Therefore, the instrument is not a negotiable instrument because it contains an express condition to payment. Louisiana Revised Statutes Title 10, Section 3-104(a) defines a negotiable instrument as an unconditional promise or order to pay a fixed amount of money, if it is payable to bearer or to order at the time it is issued or first possessed by a holder, if it is payable on demand or at a definite time, and if it does not state any other undertaking or instruction by the person promising or ordering payment to do any act in addition to the payment of money. The presence of the condition explicitly violates the “unconditional” requirement.

The scenario involves a promissory note payable to “cash” which is generally not considered a negotiable instrument under UCC Article 3 because it is not payable to a specific person or entity or to bearer. Louisiana law, following the UCC, requires a “draft or order to pay a fixed amount of money” that is payable to bearer or to a specific person. A note payable to “cash” fails this requirement. Therefore, it cannot be negotiated by endorsement and delivery. Instead, it would likely be treated as an assignment of a right to payment, governed by general contract law principles. The transfer of such a note would require an endorsement and delivery to effectuate a negotiation. However, since the instrument is not payable to order or bearer, it cannot be negotiated in the manner prescribed by UCC Article 3. The question asks about the effect of endorsement and delivery. For an instrument to be negotiated by endorsement and delivery, it must be payable to order. An instrument payable to “cash” is not payable to order or bearer. Therefore, endorsement and delivery do not operate as a negotiation under UCC Article 3. The proper legal characterization of the transfer would be an assignment, not a negotiation.

Under Louisiana law, specifically referencing UCC Article 3 as adopted by Louisiana, a holder in due course (HDC) takes an instrument free from all defenses of any party to the instrument with whom the holder has not dealt, except for real defenses. Real defenses, which can be asserted even against an HDC, include fraud in the execution (also known as fraud in the factum), forgery, material alteration, discharge in insolvency proceedings, and infancy or other incapacity that renders the obligation void. Fraud in the inducement, where a party is tricked into signing an instrument but understands its nature, is generally a personal defense and not a real defense, meaning an HDC would take the instrument free from it. In this scenario, Mr. Dubois was induced to sign the note by misrepresentations regarding the quality of the antique furniture he purchased from Ms. Moreau. He understood he was signing a promissory note, but the underlying reason for signing was based on false pretenses about the goods. This constitutes fraud in the inducement. Therefore, when Ms. Moreau negotiates the note to Mr. Chen, who is a holder in due course, Mr. Chen takes the note subject to the personal defense of fraud in the inducement because Mr. Chen acquired the note from Ms. Moreau, the party with whom Mr. Dubois dealt. Louisiana Revised Statutes § 10:3-305(a)(2) and § 10:3-305(b) are relevant here, outlining that an obligor is not liable on an instrument if the obligor has a defense of a type described in § 10:3-305(a)(2) and the obligor proves the defense. Fraud in the inducement is a personal defense, and since Mr. Chen acquired the note from the immediate transferor who was involved in the fraudulent inducement, the defense is available against him.

The scenario describes a promissory note that is not payable on demand or at a definite time, nor does it contain any other language indicating it is payable to order or to bearer. Under Louisiana Revised Statutes, specifically R.S. 10:3-104(c), an instrument that would otherwise be a negotiable instrument, except for the fact that it is not payable to order or to bearer, is still a negotiable instrument if it is payable to a specific payee and contains a statement that it is payable to the payee or the payee’s order. However, in this case, the note simply states it is payable to “Armand Dubois” without any such clarifying statement. Furthermore, R.S. 10:3-104(a) defines a negotiable instrument as an unconditional promise or order to pay a fixed amount of money, payable to bearer or to order if it is a note, or payable to order if it is a draft. Since the note lacks the requisite “to order” or “to bearer” language, it does not meet the definition of a negotiable instrument under Article 3 of the Uniform Commercial Code as adopted in Louisiana. Therefore, Armand Dubois cannot enforce it as a negotiable instrument, and it is merely a simple contract, subject to the laws governing contracts in Louisiana.

The scenario involves a promissory note that is not payable on demand or at a definite time, as it states “payable upon the successful completion of the Mardi Gras parade season.” This renders the instrument non-negotiable under UCC Article 3, as negotiability requires payment at a definite time or on demand. Louisiana law, specifically La. R.S. 10:3-104(a)(2), defines a negotiable instrument as one payable to bearer or to order, and importantly, payable “on demand or at a definite time.” The phrase “upon the successful completion of the Mardi Gras parade season” is an event whose occurrence is not certain and is dependent on subjective criteria, thus not meeting the “definite time” requirement. A definite time can be fixed by reference to a specific date, a period after a specified date, or a time readily ascertainable by reference to events that are certain to occur. The completion of a parade season, while predictable in a general sense, is not a “definite time” in the legal contemplation of UCC Article 3 because its exact date is not fixed or readily ascertainable without external, potentially subjective, determination. Consequently, the note cannot be negotiated by simple endorsement and delivery, and it is merely a contract for the payment of money. The holder cannot enforce it as a holder in due course.

The core issue here revolves around the concept of a holder in due course (HDC) and the defenses available against such a holder. Under Louisiana law, specifically Louisiana Civil Code Article 3179 and UCC § 3-305, a holder in due course takes an instrument free from all defenses of any party to the instrument with whom the holder has not dealt, except for a limited set of real defenses. Among the defenses that are generally not available against an HDC are ordinary defenses like breach of contract, failure of consideration, or fraud in the inducement. Fraud in the factum, however, is a real defense that can be asserted even against an HDC. Fraud in the factum occurs when the party signing the instrument did not know the nature of the instrument they were signing or its essential terms, due to the misrepresentation of the other party. In this scenario, Mr. Dubois, an HDC, took the promissory note from Ms. Moreau. Ms. Moreau’s defense is that she believed she was signing a receipt for a donation, not a promise to pay. This misrepresentation goes to the very nature of the instrument she signed, constituting fraud in the factum. Therefore, this defense is a real defense and is available against an HDC, including Mr. Dubois, even though he acquired the note in good faith and for value. The other options represent defenses that are typically cut off by HDC status, such as lack of consideration or a claim that the note was a gift, which are generally not considered real defenses.

The core issue here is whether the endorsement by Mr. Dubois, a minor, on the promissory note renders the instrument voidable as to him and consequently affects the rights of a subsequent holder in due course. Under Louisiana Civil Code Article 2591, a contract entered into by a minor is generally voidable at the minor’s option. This principle extends to negotiable instruments. However, UCC Section 3-305(a)(1)(i) (as adopted in Louisiana) provides that the obligation of a party with respect to a negotiable instrument is enforceable against that party only to the extent that it would be enforceable against that party in a contract for the performance of that obligation. Specifically, it addresses defenses such as infancy, which renders the obligation of the infant a legal incapacity to contract. Therefore, while the note itself might be voidable by Mr. Dubois, a holder in due course takes the instrument free of most defenses, including defenses arising from lack of capacity, unless the incapacity is of a type that under Louisiana law would make the obligation of the party void. Louisiana law, following general principles, generally treats contracts by minors as voidable, not void ab initio, unless specific exceptions apply (e.g., lack of capacity due to mental incompetence). A holder in due course (HDC) is generally protected from the defense of infancy. However, the question hinges on whether Louisiana law, particularly regarding the voidability of contracts by minors, would render the endorsement so fundamentally invalid that even an HDC cannot enforce it. UCC § 3-305(a)(1)(A) specifies that the obligor is not liable on the instrument if the obligation is one that the obligor is not subject to because of infancy. This is a real defense. Therefore, the endorsement by a minor is voidable and can be disaffirmed by the minor. An HDC takes subject to real defenses. The UCC generally considers infancy a real defense, meaning it can be asserted against an HDC. Thus, the holder in due course cannot enforce the note against Mr. Dubois.

The core issue revolves around the concept of a holder in due course (HDC) and the defenses available against such a holder. Under UCC Article 3, an HDC takes an instrument free from most defenses, including those based on simple contract law or lack of consideration. However, certain “real” defenses, such as fraud in the factum, forgery, or material alteration, can be asserted even against an HDC. In this scenario, the note was procured through fraudulent misrepresentation regarding the nature of the document being signed (fraud in the factum), not merely a misrepresentation about the underlying transaction. This type of fraud goes to the very essence of the agreement and prevents the formation of a valid contract, thus constituting a real defense. Therefore, even if Bayou Bank qualifies as an HDC, it would still be subject to this real defense. The question asks about the bank’s ability to enforce the instrument against Mrs. Dubois. Since fraud in the factum is a real defense, it is effective against any holder, including an HDC. Thus, Bayou Bank cannot enforce the note against Mrs. Dubois.

The scenario involves a promissory note that is payable to an order, specifically to “the order of Ms. Evangeline Dubois.” This designation of payability “to order” is crucial under UCC Article 3, as it makes the instrument negotiable. Negotiability requires that the instrument be payable “to order” or “to bearer” as per UCC § 3-104(a). When an instrument is payable to order, it is negotiated by a “necessary indorsement” and delivery, as outlined in UCC § 3-201. The “necessary indorsement” means the payee must sign the instrument. In this case, Ms. Dubois is the named payee. If she indorses the note by simply signing her name on the back, this constitutes a “special indorsement” under UCC § 3-205. A special indorsement specifies the person to whom the instrument is payable. After a special indorsement, the instrument becomes payable to the special indorsee and may be further negotiated only by indorsement. Therefore, for Mr. Beaumont to acquire rights as a holder in due course, the note must be specially indorsed by Ms. Dubois to him. A blank indorsement, which is merely the signature of the indorser without further specification, would make the note payable to bearer, allowing for negotiation by delivery alone. However, the question asks about the necessary steps for Mr. Beaumont to become a holder, and given the note’s payable-to-order status and the common practice for transferring such instruments to a specific individual, a special indorsement is the direct and complete method for the named payee to effectuate the transfer to a particular person. The requirement for a necessary indorsement is met by Ms. Dubois’s signature. The question implies a transfer to a specific individual, Mr. Beaumont. Therefore, the most accurate and complete method for negotiation from Ms. Dubois to Mr. Beaumont, ensuring he can become a holder, is a special indorsement by Ms. Dubois.