Question

A check originally payable to cash, but subsequently indorsed with the words "pay to Li Ping," must be negotiated as:

(A) a bearer instrument by delivery only.
(B) a conditional I.O.U.
(C) an order instrument by indorsement and delivery.

Answer 1

The correct option is C

Step-by-step explanation:

Bearer instruments and order instruments are separately negotiated. However, the method of negotiation is highly dependent on the instrument character at the time of negotiation. Indorsement however has the ability to turn an order instrument to a bearer instrument. Like from the example provided in the question, it must be negotiated as an order instrument (via indorsement and must be delivered), although formerly, it was a bearer instrument.