Question: Antoine makes a check out to cash and delivers it to Barley. He writes on...

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Question: Antoine makes a check out to cash and delivers it to Barley. He writes on the back, "Pay to the order of Charlotte." She signs her name. Is this check bearer paper or order paper? Has it been negotiated? Strategy: "To cash" is the equivalent of "to bearer," so a check made out to cash is bearer paper. Whenever a negotiable instrument is transferred, it is important to ask if the instrument has been properly negotiated. To be negotiated, order paper must be indorsed and delivered; bearer paper need only be delivered, but in both cases by someone other than the issuer. Result: This check changes back and forth between order and bearer paper, depending on what the indorsement says. When Antoine makes out a check to cash, it is bearer paper. When he gives it to Barley, it is not negotiated because he is the issuer. When Barley writes on the back "Pay to the order of Charlotte," it becomes order paper. When he gives it to Charlotte, it is properly negotiated because he is not the issuer and he has both indorsed the check and transferred it to her. When she signs it, the check becomes bearer paper. And so on it could go forever.