A promissory note is a two-party instrument in which the maker promises to pay the payee (or bearer). A draft is a three-party instrument in which the drawer orders the drawee (a third person, often a bank) to pay the payee. A check is the most common form of draft - the depositor (drawer) orders the bank (drawee) to pay the payee. Answer B is incorrect because both instruments may be payable on demand or at a definite time. Answer C incorrectly restricts their use. Answer D is incorrect because a note does not involve a bank or drawee at all.

Under UCC Section 3-109 and 3-104, the order/bearer requirement for negotiability requires either: (1) payable to the order of an identified person ('Pay to the order of Jane Doe') - this is order paper; or (2) payable to bearer or to cash - this is bearer paper. Simply naming a person without 'order' language (e.g., 'Pay Jane Doe') may not satisfy the requirement under strict UCC interpretation, though courts and the UCC have been flexible about this in practice. Answer A (any reference to a name) is insufficient without 'order' or 'bearer' language. Answer B ('pay to the order of cash') would be bearer paper. Answer C describes a payment condition unrelated to the order/bearer requirement.

Under UCC Section 3-205(b), a blank endorsement (the endorser's signature alone, without naming a new payee) converts any instrument - including order paper - into bearer paper. Once converted to bearer paper, the instrument may be negotiated by delivery alone, without any further endorsement. This is why blank-endorsed checks left in accessible places can be cashed by anyone who finds them. Answer A reverses the effect; blank endorsement creates bearer, not order, paper. Answer B is incorrect because endorsement does not void an instrument. Answer D describes a restrictive endorsement, not a blank one.

Under UCC Section 3-205(a), a special endorsement identifies a specific person as endorsee and makes the instrument payable to that person's order. After a special endorsement ('Pay to John Smith'), the instrument becomes payable to the order of John Smith - it is order paper requiring John Smith's endorsement plus delivery for any further negotiation. Answer B is incorrect because a special endorsement creates order paper, not bearer paper. Answer C is incorrect because endorsement is a normal step in negotiation; it does not destroy negotiability. Answer D describes a restrictive endorsement (such as 'for deposit only'), not a special endorsement.

A certificate of deposit is a form of promissory note issued by a bank acknowledging deposit of funds and promising repayment with interest. Under UCC Section 3-104(j), CDs are specifically identified as a type of negotiable instrument (a 'note' issued by a bank). They must meet the same formal requirements as other notes. Answer A is incorrect because CDs can be and are transferred. Answer B is incorrect because CDs are indeed signed by the bank. Answer C is incorrect because there is no one-year maturity requirement for CDs as negotiable instruments; they may have various maturities.

Under UCC Section 3-415(b), an endorser who endorses 'without recourse' disclaims their secondary (contract) liability on the instrument. Normally, an unqualified endorser promises that if the instrument is dishonored, they will pay. A 'without recourse' (qualified) endorser makes no such promise; the holder cannot seek payment from them if the instrument is dishonored. The endorser still makes transfer warranties. Answer B is incorrect because 'without recourse' reduces, not increases, the endorser's liability. Answer C is incorrect because 'without recourse' relates to payment liability, not the order/bearer status. Answer D is incorrect because transfer warranties, not guarantees of others' defenses, survive a qualified endorsement.

Under UCC Section 3-108(b), an otherwise negotiable instrument remains payable at a definite time even if it is subject to: (1) acceleration clauses (making it payable earlier than stated), (2) extension clauses (allowing extension for a definite time), or (3) prepayment rights. The acceleration clause does not destroy the definite time requirement because it only causes earlier payment, not indefinite payment. Answer B is incorrect because the UCC expressly preserves negotiability for instruments with acceleration clauses. Answer C is incorrect because acceleration clauses are specifically contemplated by Article 3. Answer D is incorrect because Article 3 does not distinguish between automatic and optional acceleration for this purpose.

Under UCC Section 3-108(b)(ii), an instrument payable at a definite time is still negotiable if it permits the maker or holder to extend the maturity to a further definite time. Extension to 'a further definite time' (one additional year in this case) is specifically authorized and does not destroy negotiability. Answer A is incorrect because the UCC expressly permits such extension clauses. Answer C is incorrect because extension clauses are expressly contemplated and permitted. Answer D is incorrect because the Article 3 rule does not distinguish between automatic and optional extensions.

Under UCC Section 3-109, an instrument is bearer paper if it is payable to 'cash' or 'to the order of cash.' 'Cash' is not an identified person, so the instrument functions as bearer paper - it may be negotiated by delivery alone without endorsement. Answer A is incorrect because 'cash' cannot endorse an instrument. Answer B is incorrect because the UCC specifically recognizes 'pay to the order of cash' as bearer paper. Answer D is incorrect because the instrument is clearly bearer paper requiring only delivery.

Under UCC Section 3-104(h), a teller's check is a draft drawn by a bank on another bank, or payable at or through a bank. The key distinction from a cashier's check is that a cashier's check is drawn by a bank on itself (making the issuing bank both drawer and drawee), while a teller's check is drawn by one bank on a different bank - often a correspondent bank. Both represent highly reliable payment instruments backed by a bank's credit. Answer A is correct. Answer B is incorrect; a teller's check is a bank-issued instrument, not a check written by a teller on a customer's personal account. Answer C is incorrect because teller's checks are issued by commercial banks, not the Federal Reserve. Answer D describes a post-dated check, which is an entirely different concept.