Alpacas of America, LLC v. Groome Chad A. Jenkins

1. What is the difference between a contract and a negotiable instrument? A contract

requires both parties to agree on particular terms or there must be exchange of

consideration. Both parties have to give something to each other in value in order for the

contract to be valid. For example, I sign a contract stating I will pay rent for an

apartment and exchange the land owner will provide me with a place to live. A

negotiable instrument is a signed document which contains an unconditional promise or

order to pay an exact sum on demand or at a specified time. They are usually in forms of

a paper documents. No services are required with a negotiable instrument. Any paper

document with a promise has to be paid and the courts will honor this signed document.

2. In circumstances like those in the Alpacas case, could a maker successfully argue that a

note is conditional, and thus not negotiable, because it is not separate from its underlying

contract but merely enforces it? Under what circumstances could you successfully argue

that an agreement is not a note (a negotiable instrument), but is actually part of the

underlying contract?

One could argue this case as it was determined by the courts before it was appealed.

However, the state appellant court reversed the decision stating the notes were classified

as negotiable instruments. These notes are unconditional promises of payment. If there

were only a contract and no other notes or negotiable instruments, then there could be an

argument made. However, in this case the promise had been made in writing and is not

Alpacas of America, LLC v. Groome Chad A. Jenkins

dependent on the contract. They are both considered separate. Alpacas of America has

the right to bring its claim under the sales contract or the negotiable instrument of the

promissory notes.