1. Parties: Who's Who?

Question 1

Parties

What is a Note?(2 parties)

-Maker
-Payee

Answer 1

A note is a two-party instrument in which one party (the maker) promises to pay a second party (the payee) a sum of money.

Certificate of Deposit- Bank (maker) acknowledges receipt of money and promises depositor (payee) to repay it.

Question 2

Parties

What is a Draft? (3 parties)

-Drawer
-Drawee/Payor
Payee

Answer 2

A draft is a three-party instrument in which one party (the drawer) orders a second party (the drawee or payor) to pay a sum of money to a third party (the payee).

Question 3

Maker (UCC § 3-412):

Answer 3

The person who creates and signs a promissory note.

A maker is primarily liable on a note and must pay the holder upon demand.

Question 4

Drawer (UCC § 3-414)

Answer 4

The person who writes a draft (e.g., a check) ordering another party to pay.

A drawer is secondarily liable and only obligated to pay if the drawee (bank)