2nd QUARTER- BUSINESS LAW Exam 3 Flashcards Preview

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Flashcards in 2nd QUARTER- BUSINESS LAW Exam 3 Deck (53)
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1

document drawn in a special form which can be transferred from person to person as a substitute for money or as an instrument of credit.
Also called negotiable instrument

commercial paper

2

classifications of commercial paper ??????

promises to pay
orders to pay
???????

3

Unconditional promise in writing made by one party to another, signed by the maker engaging to pay on demand or at a particular time, a particular sum of money to order or to bearer
This is one example of commercial paper

PROMISSORY NOTE

4

acknowledgement by a bank of receipt of money with an agreement of repayment

CERTIFICATE OF DEPOSIT (CD)

5

here is an example of a CD

$1,000 CD with maturity date of 01/05 and interest of 6% at maturity date, bank will pay principle, plus interest

6

person who executes promissory note (person who MAKES promise, a bank or person getting loan)

maker

7

party to whom any negotiable instrument is made payable

payee

8

written order signed by one person requiring the person to whom it is addressed to pay a particular sum of money, to order or bearer; on demand at a certain time.

Second example of commercial paper

draft

9

types of orders to pay

Certified check
Cashier’s check
Bank draft
Voucher check
Traveler’s check

10

ordinary check which an official of a bank has accepted by writing across the face of the check the word “certified” and signed.
• This makes the bank liable for the payment.
• The drawer is released from liability

certified check

11

• Check drawn on a bank’s own funds
• Signed by a responsible bank official or a cashier
• Bank may use to pay its own obligation
• May be used by someone in lieu of their own personal check

cashier's check

12

• Check drawn by one bank or another
• Banks will keep a portion of their funds in other banks
• Bank can draw a check on these funds at will

bank draft

13

• Checks with voucher attached
• Voucher lists items of an invoice being paid by check

voucher checks

14

• Similar to cashier’s checks
• Required signature and countersignature by purchaser

traveler's checks

15

person who executes any draft or check

drawer

16

person, company or financial institution ordered to pay a draft or check

drawee

17

party to whom any negotiable instruments is made payable. Person that gets the money

payee

18

REQUIREMENTS FOR NEGOTIABILITY

• Must be in writing and signed by the maker
• Contain an unconditional order or promise to pay a certain sum in money
• Payable on demand at a definite time
• Payable to “order” or to “bearer”
• Order paper or Bearer paper

19

• A commercial paper made payable “the order of” some named party
• Word “order” or its equivalent must be used
• may be paid only to the person to whom it has been properly endorsed

order paper

20

• A commercial paper made payable to any person in possession of it
• “Payable to bearer”

bearer paper

21

act of transferring ownership of a negotiable instrument to another party

negotiation

22

person who has possession of a delivered negotiable instrument

holder

23

the signature or statement of purpose by the owner on the back of a negotiable instrument, which indicates future control of the instrument

ENDORSEMENT or INDORSEMENT

24

the “payee” of a note or draft transferring the instrument to another party

ENDORSER or INDORSER

25

person who becomes the “holder” of a negotiable instrument by endorsement which names him/her as the person to whom the instrument is negotiated

ENDORSEE or INDORSEE

26

a type of endorsement having no words other than signature of endorser

blank endorsement

27

endorsement which designates the particular person to whom payment is to be made (i.e. – pay to the order of)

special endorsement

28

an endorsement which prevents the use of the instrument for anything except stated use (i.e. – for deposit only)

restrictive endorsement

29

limits liability of endorser. Endorser signs the bill or promissory notes and adds; “without recourse”. This limits the endorser’s liability and endorsee accepts the liability

qualified endorsement

30

person in possession of a negotiable instrument who accepts the negotiable instrument in good faith and for value; “innocent purchaser”

holder in due course