2nd QUARTER- BUSINESS LAW Exam 3 Flashcards Preview

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

31

What are the requirements of the holder in due course?

The Holder:
• Must take instrument in good faith and for value
• Must have no notice that instrument is overdue or has been dishonored
• At time of negotiation, no notice of any defense against or adverse claim to the instrument

32

What are the rights of the holder in due course?

• Right to collect amount due
• Right to be free from defense of no consideration

33

liability for payment of negotiable instruments

• Requirements to qualify as a holder in due course
• Rights of a holder in due course

34

transferor's warranties

• Transfer of commercial paper
• Warrants existence of certain facts
• Specified by UCC
• Transferor entitled to enforce the instrument
• All signatures genuine or authorized
• Instrument has not been altered
• Instrument not subject to defense or claim of any party
• Transferor has no knowledge or insolvency proceedings with maker, acceptor, or drawer of unaccepted draft

35

transfer of possessions, but not title of personal property by one party to another, under agreement

EXAMPLE:
Leaving a car with garage for repair
Storing furniture in a warehouse
Student borrowing a tuxedo

bailment

36

party who gives up possession, but not title or property

bailor

37

party who acquires possession, but not title of personal property

bailee

38

those held to “normal” standard of care for bailed property

ordinary bailment

39

those held to higher than normal standard of care for bailed property

Such as:
• Common carriers
• Hotel keepers
• Funeral directors

extraordinary bailment

40

conditions of bailment

• Bailor delivers property to bailee
• Bailee accepts property from bailor
• Both parties agree that property will be returned to bailor

41

types of bailment

• Sole benefit of bailor
• Sole benefit of bailee
• Mutual benefit

42

• Bailment benefits only property owner
• Bailee must exercise “slight care”
• Liable only for gross negligence

sole benefit of bailor

43

occurs when borrowing someone’s property
Bailee must exercise “great care”

sole benefit of bailee

44

• Bailee renders a service
• Charges for the service
• Bailee must exercise “reasonable care under the circumstances”

mutual benefit

45

Transports under special arrangements for a fee
• Moving van
• Delivery services
• Funeral home A transports body for funeral home B

private carriers

46

one that undertakes transport without discrimination for all who apply for service
• Airline
• Bus
• Train

public carriers

47

one who ships goods by a common carrier, (i.e. - forwarding funeral home).

consignor

48

one to whom goods are shipped to by a common carrier

consignee

49

contract between consignor and carrier
Is receipt and contract existing between consignor and carrier?
Is documentary evidence of title of goods?

bill of lading

50

• Describing the freight for ID
• States the name of the consignor
• The terms of the contract for carriage
• Directing location of delivery

elements of bill of lading

51

person in possession of a COMMERCIAL check

bearer

52

public carrier is the same as...

common carrier

53

person in possession of an INSTRUMENT

holder