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Uncategorized > 2nd QUARTER- BUSINESS LAW Exam 3 > Flashcards

2nd QUARTER- BUSINESS LAW Exam 3 Flashcards

1
Q

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

A

commercial paper

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2
Q

classifications of commercial paper ??????

A

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

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3
Q

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

A

PROMISSORY NOTE

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4
Q

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

A

CERTIFICATE OF DEPOSIT (CD)

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5
Q

here is an example of a CD

A

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

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6
Q

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

A

maker

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7
Q

party to whom any negotiable instrument is made payable

A

payee

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8
Q

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

A

draft

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9
Q

types of orders to pay

A 
Certified check
Cashier’s check 
Bank draft
Voucher check 
Traveler’s check
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10
Q

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

A

certified check

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11
Q
  • 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
A

cashier’s check

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12
Q
  • 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
A

bank draft

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13
Q
  • Checks with voucher attached

* Voucher lists items of an invoice being paid by check

A

voucher checks

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14
Q
  • Similar to cashier’s checks

* Required signature and countersignature by purchaser

A

traveler’s checks

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15
Q

person who executes any draft or check

A

drawer

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16
Q

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

A

drawee

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17
Q

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

A

payee

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18
Q

REQUIREMENTS FOR NEGOTIABILITY

A
  • 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
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19
Q
  • 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
A

order paper

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20
Q
  • A commercial paper made payable to any person in possession of it
  • “Payable to bearer”
A

bearer paper

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21
Q

act of transferring ownership of a negotiable instrument to another party

A

negotiation

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22
Q

person who has possession of a delivered negotiable instrument

A

holder

23
Q

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

A

ENDORSEMENT or INDORSEMENT

24
Q

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

A

ENDORSER or INDORSER

25
Q

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

A

ENDORSEE or INDORSEE

26
Q

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

A

blank endorsement

27
Q

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

A

special endorsement

28
Q

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

A

restrictive endorsement

29
Q

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

A

qualified endorsement

30
Q

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

A

holder in due course

31
Q

What are the requirements of the holder in due course?

A

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
Q

What are the rights of the holder in due course?

A
  • Right to collect amount due

* Right to be free from defense of no consideration

33
Q

liability for payment of negotiable instruments

A
  • Requirements to qualify as a holder in due course

* Rights of a holder in due course

34
Q

transferor’s warranties

A
  • 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
Q

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

A

bailment

36
Q

party who gives up possession, but not title or property

A

bailor

37
Q

party who acquires possession, but not title of personal property

A

bailee

38
Q

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

A

ordinary bailment

39
Q

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

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

A

extraordinary bailment

40
Q

conditions of bailment

A
  • Bailor delivers property to bailee
  • Bailee accepts property from bailor
  • Both parties agree that property will be returned to bailor
41
Q

types of bailment

A
  • Sole benefit of bailor
  • Sole benefit of bailee
  • Mutual benefit
42
Q
  • Bailment benefits only property owner
  • Bailee must exercise “slight care”
  • Liable only for gross negligence
A

sole benefit of bailor

43
Q

occurs when borrowing someone’s property

Bailee must exercise “great care”

A

sole benefit of bailee

44
Q
  • Bailee renders a service
  • Charges for the service
  • Bailee must exercise “reasonable care under the circumstances”
A

mutual benefit

45
Q

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

A

private carriers

46
Q

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

A

public carriers

47
Q

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

A

consignor

48
Q

one to whom goods are shipped to by a common carrier

A

consignee

49
Q

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

A

bill of lading

50
Q
  • Describing the freight for ID
  • States the name of the consignor
  • The terms of the contract for carriage
  • Directing location of delivery
A

elements of bill of lading

51
Q

person in possession of a COMMERCIAL check

A

bearer

52
Q

public carrier is the same as…

A

common carrier

53
Q

person in possession of an INSTRUMENT

A

holder

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