STU19 Flashcards
What instruments are subject to the provisions of the Negotiable Instruments Article of the UCC?
UCC Article 3 regulates negotiable instruments. The article includes four kinds of negotiable instruments: drafts, checks, promissory notes, and certificates of deposit. Negotiable instruments are formal written contracts used extensively in business as a substitute for money and as a method to extend credit. Every negotiable instrument governed by Article 3 contains an unconditional promise or order to pay money. Other forms of negotiable contracts, such as bills of lading, warehouse receipts, and investment securities do not order or promise payment of money and are governed by UCC Articles 7 and 8, respectively, and not by UCC Article 3. A certificate of deposit (CD) is a specialized form of promissory note in which a bank acknowledges a receipt of money and promises to repay the money with interest in the future.
A trade acceptance usually
A trade acceptance is a special form of negotiable instrument. It is a time draft used by sellers as a way to extend credit to buyers of their goods. The seller draws a draft ordering the buyer to pay the seller at some time in the future. The seller is thus both drawer and payee of a trade acceptance.
