Types of Negotiable Instruments Flashcards Preview

A Wiley Review Notes REG > Types of Negotiable Instruments > Flashcards

Flashcards in Types of Negotiable Instruments Deck (8)
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1
Q

A instrument is a draft because

A

it is a 3 party instrument.

A 1) drawer ORDERS a 2) Drawee to pay a Fixed amount to the 3) Payee

2
Q

To qualify as a check

A

instrument must be payable on demand (unless it is postdated)

3
Q

A promissory note

A

is a 2 party instrument where one party PROMISES to pay a fixed party in money to a payee

4
Q

Trade acceptance is

A

a special type of draft. The seller is the drawer and the payee.

5
Q

How does a trade acceptance work?

A

seller extends credit to buyer by drawing a draft on the buyer then directing that buyer to pay a fixed amount on a specified date.

6
Q

Under the revised article 3 of UCC

A

there are 2 categories of negotiable instruments

1) promissory note
2) drafts

7
Q

What are examples of 3 party instruments requiring a drawee

A

sight drafts
checks
trade acceptance

8
Q

What are examples of 2 party instruments

A

Notes

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