Unit 6 Flashcards
(50 cards)
_____________ encompasses substitutes in common usage today such as checks, promissory notes, and certificates of deposit
commercial paper 860
__________ is also basically a contract
commercial paper 860
The law of commercial paper is covered in _________ (Negotiable instruments) and ________ (Bank deposits and collections)
Article 3, Article 4 861
________ and certificate of deposits are promises to pay money where as ________ are checks and drafts that a person issues instructing a bank to pay money out of the issuers account to a third party.
promissory notes, orders to pay money 861
A ________ is a two-party instrument in which one person known as the ______, makes and unconditional promise in writing to pay another person known as the ______, a person specified by the person, or the bearer of the instrument, a fixed amount of money.
promissory note, maker, payee 862
Examples: car note
The most common example of a _______ is a check; however someone who is owed money by another may also use this instrument to request money from the other’s bank account. Commonly used by companies who ship products, car sales man, and purchasers of livestock.
draft 864
A note that provides, “I promise to pay to the order of Carl Adams $2500 if he replaces the roof on my garage,” is _________ because it is payable on a condition.
not negotiable 867
An instrument is not negotiable unless the promise or order is ___________
unconditional 867
A check that reference a specific account account __________ due to a revision in Article 3.
is negotiable 868
Except for checks, to be negotiable instrument must be “_______” or “_______.” This is the essence of negotiable.
Payable to order, to bearer 870
Typewritten terms prevail over ______
printed terms 874
__________ prevail over typewritten or printed terms.
handwritten terms 874
where words and number conflict, the ______ control the ______
written words, numbers 874
If an instrument is payable to the order of a specific payee, it is called ________ and it can be negotiated by transfer of possession of the instrument after ________ by the person specified
order paper, indorsement 877
A check made payable to a specific person is _______ not because the word “order” appears on it, but rather because it ……….
order paper, named a specific payee 877
If an instrument is made payable “to bearer” or “to cash,” it is called _________ and negotiating it is even simpler.
bearer paper 877
In instrument payable to bearer may be negotiated by _________ alone. No ______ in necessary; however, by indorsing the check, you agree to be ______ for its payment if it is not paid by the drawee bank.
transfer of possession, indorsement, liable 877
A promise or order is “payable on demand” if __________ or __________.
it states that it is payable on “demand”, does not state any time for payment 869
A ______ is a form of commercial paper that involves an order to pay money rather than a _______ to pay money
draft, promise 864
A promissory note must be signed by the _______.
maker
what are the 4 kinds of indorsements?
- special
- blank
- restrictive
- qualified 880
A _______ indorsement contains the signature of the indorser along with the words indicating to whom, or to who’s order, the instrument is payable.
special 880
If in indorser merrily signs his name and does not specify to whom the instrument is payable, he has indorsed the instrument in _______.
blank 880
When Natalie signs her name on the back of a check made “payable to the order of Natalie ,” she has made a _______ indorsement and the check is payable to the ______. The bearer negotiates it by ______ alone, and no further indorsements are necessary.
blank, bearer, transfer 880
