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Business Law > Bus Law Exam 3 > Flashcards

Bus Law Exam 3 Flashcards

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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

A

Commercial “CONSUMER” PAPER
AkA
Negotiable Instrument

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2
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

A

PROMISSORY NOTE

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2
Q

Promises to pay

A

Promissory Note
Certificate of Deposit (CDs)
Draft

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3
Q

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

EXAMPLE: $1000 CD with maturity date of 01/05 and interest of 6% At maturity date bank will pay principle plus interest

A

CERTIFICATE OF DEPOSIT (CD)

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4
Q

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

A

MAKER

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5
Q

party to whom any negotiable instrument is made payable

A

PAYEE

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6
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.

A

Draft

ORDERS TO PAY

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7
Q

Orders to Pay-Types

A 
Check:
Certified check
Cashier's check
Bank draft
Voucher check
Traveler's check
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8
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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9
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 CHECK

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10
Q

Check drawn by one bank to 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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11
Q

Checks with voucher attached

Voucher lists items of an invoice being paid by check

A

VOUCHER CHECKS

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12
Q

Similar to cashier’s checks
Required signature and countersignature by
purchaser

A

TRAVELERS CHECKS

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13
Q

person who executes any draft or check

A

DRAWER

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14
Q

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

A

DRAWEE

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15
Q

party to whom any negotiable instruments is made payable.

Person that gets the money

A

PAYEE

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16
Q

REGUIREMENTS 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 
Bearer paper
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17
Q

A commercial paper made payable “the the order
of” some named party
Word “order” or its equivalent must be used
Order paper may be paid only to the person to whom it has been properly endorsed

A

ORDER PAPER

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18
Q

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

A

BEARER PAPER

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19
Q

TRANSFER OF NEGOTIABLE INSTRUMENTS:

A 
NEGOTIATION 
HOLDER 
ENDORSEMENT 
ENDORSER 
ENDORSEE
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20
Q

act of transferring ownership of a negotiable instrument to another party

A

NEGOTIATION

21
Q

person who has possession of a delivered negotiable instrument

A

HOLDER

22
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
AkA
INDORSEMENT

23
Q

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

A

ENDORSER
AkA
INDORSER

24
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
AkA
INDORSEE

25
Q

TYPES OF ENDORESEMENTS:

A 
	BLANK  
	SPECIAL
	RESTRICTIVE
 	QUALIFIED
	HOLDER IN DUE COURSE
26
Q

having no words other than signature of endorser

Mary A Johnson

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 endorsee accepts the liability
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;

A

Innocent Purchaser

HOLDER IN DUE COURSE

31
Q

REQUIREMENTS OF 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

RIGHT OF 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 NEGOTIALE INSTRUMENT

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
party
Transferor has no knowledge or insolvency
proceedings with maker acceptor or drawer unaccepted draft

35
Q

transfer of possessions but not title 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

of title or property

A

BAILOR

37
Q

party who acquires possession, but not

title of personal property

A

BAILEE

38
Q

those hold 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

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 to bailor
Sole benefit of bailee
Mutual benefit

42
Q

SOLE BENEFIT OF BAILOR:

A

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

Example
You own a piano
You plan to move into a new apartment
You ask a friend to store your piano
Your friend does not play the piano
Only you benefit from the friend who stores your piano
43
Q

SOLE BENEFIT OF BAILEE

A

Occurs when borrowing someone’s property

Bailee must exercise “great care”

44
Q

MUTUAL BENEFIT

A

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

Example
You own a mink coat
You store your coat at ABC Cleaners for the summer months
Your coat is stored
ABC Cleaners is paid for the storage service

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

BILL OF LADING ELEMENTS:

A

Describing the freight for ID
States the number of the consignor
The terms of the contract for carriage
Directing location of delivery

Business Law (4 decks)

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