Question 1

acceleration clause

Accepted Answer

(1) a clause in an installment contract that provides for all future payments to become due immediately on the the failure to tender timely payments or on the occurrence of a specified event (2) a clause in a mortgage loan contract that makes the entire loan balance become due if the borrower misses or is late making monthly payments

Question 2

acceptance

Accepted Answer

(1) in contract law, the offeree's notification to the offeror that the offeree agrees to be bound by the terms of the offeror' proposal. Although historically the terms of acceptance had to be the mirror image of the terms of the offer, the Uniform Commercial Code provides that even modified terms of the offer in a definite expression of acceptance constitute a contract (2) in negotiable instruments law, the drawee's signed agreement to pay a draft when presented

Question 3

acceptor

Accepted Answer

- the person (drawee) who accepts a draft and who agrees to be primarily responsible for its payment

Question 4

banker's acceptance

Accepted Answer

- a negotiable instrument that is commonly used in international trade - a banker's acceptance is drawn by a creditor against the debtor, who pays the draft at maturity - the drawer creates a draft without designating a payee - the draft can pass through many parties' hands before a bank (drawee) accepts it, transforming the draft into a banker's acceptance - acceptances can be purchased and sold in a way similar to securities

Question 5

bearer

Accepted Answer

- a person in possession of an instrument payable to bearer or indorsed in blank

Question 6

bearer instrument

Accepted Answer

- any instrument that is not payable to a specific person, including instruments payable to the bearer or to "cash"

Question 7

certificate of deposit (CD)

Accepted Answer

- a note of a bank in which a bank acknowledges a receipt from a party and promises to repay the money, with interest, to the party on a certain date

Question 8

check

Accepted Answer

- a draft drawn by a drawer ordering the drawee bank or financial institution to pay a certain amount of money to the holder on demand

Question 9

draft

Accepted Answer

- any instrument (such as a check) drawn on by a drawee (such as a bank) that order the drawee to pay a certain sum of money, usually to a third party (the payee), on demand or at a definite future time

Question 10

drawee

Accepted Answer

- the party that is ordered to pay a draft or check - with a check, a financial institution is always the drawee

Question 11

drawer

Accepted Answer

- the party the initiates a draft (writes a check, for example), thereby ordering the drawee to pay

Question 12

extension clause

Accepted Answer

- a clause in a time instrument that allows the instrument's dats of maturity to be extended into the future

Question 13

holder

Accepted Answer

- any person in the possession of an instrument drawn, issued, or endorsed to him or her, to his or her order, to bearer, or in blank

Question 14

issue

Accepted Answer

- the first transfer, or delivery, of an instrument to a holder

Question 15

maker

Accepted Answer

- one who promises to pay a certain sum to the howler of a promissory note or certificate of deposit (CD)

Question 16

negotiable instrument

Accepted Answer

- a signed writing that contains an unconditional promise or order to pay an exact sum of money, on demand or at an exact future date, to a specific person or holder, or to bearer

Question 17

order instrument

Accepted Answer

- a negotiable instrument that is payable "to the order of an identified person" or "to an identified person or order

Question 18

payee

Accepted Answer

- a person to whom an instrument is made payable

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Chapter 12 - The Function and Creation of Negotiable Instruments Flashcards

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