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REGULATION > Commercial Paper > Flashcards

Commercial Paper Flashcards

1
Q

Law that covers negotiable commercial paper

A

Article 3 of UCC

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2
Q

A type of commercial paper that has 3 parties in which one person or entity (drawer) orders another (drawee) to pay a 3rd party (payee) a sum of money

A

Draft (Bill of exchange)

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3
Q

A special type of draft that is payable on demand (unless postdated) and drawee must be bank and the one writing it is the drawer

A

Check

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4
Q

A type of commercial paper that is a two-party instrument in which one party (maker) promises to pay a specified some of money to another party (payee)

A

Note (ex. promissory notes, certificates of deposit)

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5
Q

A promise to pay in which the payment does not depend upon, or is not “subject to”, another agreement or event

A

Unconditional promise to pay

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6
Q

Is entitled to payment on a negotiable instrument despite personal defenses that a maker/drawer of the instrument may have

A

Holder in Due Course

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7
Q

A promise to give value in the future–does not qualify as given consideration to be a holder in due course

A

Executory promise

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8
Q

Honesty in fact and observance of reasonable commercial standards of fair dealing

A

Good faith

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9
Q

Defenses that are assertable against any party, including a HDC

A

REal (universal) defenses

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10
Q

Defenses that are not assertable against HDC

A

Personal defenses (ex. breach of contract, lack/failure of consideration, prior payment, etc.)

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11
Q

Occurs wehn a person signs a negotiable instrument and knows what s/he issigning; however, s/he was induced into doing so by intentiaonal misrepresentation

A

Fraud in the inducement–a personal defense

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12
Q

Occurs when a party is tricked into signing a negotiable instruement believing it to be something else

A

Fraud in the execution–a real defense

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13
Q

Under this rule, a party who does not quality as a HDC but obtains a negotiable instrument from a HDC has the standing of an HDC

A

Shelter rule

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14
Q

A rule intended to limit unfair hardship on consumers who sign notes promising to pay retailers for goods purcharsed that were defective (b/c they could sell them to a HDC); does NOT apply to any goods/services paid for by check

A

Federal Trade Commission Rule (FDC)

–takes precedent over UCC where it applies

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15
Q

The liability for payment of the instrument’s face value that appliese to any party who signs a negotiable instrument

A

Contractual liability

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16
Q

Liability under which a holder can seek payment from secondary parties; includes transfer warranties and presentment warranties

A

Warranty liability

17
Q

A warranty liability under which the transferor gives these warranties whenever a negotiable instruemnt is transferred for consideration

A

Transfer warranties

18
Q

A warranty in which the holder/HDC presenting the negotiable instrument for payment or acceptance and all prior transferors of the instrument provide to the party that pays the instrument

A

Presentment warranty

19
Q

A party who signs to lend his/her name to another party (ex. A father-in-law endorses a note for son-in-law so creditor will accept it)

A

Accomdation party

20
Q

Rule that applies when a maker/drawer issues a note or draft to an imposter thinking s/he actually is the real payee, and the imposter forges the real payee’s name

  • -effectively negotiates note/draft so that a subsequent holder CAN collect from maker/drawer
  • an exception to rule that forged endorsements cannot transfer title
A

Imposter rule

21
Q

Rule that applies when maker/drawer, or his/her agent issues a note or a check to a fictitious payee and then the maker/drawer, or employee forges the endorsement

  • -subsequent holder CAN enforce the note/check
  • exception to the rule that forged endorsements cannot transfer title
A

Fictitious payee rule

22
Q

A draft in which a seller of goods extends credit to buyer by drawing a draft on that buyer directing him/her to pay seller a sum of money on a specified date

A

Trade acceptance

23
Q

A draft in which the drawee and drawer are a bank

A

Banker’s acceptance

24
Q

A draft payable upon presentment to drawee

A

Sight draft

25
Q

A draft payable at a specified date or payable a certain period of time after a specified date

A

Time draft

26
Q

A draft purchased by one party to pay payee in which the 3rd party is typically post office, bank, or a company

A

Money order

27
Q

A check purchased from a bank or company in which the drawer (traveler) must sign twice for purposes of identification, and the drawee is the bank or company

A

Traveler’s check

28
Q

A check in which the drawer and drawee are the same bank witha separate party being hte payee

A

Cashier’s check

29
Q

A check that payor bank has agreed in advance to pay so that bank becomes primarily liable

A

Certified check

30
Q

A draft drawn by one bank on another bank

A

Teller’s check (bank draft)

31
Q

A document issued by a common carrier and given to the seller evidencing receipt of ot hte goods for shipment

A

Bill of lading

32
Q

A document issued by a warehouseman and given to seller evidencing receipt of goods for storage

A

WArehouse receipt

33
Q

Occurs when a document of title is negotiated to a holder who takes it in good faith in the ordinary course of business without notice of a defense and pays value

A

Due negotiation

34
Q

The Central Bank of US which regulates US monetary system and overseees bank holding companies

A

Federal Reserve

35
Q

US entity which insures customer deposits against bank failure and promotes sound banking practices

A

FDIC

36
Q

An arm of the Treasury Department establsihed to regulate and supervise national banks and federal branches of foreign banks; conducts on-site examinations of banks

A

OCC

37
Q

A US agency established to ensure open and efficient operation of futures markets which have grown from trading agricultural futures to more sophisticated financial products

A

CFTC

38
Q

Issues and enforces regulation governing nation’s savings and loan industry

A

OTS

39
Q

Currently, many are recommending mergin these 2 entities, to reglect the blurred lines between securities and comodities

A

SEC and CFTC

REGULATION (17 decks)

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