Commercial Paper: Presentment, Payment, & Dishonor

Question 1

Negotiable Instruments:

Proper Steps

Answer 1

1. Holder presents to primary for payment (makers and drawers).
   - Party paying can ask for proof
   - Presentment is right of holder
2. Primary Parties
   - Notes = payor/debtor
   - CD’s = bank that accepted CD deposit
   - Checks = drawee bank (customer primarily liable not bank, bank is primary only if certified check)
   - Drafts: drawee of the draft
3. Checks have time restrictions
   - 30 days
   - postdating checks has no effect on time for presentment
   - bank can pay in good faith for 6 months
4. Time for other instruments
   - Time draft = when time for payment arrives
   - Note = as of due date
   - Sight Draft = any time

Question 2

Negotiable Instruments:

Dishonor

Answer 2

General: refusal to pay or accept (asking for ID okay)

• notice of dishonor is given to secondary parties
• must be within 30 days of dishonor