I. Inroduction

Question 1

Forms of Commercial Paper

Answer 1

Article 3 of the UCC governs rights and liabilities of parties to what the Code calls “commercial paper.

• This paper calls for party to pay money rather than deliver goods or perform a service
• NOTES & DRAFTS

Question 2

Note

Answer 2

I, X, promised to pay to the order of Y, the sum of $ 100. Signed X

Two party instrument:

1. MAKER: the person who signs or is identified in a note as the person undertaking to pay (X)
2. PAYEE: person to whom the note is payable (Y)

Question 3

Draft

Answer 3

TO: X BANK

PAY TO ORDE OF Y $100

SIGNED Z

Three Party Instrument:

1. DRAWER: person who signs or is idnetified in a draft as the person order payment (Z)
2. DRAWEE: person orders to make payment (X)
3. PAYEE: person to whom the draft is payable (Y)

• When the drawee is a bank, and it is payable on demand, then the draft is a CHECK
• Certificate of deposit: acknowledgement by bnak that a sum of money has been received, and a promise by the bank to repeay the sum of money

Question 4

Negotiability Concept

Answer 4

• If a particular piece of commerical paper is NEGOTIABLE