Identify Parties/Instruments Flashcards
What is a note?
A note is a promise to pay money.
A note is a two party instrument.
What are the parties to a note?
Parties:
Maker: The person who promises to pay.
Payee: The person entitled to payment.
What is a certificate of deposit?
A CD is a note.
It is a note issued by a financial institution.
The financial institution acknowledges receipt of the money.
Financial Institution promises the payee/depositor to repay the money.
What is a draft?
A draft is an order to pay money.
A draft is a three party instrument.
What are the parties to a draft?
Drawer: Person ordering payment.
Drawee: Person to make the payment
If a check, the drawee is the payor bank.
Payee: Person to receive the payment.
What is the most common draft?
A check
What are the basic requirements of a check?
A financial institution is the drawee
Payable on Demand
How many types of checks are there?
5
1) Ordinary Check
2) Certified Check
3) Cashier’s Check
4) Teller’s Check
5) Traveler’s Check
What is a certificated check?
An ordinary check which the bank has already agreed to pay and accepted.
What is a Cashier’s Check?
Drawer and Drawee are the same bank.
The person buying the check is the remitter.
What is a Teller’s Check?
A check drawn by one bank on another bank.
The person buying the check is the remitter.
What is a Traveler’s Check?
A demand instrument requiring a counter part signature by a person whose signature already appears on the instrument.
