Overview Flashcards
1
Q
Two basic instruments of commercial paper
A
- note (e.g. promissory note)
- draft (e.g. a check)
2
Q
Note
A
promise to pay
parties: person promising to pay (“maker”) and the person to whom payment is promised (“payee”)
E.g.: Certificate of Deposit: like a note. an instrument made by a bank containing (i) acknowledgment of money received and (ii) promise to repay
3
Q
Draft
A
order to pay
parties: one party (“drawer”) orders another party (“drawee”, often a bank) to pay money to a third party (“payee”)
E.g.: check: any draft drawn on a bank and payable on demand