Test 1 Flashcards
What are the four types of negotiable instruments? (commercial paper)
drafts, checks, notes, and certificates of deposit (CDs)
Draft
An unconditional written order that involves three parties (drawer, drawee, and payee)
Drawer, drawee, and payee
drawer - me
drawee- bank
Payee - Peach
Trade acceptance
The seller of the goods is both the drawer and the payee.
Bankers acceptance
A draft orders the buyers bank to pay. These are commonly used in international trade
Promissory note
a written promise made by one person to pay another person a specified sum
What is a CD?
A CD is a note issued when a party deposits funds with a bank, and the bank promises to repay the funds, with interest, on a certain date.
3 modifications of UCC?
E-commerce (amazon)
Checks
Negotiability
Acceleration Clause
payee or other holder of a time instrument to demand payment of the entire amount due, with interest if a certain event happens
Holder
any person who is in possession of a negotiable instrument (they have to pay the amount due)
Extension clause
Opposite of acceleration clause
Order instrument
an order that is payable to an identified person.
Bearer Instrument
Does not designate a specific person
Bearer
person in possession of an instrument
Time draft
payable at a definite future time
sight draft
payable on sight (When it is presented to the drawee)
collateral note
automobile promissory note
