Types of Neg. Instruments

Question 1

Basic Concept

Answer 1

• instrument’s holder wants to be paid
• person obligated to pay doesn’t want to pay
• person who ultimately pays the instrument will want to recover someone else

Question 2

Attack Way of Thinking

Answer 2

1) Negotiable instrument?
2) properly negotiated?
3) HIDC?
4) obligor have any defenses?
5) real or personal defenses?
6) hold anyone else responsible?

Question 3

2 types of commercial paper

Answer 3

1) note
2) draft

makers make notes; drafters draw drafts

Question 4

Note

Answer 4

• a promise to pay
• parties (2 party instrument)
  1) maker= person making promise to pay
  2) payee= person to whom the instrument is payable

Question 5

Certificate of Deposit (COD)

Answer 5

• type of note
• bank acknowledges receipt of money and
• bank promises the payee/depositor to repay the $

Question 6

Draft

Answer 6

-eg: check
-order to pay $
parties:
1) drawer- person ordering payment
2) drawee- person being ordered to pay
3) payee- person to whom instrument is payable

Question 7

check

Answer 7

• type of draft
• Requirements:
  1) bank is the drawee and
  2) instrument is payable on demand

Question 8

types of checks

Answer 8

• ordinary check
• traveler’s check (must be counter-signed by a person whose “specimen signature” appears on the traveler’s checks)
• cashier’s check (drawer and drawee are the same bank)
• teller’s check (check drawn by one bank on another bank)

Question 9

contradictory terms

Answer 9

• if an instrument contains contradictory terms:
  1) handwritten terms prevail over both typewritten terms
  2) typewritten terms prevail over printed terms
  3) words prevail over numbers