Types of Negotiable Instruments Flashcards
How may types of Negotiable instruments are there ?
2 (Notes and Drafts)
Who makes a note ?
A maker
Who makes a draft ?
a drawer
A Note is a
Two party instrument characterized by a promise to pay
A Certificate of Deposit is a type of
Note if
1) Bank acknowledges the receipt of money; and
2) The bank promises to the payee/depositor to repay the money
A Draft is a
Three party instrument that is an order to pay
A drawee is
The person being ordered to pay (usually a bank)
A payee is
The person who whom the instrument (note or draft) is payable
The most common form of a draft is a
Check
A check requires
1) The bank be the drawee; and
2) The instrument is payable on demand
Types of Checks
1) Ordinary Checks
2) Travelers Checks (must be signed by a specimen signature which appears on the check)
3) Cashiers Checks (drawer and drawee are same bank)
4) Tellers Checks (checks drawn on one bank by another)
If an instrument contains contradictory terms
1) Handwritten terms prevail over all others
2) Typewritten terms prevail over printed terms
3) Words prevail over numbers
