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Acceptor
person who agrees to pay a draft
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allonge
paper so firmly attached to insturment as to be part of it
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alteration
unauthorized change or completion of negotiable insturment to modify obligation of a party
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bad check
check the drawee bank refuse to pay
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bank draft
(teller's check) check drawn by one bank on another
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bearer paper
commercial paper payable to bearer
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bond
sealed, written contract obligation with essentials of note
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cancelation
act that indicates intention to destroy validity of an insturment
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certificate of deposit (CD)
acknowledgement by bank of receipt of money with engagement to repay it
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check
draft drawn on a bank & payable on demand
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collateral note
note secured by personal property
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coupon bond
bond with detachable individual coupons representin intrest payments
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dishonor
presentment made, but acceptance or payment not made
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draft (bill of exchange)
written order by one person directing another to pay sum of money to thrid person
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drawee
person ordered to pay draft
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drawer
person who excutes a draft
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fiduciary
a person in relationship of trust & confidence
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holder
person in possession of instrumen payable to bearer or that person
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holder in due course (holder through)
holder subsequent to holder in due course
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hybrid defense
defind & which ae included
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indorsement
signature of holder on back of insturments with any directions or limitations
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indorser
payee or holder who signs back of instrument
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limited defense
defined & which are included
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maker
person who executes a note
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money order
insturment issued by business indicating payee may receive
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negotiable insturment (commercial paper)
writting drawn in special form that can be transfered as substitutes for money or as insturment of credit
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negotiation
act of transfering ownersip
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order paper
commercial paper payableto order
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payee
party to whom insturment is payable
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presentment
the demand for acceptance made upon the maker
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primary liability
liability without conditions for commercial paper that is due
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promissory note
unconditional written promise to pay sum of money to another
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registered bond
bond payable to specific person, whose name is recorded by issuer
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renunciation
unilateral act of holder giving up rights in the instrument or against a party to it
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setoff
a claim by the party being sued against the party suing
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trade acceptance
draft drawn by seller on purchaser of goods
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universal defense includes
- minority
- forgery
- fraud as to the nature of the instrument or its essential terms
- discharge in bankruptcy proceedings
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voucher check
check with voucher attached
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Other types of checks
cashier's check, certified check, stale check
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cashiers check
check drawn by bank on its own funds
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certified check
check accepted by banks writing certified on it
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stale check
check presented more than six months after its date
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Requirements for negotiability
- instrument must be in writing & signed by the party executing it
- instrument must contain either an order to pay or a promise to pay
- order or the promise must be unconditional
- instrument must provide for the payment of a fixed amount of money
- instrument must be payable either on demand or at a fixed or definite time
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types of drafts
inland, foreign, sight
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inland drafts
draft drawn & payable in the United States
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foreign drafts
drafts outside of the US
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sight drafts
draft payable on presentation by holder
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types of indorsements
blank, restrictive, qualified, special
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blank indorsement
indorsement consisitng of signature of indorser
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restricitive indorsement
indorsement that restrict use of instrument
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qualified indorsement
indorsement that limits liability of indorser
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special indorsement
indorsement that designates particular person to whom payment is to be made
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classification of defenses
- 1. ordinary contract defenses
- 2. fraud that induced the execution of the insturment
- 3. conditional delivery
- 4. impropercompletion
- 5. payment or part payment
- 6. nondelivery
- 7. theft
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