Business law chapter 24

What are negotiable instruments

Negotiable instruments include drafts, checks, promissory notes, and COD which is certificates of deposit.

What is the most common form of negotiable instruments

Checks

What is negotiability

Is a legal concept that makes written instruments freely transferable and therefore a readily accepted form of payment in substitution for money

What is the key feature of negotiable instrument

Negotiability

What are the three parties to a check

Drawer, the drawee, the payee

What is the drawer for checks

Is the party issuing an order to pay a check or a draft

What is a drawee for checks

Is the party ordered to pay a draft or check (the Bank)

What is the payee for checks

Is the person to receive payment by an instrument

What is a promissory note

Is a written promise by a maker (Issuer) to pay a payee

What is a maker

Issuer of a promissory note or certificate of deposit

What is a certificate of deposit

A specialized form of a note that is given by a bank or thrift association

What is writing

Any reduction to tangible form is sufficient

What is signature

Any symbol executed or adopted by a party with the intention to adopt or accept a writing

What is unconditional

An absolute promise to pay that is not subject to any contingencies

Demand paper versus time paper

Demand paper payable on request in time paper is payable at a different time

what is definite time

One at a fixed date or dates and two at a definite period of time after sight or acceptance and 3 at a time readily ascertainable at a time the promise or order is issued

What is payable to order or to bearer

A negotiable instrument must contain words indicating that the maker or drawer intends that it passed on to the hands of someone other than the payee

What is payable to order

Payable to the "order of" a named person or anyone designated by that person

What is payable to bearer

Payable to the holder of the instrument includes instruments payable to bearer, to an unspecified payee, or to cash

Can a bank cash a postdated check before its the date?

Only if they have been notified about it