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Cards In This Set
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Commercial paper=negotiable instruments=negotiable contracts
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Written promises or orders to pay sums of money
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Negotiability
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K which is freely transferred from 1 person to another taking with it certain legal rights and duties
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Sub for money, creates credit
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Purposes of negotiable instruments
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How negotiable instruments creates credit
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Future repayment of items you presently enjoy becuase k between you and creditor (person who extends your credit)
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Negotiable instruments as sub for money
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K between depositor and bank
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1. signed and in writing- no oral negotiable k
2. contains an unconditional promise or order to pay 3. sum certain in money only 4. payable on demand or at a fixed future date 5. contains the magic words of negotiability- pay to the order of or pay to bearer |
5 requirements of negotiability
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Doesn't destroy negotiability
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If date omitted...
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Assume date instrument given to other person
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Why isn't negotiability destroyed if date omitted
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1. promissory note
2. draft or check 3. certificate of deposit |
3 classifications of negotiable instruments
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Promissory note
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2 party instrument
-contains at least a "promise to pay" maybe an "order" too "promise to pay to the order of" |
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Maker & payee
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2 parties of promissory note
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Maker (promissory note)
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Made the promise, signs it
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Payee (promissory note)
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Person to be paid
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1. lump sum or single pay note
2. installment 3. balloon or bullet note |
3 types of promissory notes (payment)
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Lump sum or single pay note
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Entire amount at 1 fixed future date
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