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Types of Negotiable Instruments
- Notice: Two-party promise to pay (C.D.)
- Draft: One party instructing another party to pay money to a third party (Check)
Requirements of a Negotiable Instrument
- Promise or order to pay
- Fixed amount
What must an negotiable instrument accomplish?
- Payable to order or bearer when issued or first in possession of holder
- Payable on demand at a definite time; and
- States no unauthorized taking or instruction
When is an instrument not unconditional?
- If it expressly states condition for payment;
- It states the instrument is subject to or governed by another writing
What is a fixed amount?
- Money or medium of exchange adopted by government;
- Can include fixed or varible interest
When is an instrument payable to order or bearer?
- Order: When it is to the order of an identified person or her order
- Bearer: States payable to bearer, payable to cash, or otherwise indicates that possessor is entitled to payment
How is the payee identified?
By the intent by the maker or drawer
What are authorized takings or instructions?
- Undertaken or power to give, maintain, or protect collateral
- Authorization or power given to the holder to confess judgment or to realize on or dispose of collateral
- A waiver of the benefit of the law that protects the obligor
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