Business Law Exam#4
Card Set Information
Business Law Exam#4
Business Law Vocabulary Exam
Vocabulary, Business Law, Exam#4
Person who agrees to pay a draft
Paper so firmly attached to instrument as to be part of it.
Unauthorized change or completion of negotiable instruments to modify obligation of a party.
Check the drawee bank refuses to pay.
Bank Draft (Teller's Check)
Check drawn by one bank on another.
Negotiable instrument payable to bearer.
Sealed, written contract obligation with essentials of note.
Act that indicates intention to destroy validity of an instrument.
Certificate of Deposit
Acknowledgement by bank of receipt of money with engagement to repay it.
Draft drawn on bank and payable on demand.
Note secured by personal property.
Bond with detachable individual coupons representing interest payments.
Presentment made, but acceptance or payment not made.
Draft ( Bill of Exchange)
Written order by one person directing another to pay sum of money to third person.
Person ordered to pay draft.
Person who executes a draft.
A person in a relationship of trust and confidence
Person in possession of instruments payable to bearer or that person.
Holder in Due Course (holder through)
Holder for value and in good faith with no knowledge of dishonor, defenses, or claims, or that paper overdue; acquires rights superior to original owner.
Several defenses may be either universal or limited depending on the circumstances of a case.
What circumstances fall under Hybrid Defense?
Duress* Obtaining consent by means of threat-Duress nullifies a contract the defense is universal.
Incapacity other than Minority* The effect if the incapacity makes the instrument void.
Illegality* Specifies that instruments Based on such transactions are unenforceable
Alteration* Unauthorized change or completion of negotiable instrument to modify obligation of a party.
Signature of holder on back of instruments with any directions or limitations.
Payee or holder who signs back of instrument
Limited Defenses ( Personal Defenses)
Certain defenses are limited to being raise against ordinary holders and cannot be raised against holders in due course.
Limited Defenses include?
1. ordinary contract defenses
2. fraud that induced the execution of the
3. conditional delivery
5. payment or part payment
Person who executes a note
Instrument issued by business indicating payee may recieve
Document of payment, such as a check.
The act of transferring ownership.
Negotiable instrument payable to order
party to whom instrument is payable.
The demand for acceptance made upon the maker.
Liability without conditions for negotiable instrument that is due.
Unconditional written promise to pay sum of money to another.
Bond payable to specific person, whose name is recorded by issuers.
Unilateral act of holder giving up rights in the instruments or against a party to it.
A claim by the party being sues against the party sueing
Draft drawn by sellerin purchaser of goods
Universal Defenses Include?
3) Fraud as to the nature of the instrument or its essential terms
4) Discharge in bankruptcy proceedings.
Check with voucher attached
Types of Checks?
1) Cashier's Check*Check drawn by bank on it's funds in bank
2)Certified Check* Check accepted by bank's writing "Certified" on it.
3) Stale Check* Check presented more than six months after its date
Requirements for Negotiability
1) The instrument must be in writing and signed by the party executing it
2) The instrument must contain either an order to pay or a promise to pay
3) The order or the promise must be unconditional
4) The instrument must provide for the payment of a fixed amount of money
5) The instrument must be payable either on demand or at a fixed or definite time.
6) The instument must be payable to order of a payee or to bearer.
7) The payee ( unless the instrument is payable to bearer) and the drawee must be designated with resonable certainty.
Types of Drafts
Inland Draft* Draft drawn and payable in the U.S.
Foreign Draft* Draft drawn and payable outside the U.S.
Sight Draft* Draft payable on presentation of the holder
Time Draft* Draft payable a certain number of days or months after date or presentation.
Types of Indorsements
Blank Indorsement* Indorsement consisting of signature of indorser.
Restrictive Indorsement* Indorsement that restricts use of instrument.
Qualified Indorsement* Indorsement that limits liability of indorser.
Special Indorsement* Indorsement that designates particular person to whom payment is to be made.