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4 Cards in this Set
- Front
- Back
- 3rd side (hint)
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Commercial Paper:
Written instruments for payment of money |
Fundamental Issues:
1) Person w/instrument wants to get paid 2) Person obligated on instrument does not want to pay 3) Person who paid the instrument now wants to recover money from the person paid or someone else |
Approach:
1) Identify type of paper (representation of money) 2) Identify parties 3) Determine if instrument is negotiable 4)Determine if instrument was properly negotiated 5) Determine if transferee is holder in due course 6) Determine P's cause of action such as contract, warranty, tort or not properly payable 7) Determine D's defenses 8) If D held liable, may D pass liability to another party? |
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First step in any analysis: Identify type of instrument involved, and parties
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Rules differ based on type of paper and parties
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NOTE
Promise to pay money: 2 party instrument (e.g., student loan) 1) Maker: obligor, promisor (person who promises to pay) 2) Payee: promisee (person entitled to payment) |
Certificate of Deposit: note issued by a financial institution
- Financial institution acknowledges receipt of money; and - Financial institution promises payee/depositor to repay the money |
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DRAFT
Order to pay money- 3 party instrument: 1) Drawer (person ordering payment) 2) Drawee (person to make the payment) ... in a check context, the Payor bank 3) Payee (person to receive the payment) Check (draft, w/2 additional reqs): 1) Financial institution is the drawee; 2) Payable on demand |
5 check types:
Ordinary check; certified check (ord. check that bank's agreed to pay); Cashier's check (drawer and drawee are same bank; person buying the check is the remitter); Teller's check (check drawn by one bank on another bank; person buying check is the remitter); Traveler's check (demand instrument requiring a counter-signature by a person whose specimen signature already appears on the instrument) |
Remotely-Created Item ("demand draft") --> internet transaction
Draft not signed by the drawer but created with the drawer's authority so that a third party can get paid from the drawer's acocunt at a bank. Third party is usually a seller in a ___ transaction or when you pay bills over phone by giving creditor your checking account number. |
