Negotiable Instrument Terminology

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Payee

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The third party to whom payment is made

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Negotiation

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3-201 “Negotiation means a transfer of possession, whether voluntary or involuntary, of an instrument by a person other than the issuer to a person who thereby becomes its holder.

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Maker

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Means a person who signs or is identified in anote as a person undertaking to pay.

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Check

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A draft written on a bank and payable on demandis called a check 3-104 (f) (i)

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Holder

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1-201 (b) (21)- the person in possession of a negotiableinstrument that is payable either to bearer or to an identified person that isthe person in possession.

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Indorsement

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3-204 (a) means a signature, other than that of a signer as maker, drawer, or accepter, that alone or accompanied by other words is made on an instrument for the purposes of (i)negotiating the instrument, (ii) restricting payment of the instrument (iii)incurring indorser’s liability on the instrument.

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Holderin Due Course

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means holder took the instrument (i)for value (ii) in good faith (iii) without notice that the instrument isoverdue or has been dishonored or there is uncured default with respect topayment (iv) without notice that the instrument contains unauthorized signatureor has been altered (v) without notice of any claim to the instrument (vi)without notice that any party has a defense or claim in recoupment.

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Cashier’sCheck

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a draft with respect to which the drawer and drawee are the same bank

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Presentment

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a demand made by or on behalf of aperson entitled to enforce an instrument (i) to pay the instrument made to thedrawee or a party obliged to pay the instrument or, in the case of a note oraccepted draft payable at a bank, to the bank, or (ii) to accept a draft madeto the drawee.

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DepositoryBank

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4-105 The first bank to take anitem even though it is also the payer bank

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Payableon Demand

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- a promise or order is P.O.D if it (i) states that it is payable on demand or at sight, or otherwise indicates that it is payable on demand or at sight, or is payable at the will of the holder (ii) or dos not state anytime of payment.

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PromissoryNote

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maker promises to pay a payee

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BearerPaper

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3-109 (i) states that it is payable to bearer orto the order of bearer (ii) does not state a payee (iii) states it is payableto or to the order of cash or indicates that it is not payable to an identifiedperson

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Drawer

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A person who signs or is identified in a draftas a person ordering payment.

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Bearer

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The person whom payment is promised

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PersonEntitled to Enforce

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3-301 means (i) the holder of the instrument, (ii) a non-holder inpossession of the instrument who has the rights of a holder, or (iii) a personnot in possession of the instrument who is entitled to enforce the instrumentpursuant to 3-309 or 3-418 (d)

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AnomalousIndorsement

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an indorsement made by a person who is not theholder of the instrument. And does not affect the manner in which the instrumentmay be negotiated

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Draft

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drawer ordering drawee to pay payee

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Drawee

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a person ordered in a draft to make payment.

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Issue

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first delivery of an instrument by the maker or drawer, whether to a holder or none-holder, for the purpose of giving rights on the instrument to any person.