Business Law Test 3

Front 1

a signed writing (or record) that contains an unconditional promise or order to pay an exact amount, either on demand or at a specific future time

Back 1

negotiable instrument

Front 2

payable immediately after it is issued and thereafter for a reasonable period of time

Back 2

Demand instrument

Front 3

the first delivery of an instrument by the maker or drawer for the purpose of giving rights on the instrument to any person

Back 3

Issue

Front 4

payable at a future date

Back 4

time instrument

Front 5

unconditional written order that involves three parties

Back 5

draft

Front 6

party creating the draft

Back 6

drawer

Front 7

the party who gets ordered to pay money to a third party

Back 7

Drawee

Front 8

third party in a draft who gets the money

Back 8

payee

Front 9

the drawee's written promise to pay the draft when it comes due

Back 9

Acceptance

Front 10

is a written promise made by one person to pay another a specified sum

Back 10

Note

Front 11

person who makes promise in a note

Back 11

Maker

Front 12

name the 5 criteria to be article 3 instrument

Back 12

1) written 2) signed 3) instrumetn contains unconditional promise/order to pay a sum certain of money 4)payable on demand or at a time certain 5( payable to order of person or the bearer

Front 13

name characteristics for a instrument to be in writing?

Back 13

permanence, portability (freely transferable)

Front 14

for an instrument to be negotiable it must be signed by who?

Back 14

maker (note)
Drawer(draft)

Front 15

almost any symbol executed or adopted by a person with the intent to authenticate a written or electronic document

Back 15

signature

Front 16

cannot be conditioned on the occurrence or nonoccurrence of some other event or agreement

Back 16

unconditional

Front 17

1) an express condition to payment 2) that the promise or order is subject to or governed by another writing 3) that the rights or obligations with respect to promise/order are stated in another writing or record

Back 17

how to make conditional

Front 18

the amount owed must be ascertainable from the face of the instrument

Back 18

fixed amount/ sum certain

Front 19

a medium of exchange authorized or adopted by a domestic or foreign government as part of its currency

Back 19

money

Front 20

a drawee who has accepted, or agreed to pay, an instrument when it is presented alter for payment

Back 20

acceptor

Front 21

demand made by or on behalf of a person entitled to enforce an instrument to either pay or accept the instrument

Back 21

presentment

Front 22

payable on 1) specified date 2) within a definite period of time after being presented for payment 3) on a date or time readily ascertainable at the time the promise or order is issued

Back 22

payable at a definite time

Front 23

allows a payee or other holder of a tie instrument to demand payment of the entire amount due, with interest, if a certain event occurs, such as a default in payment of an installment when due.

Back 23

acceleration clause

Front 24

person in possession of a negotiable instrument that is payable either to the bearer or to an identified person that is the person in possession

Back 24

holder

Front 25

allows the date of maturity to be extended into the future

Back 25

extension clause

Front 26

an instrument that is payable 1) to the order of an identified person. or 2) to an identified person or order

Back 26

Order Instrument

Front 27

an instrument that does not designate a specific payee

Back 27

bearer instrument

Front 28

refers to a person in possession of an instrument that is payable to bearer or indorsed in blank

Back 28

bearer

Front 29

transfer of an instrument in such form that the transferee becomes a holder

Back 29

negotiation

Front 30

signature with or without additional words or statements

Back 30

indorsement

Front 31

a person who transfers a note or a draft by signing it and delivering it to another person

Back 31

indorser

Front 32

the person to whom the check is indorsed and delivered

Back 32

indorsee

Front 33

does not specify a particular indorsee and can consist of a mere signature

Back 33

blank indorsement

Front 34

contains the signature of the indorser and identifies the person to whom the indorser intends to make the instrument payable; that is, it names the indorsee

Back 34

special indorsement

Front 35

an indorser who does not wish to be liable on a instrument can use this indorsement to disclaim liability

Back 35

qualified indorsement

Front 36

requires the indorsee to comply with certain instructons regarding the funds involved but does not prohibit further negotiation of the instrument

Back 36

restrictive indorsement

Front 37

indorsements to persons who are to hold or use the funds for the benefit of the indorser or a third party

Back 37

trust indorsements

Front 38

holder who, by meeting certain aquistion requirements takes an instrument free of most of the defenses and claims that could be asserted against the transferor,

Back 38

Holder in due course HDC or h.d.c.

Front 39

What are the criteria for holder in due course

Back 39

1) taken for value 2)in good faith 3)without notice that it is defective

Front 40

preexisting obligation

Back 40

antecedent claim

Front 41

honesty in fact an the observance of reasonable commercial standards of fair dealings.

Back 41

good faith

Front 42

transfer of an instrument ,whether or not the transfer is a negotiation, vests in the transferee any right of the transferor to enforce the instrument, including any right as a holder in due course, but the transferee cannot acquire rights of a older in due course by a transfer, directly or indirectly, from ma holder in due course inf the transferee engaged in fraud or illegality affecting the instrument.

Back 42

shelter principle

Front 43

party that is primarily responsible for paying the instrument refuses to do so

Back 43

dishonors

Front 44

one who signs an instrument for the purpose of lending his or her name as credit to another party on the instrument

Back 44

accommodation party

Front 45

a person who agrees to represent or act for another

Back 45

agent

Front 46

the person who is being acted for

Back 46

principal

Front 47

one who, by her or his personal apperance or use of the mails, internet, telephone, or other communication, induces a maker or drawer to issue an instrument i the name of an impersonated payee

Back 47

imposter

Front 48

when a person causes an instrument to be issued to a payee who will have no interest in the instrument

Back 48

fictitious payee

Front 49

1) the transferor is entitled to enforce the instrument 2) all signatures are authentic and authorized 3) the instrument has not been altered 4) the instrument is not subject to a defense or claim of any party that can be asserted against the transferor 5) the transferee has no knowledge of any bankruptcy proceedings against the maker, the acceptor, or the drawer of the instrument

Back 49

transfer warranties

Front 50

1) the person obtaining payment or acceptance is entitled to enforce the instrument or is authorized to obtain payment or acceptance on behalf of a person who is entitled to enforce the instrument 2) the instrument has not been altered 3) the person obtaining payment or acceptance has no knowledge that the signature of the drawer of the instrument in unauthorized

Back 50

presentment warranties

Front 51

valid against all holders, including HDC and holders through HDC's includes forgery, fraud in the executions, material alteration, discharge in bankruptcy, minority (children), illegality, mental incapacity, extreme duress

Back 51

Universal defenses (REAL)

Front 52

used to avoid payment to an ordinary holder of a negotiable instrument, but not a HDC examples: breach of contract/warranty, lack or failure of consideration, fraud in inducement (ordinary fraud), illegality, mental incapacity, discharge by previous payment, unauthorized completion of an incomplete instrument, nondelivery of the instrument, ordinary duress or undue influence rendering the contract voidable.

Back 52

Personal defenses

Front 53

special type of draft that is drawn on a bank, ordering the bank to pay a fixed amount of money on demand

Back 53

check

Front 54

pay the item from check and charge customer's account

Back 54

overdraft

Front 55

check that is presented for payment more than six months form it date

Back 55

stale check

Front 56

order by a customer to her or his bank not to pay a certain check

Back 56

stop-payment order

Front 57

first bank who receive a check for payment

Back 57

depository bank

Front 58

the bank on which a check is drawn

Back 58

payor bank

Front 59

any bank except the payor bank that handles a check during some phase of the collection process

Back 59

collecting bank

Front 60

any bank except the payor bank or the depositary bank to which an item is transferred in the course of this collection process

Back 60

intermediary bank