Basics
This is a signed, written document that promises or orders payment of a fixed amount of money.
negotiable instrument
A check is considered this type of negotiable instrument.
What is a draft
The party who signs a check and orders payment.
the drawer
A signature only, without instructions or restrictions.
a blank endorsement
A holder in due course must take the instrument for this, meaning payment or something of value
value
The law that primarily governs negotiable instruments in the U.S.
Uniform Commercial Code (UCC)
This instrument contains an unconditional promise to pay.
a promissory note
The party to whom a check is payable.
the payee
An endorsement that limits how the instrument can be used
a restrictive endorsement
A holder in due course must take the instrument in this manner, showing honesty in fact
good faith
Which of the following is a negotiable instrument?
a) Credit card
b) Library card
c) Promissory note
d) Lease agreement
C. Promissory note
A certificate issued by a bank acknowledging a deposit and promising repayment.
a certificate of deposit
The bank or party ordered to pay a check
the drawee
This type of endorsement specifies a new person to whom the instrument is payable
special endorsement
The holder must take the instrument without knowledge of this, such as fraud or forgery
defects or claims
This requirement means a negotiable instrument cannot be subject to any conditions
an unconditional promise or order
This is a time draft accepted by a bank, used often in international trade.
banker’s acceptance
In a promissory note, this is the party making the promise to pay.
the maker
This endorsement disclaims liability for future holders.
a qualified endorsement?
This status gives a holder protection from most defenses that could be used against the original payee.
holder in due course status
To be negotiable, the instrument must be payable to order or to _____.
bearer
A type of check guaranteed by the issuing bank and signed by a bank officer
certified check
In a promissory note, this is the party who receives the payment.
payee
The process by which an instrument is transferred to give the new holder rights.
negotiation
A holder in due course is not subject to these defenses, like breach of contract.
personal defenses?