Business Law Commercial Paper Chapter 29
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Unconditional written orders or promises to pay money
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Commercial Paper
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An unconditional written order by one person that directs another person to pay money to a third party.
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Draft or Bill of Exchange
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The person who executes or "draws" the draft or orders the payment
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Drawer
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The person ordered to pay the draft.
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Drawee
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The party to whom commercial paper is made payable.
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Payee
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When a draft is payable on demand or "at sight." Drawee is expected to pay immediately upon the draft being presented for payment.
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Sight Draft
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When a draft is payable on a set date, at the end of a specific period after sight or at the end of a specified period after the date of the draft.
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Time Draft
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Drawee's promise to pay the draft when due.
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Acceptance
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Type of draft by which a bank depositor orders a bank to pay money.
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Check
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Pay each check as long as sufficient funds remain--pay when due.
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Honor
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Refuse to pay a draft--most often insufficient funds.
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Dishonor
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Drawer instructs bank not to pay a check. Most often in a case of a lost or stolen check.
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Stop-Payment Order
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Unconditional written promise by a person to pay money according to the payee's order.
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Promissory Note
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The person who executes a promissory note.
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Maker
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When personal property is offered as security and indicated on the note.
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Collateral Note
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When real property is the security for payment.
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Mortgage Note
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Identifies the banks written acknowledgement of the receipt of money, along with an unconditional promise to repay it at defined future time. (CD)
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Certificate of Deposit
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Laws governing the legitimacy and use of commercial paper.
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Uniform Commercial Code
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Land, buildings, and those things permanently affixed. Often called realty.
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Real Property
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Rights and interests in anything that is not real property. Can be tangible or intangible.
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Personal Property
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A personal check that has been accepted by a bank before payment.
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Certified Check
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A draft drawn by a bank on funds that it has on deposit at another bank.
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Tellers Check
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A check that the bank draws on itself.
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Cashiers Check
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A draft issued by the post office, or certified institution for use in paying and transferring funds.
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Money Order
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A draft drawn by a well-known financial institution on itself or agent.
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Travelers Check
