Commercial Paper Definitions

Flashcard maker : Tony Foust
Acceleration clause
Clause on an installment instrument under which all future payments become due if current payments are in default
Acceptance
The drawee’s signed agreement to pay the draft as presented
Assignment
Transfer of an instrument such that the party receiving it is an assignee but not a holder
Bank draft
A draft where one bank draws upon its funds in another bank
Bearer paper
An instrument that can be further negotiated by delivery alone, opposite of order paper
Blank indorsement
indorsement that does not specify to whom the instrument is payable
cashier’s check
Check drawn by a bank on itself
Certified check
Check that has been accepted by the drawee bank prior to payment of the check
Collateral note
Promissory note for which the maker provides personal property as collateral to satisfy the amount if not paid
conditional indorsement
indorsement on which the indorser attaches a condition to their liability
demand instrument
instrument that is payable on demand, opposite of time instrument
extension clause
clause on an instrument that allows an extension of the time when payment it due
float
the time period between issue and when the check is charged to the account
forgery
unauthorized signature
good faith
honesty in fact, conduct, or in the transaction
indorsement
signature put on an indorsement for the purpose of transferring ownership
installment note
note that is due in installments rather than a lump sum
instrument
a negotiable instrument
issue
first delivery of an instrument by the maker or drawer
negotiation
transfer of possession, whether voluntary or involuntary to another person
order
direction to some identified party to pay
order paper
instrument that must be transferred by indorsement of a named party, opposite of bearer paper
personal defense
legal excuse for not paying a negotiable instrument that is valid against both holders and holders in due course
real estate mortgage note
note for which real property is given as the collateral to satisfy the amount of the note if not paid
sight draft
draft payable on acceptance
special indorsement
indorsement that specifies to whom the instrument is payable
stale check
check that is presented for payment more than six months after being issued
time instrument
instrument payable at some future date
trade acceptance
time draft by the seller of goods on the buyer of goods and for the purchase price of goods
unauthorized completion
completion of an incomplete instrument without authorization for the party
value
means that consideration must have actually been given, promise to do something later it not one

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