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