Term
| Two functions of commercial paper |
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Definition
1. substitutes for cash
2. used for credit |
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Term
| Buyer takes title of _________. |
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Definition
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Term
| Public policy allows a thief to convey title to _______ and _______ to an innocent purchaser. |
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Definition
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Term
| Two types of commercial paper |
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Definition
1. Notes (2-party)
2. Drafts (3-party) |
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Term
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Definition
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Term
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Definition
| Instrument where a MAKER promises to pay PAYEE. |
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Term
| There can be more than ____ parties to a note, but there are only two _____ involved, which are _________ and ________. |
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Definition
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Term
Liability of a single maker to payee
Liability of numerous makers to payee |
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Definition
Primary liability (to pay payee full amount)
Joint and several primary liability (for full amount) |
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Term
| If multiple makers fail to pay payee on a promissory note, who can payee sue? |
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Definition
| Can sue one, other, or all |
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Term
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Definition
1. drawer
2. drawee
3. payee |
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Term
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Definition
| Instrument where DRAWER orders DRAWEE to pay PAYEE. |
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Term
| When the drawee agrees to pay the payee, the drawee becomes a(n) _________. |
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Definition
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Term
| If drawee refuses to pay payee, it's called ______. |
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Definition
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Term
| If the drawee refuses to pay the payee upon the request of the drawer, what can the payee do? |
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Definition
| Payee can go to drawer and demand money ("secondary" liability) |
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Term
| Liability of drawer to payee |
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Definition
Secondary liability, which means that drawer will only have to pay payee if:
1. drawee refuses to pay (dishonors) or
2. condition of draft |
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Term
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Definition
Drawer is only liable to payee if:
1. Drawee dishonors (refuses to pay payee) or
2. Condition that drawer will pay |
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Term
| Difference between liability of makers and drawers |
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Definition
Makers have PRIMARY liability (1st person payee goes to)
Drawers have SECONDARY liability (2nd person payee goes to) |
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Term
| Anyone who signs a commercial paper (either a note or a draft) other than the maker, drawer, or acceptor |
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Definition
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Term
| Indorser can be either ________ or a __________. |
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Definition
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Term
| Special Indorsement vs. Blank Indorsement |
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Definition
Special = identifies the person to whom payable
Blank = doesn't identify the person to whom payable |
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Term
| Restrictive Indorsement vs. Unrestrictive Indorsement |
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Definition
Restrictive = limits payment
Unrestrictive = doesn't limit payment |
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Term
| Qualified Indorsement vs. Unqualified Indorsement |
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Definition
Qualified = negates secondary liability ("without recourse")
Unqualified = doesn't negate secondary liability |
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Term
| Words on indorsement that makes it a qualified endorsement (i.e. negates secondary liability) |
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Definition
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Term
| Anomalous Indorsement vs. Nonanomalous Indorsement |
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Definition
Anomalous = indiates accommodation
Nonanomalous = doesn't indicate accommodation |
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Term
| _______ indorsement identifies that person to whom the paper is payable |
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Definition
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Term
| _______ endorsement does not identify the person to whom the paper is payable. |
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Definition
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Term
| _______ indorsement limits the payment |
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Definition
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Term
| ________ indorsement does not restrict the amount of payment |
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Definition
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Term
| _________ indorsement does not negate secondary liability |
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Definition
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Term
| _______ indorsement negates secondary liability |
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Definition
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Term
| The term "without recourse" on an indorsement indicates _______, which has the effect of _________. |
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Definition
Qualified indorsement
Negates secondary liability (liability of drawer or indorser) |
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Term
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Definition
1. Accommodation parties are liable in the capacity in which they sign.
2. Surety has the right of recourse against an accommodated party. |
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Term
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Definition
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Term
| 4 qualities of all indorsements |
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Definition
1. WHO paper is payable to (special or blank)
2. LIMIT on payment (restrictive or unrestrictive)
3. SECONDARY LIABILITY OR NOT (qualified or unqualified)
4. ACCOMMODATION OR NOT (anomalous or nonanomalous) |
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