Chapter 14 pt1
Understanding Negotiable Instruments Quiz
Test your knowledge on negotiable instruments with this engaging quiz! Covering various aspects including drafts, checks, promissory notes, and more, this quiz is designed to enhance your understanding of commercial paper under the Uniform Commercial Code (UCC).
Whether you're a student, a lawyer, or someone interested in financial instruments, this quiz will help you:
- Learn key concepts
- Understand legal definitions
- Assess your knowledge of financial transactions
Negotiable Instruments
To qualify as a negotiable instrument (commercial paper), the document must meet certain requirements established by Revised Article 3 (Negotiable Instruments) of the Uniform Commercial Code (UCC)
Most purchases by businesses and many individuals are made by negotiable instruments instead of cash
A draft is a three-party instrument that is an unconditional written order by one party that orders the second party to pay money to a third party
Article 4 of the UCC establishes the rules and principles that regulate bank deposit and collection procedures
Negotiable instruments serve the following fun
Substitute for money
Credit device
Record-keeping device
Record-keeping
Credit cards
Halloween
Drafts
A draft is a three-party instrument that is an unconditional written order by one party that orders the second party to pay money to a third party
To qualify as a negotiable instrument (commercial paper), the document must meet certain requirements established by Revised Article 3 (Negotiable Instruments) of the Uniform Commercial Code (UCC)
Most purchases by businesses and many individuals are made by negotiable instruments instead of cash
Checks
A distinct form of draft drawn on a financial institution and payable on demand
A draft is a three-party instrument that is an unconditional written order by one party that orders the second party to pay money to a third party
To qualify as a negotiable instrument (commercial paper), the document must meet certain requirements established by Revised Article 3 (Negotiable Instruments) of the Uniform Commercial Code (UCC)
Promissory Notes
A two-party negotiable instrument that is an unconditional written promise by one party to pay money to another party
A distinct form of draft drawn on a financial institution and payable on demand
A draft is a three-party instrument that is an unconditional written order by one party that orders the second party to pay money to a third party
Certificates of Deposit
A two-party negotiable instrument that is a special form of note created when a depositor deposits money at a financial institution in exchange for the institution’s promise to pay back the amount of the deposit plus an agreed-upon rate of interest upon the expiration of a set time period agreed upon by the parties
A two-party negotiable instrument that is an unconditional written promise by one party to pay money to another party
A distinct form of draft drawn on a financial institution and payable on demand
A draft is a three-party instrument that is an unconditional written order by one party that orders the second party to pay money to a third party
Indorsement
The signature (and other directions) written by or on behalf of the holder somewhere on the instrument
A two-party negotiable instrument that is an unconditional written promise by one party to pay money to another party
A distinct form of draft drawn on a financial institution and payable on demand
Holder
A person who is in possession of a negotiable instrument that is drawn, issued, or indorsed to him or his order, or to bearer, or in blank
A person who takes a negotiable instrument for value, in good faith, and without notice that it is defective or is overdue
The signature (and other directions) written by or on behalf of the holder somewhere on the instrument
Holder in Due Course
A person who takes a negotiable instrument for value, in good faith, and without notice that it is defective or is overdue
A person who is in possession of a negotiable instrument that is drawn, issued, or indorsed to him or his order, or to bearer, or in blank
The signature (and other directions) written by or on behalf of the holder somewhere on the instrument
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