Term |
Definition |
Payee |
the person whom the note is made payable; the person specified by the drawer as entitled to receive payment |
Negotiation (3-201) |
a transfer of possession, whether voluntary or involuntary, of an instrument by a person other than the issuer to a person who thereby becomes the beholder;
**Requires: transfer of possession and its indorsement by the holder |
Maker (3-103) |
a person who signs or is identified in a note as the person undertaking to pay; the person who issues the instrument and promises to pay; this person creates a note–a promise
|
Check (3-104) |
(i) a draft other than a documentary draft, payable on demand and drawn on a bank or (ii) a cashier's check or teller's check.
|
Holder (1-201) |
a person (1) in possession of bearer paper or order paper (2) with the proper indorsement (if it is payable to them) |
Indorsement (3-204) |
a signature, other than that of a maker, drawer, or acceptor, that alone or accompanied by other words is made on an instrument for the purpose of (i) negotiating the instrument (ii) restricting payment, or (iii) incurring indorser's liability |
Intermediary Bank (4-105) |
a bank to which an item is transferred in course of collection except the depository or payor bank |
Certificate of Deposit (3-104) |
an instrument containing an acknowledgement by a bank that a sum of money has been received by the bank and a promise by the bank to repay the sum of money; a note of the bank |
Draft |
an order or a written instruction to pay, signed by the person giving the instruction; an authorization to pay is not an order unless the person authorized is also instructed to pay |
Bearer Paper |
a negotiable instrument which is payable to whoever has possession |
Drawer (3-103) |
a person who signs or is identified in a draft as a person ordering payment;
** this person creates a draft |
Bearer |
the holder of the (bearer) paper, not a specific person |
Issue (3-105) |
the first delivery of an instrument by the maker or drawer, whether to a holder or non holder, for the purpose of giving rights on the instrument to any person |
Depository Bank (4-105) |
the first bank to take an item even though it is also the payor bank, unless it is presented for immediate payment over the counter |
Promissory Note |
a two party instrument: the first party–the maker–promises to pay to the order of the 2nd party–the payee |
Drawee (3-103) |
a person ordered in a draft to make the payment |
Person Entitled to Enforce Payment (3-301) |
(I) the holder of the instrument, (ii) a n0n – holder in possession of the instrument who has the rights of a holder, (iii) or a person not in possession of the instrument who is entitled to enforce the instrument |
Special Indorsement (3-103) |
an indorsement made by the holder of the instrument, whether payable to an identified person or payable to bearer, and that indentifies a person to whom it makes the instrument payable;
**May only be negotiated by indorsement of that person |
Holder in Due Course |
a holder who pays value and takes good faith without notice of any claims or defenses |
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