Comm. Law Vocab 1

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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