BLAW

trade acceptance

draft that is drawn by a seller of goods ordering the buyer to pay a specified sum of money to the seller, usually at a stated time in the future. The buyer accepts the draft by signing the face of the draft, when it come due. On a trade acceptance, the seller is both the drawer and the payee.

blank indorsemnt

endorsement that specifies no particular indorsee and can consist of a mere signature. An order instrument that is indorsed in blank becomes a bearer instrument

holder in due course

holder who acquires a negotiable instrument for value; in good faith and without notice that the instrument is overdue, that it has been dishonored, that any person has a defense against it or a claim to it, or that the instrument contains unauthorized signature, alterations, or is so irregular or incomplete as to call into question its authenticity

trust indorsement

indorsement for the benefit of the indorser or a third person; also known as an agency indorsment; The indorsement results in legal title vesting in the original indorsee.

qualified indorsement

indorsement on a negotiable instrument in which the indorser disclaims any contract liability on the instrument; the notation "without recourse" is commonly used to create a qualified indorsement

special indorsement

indorsement on an instrument that indicates th specific person to whom the indorser intends to make the instrument payable; that is, it names the indorsee

dishonor

to refuse to accept payment or pay a draft/promissory note when properly presented or can not be obtained in prescribed time (insufficient funds)

negotiation

transfer of an instrument in such a way that the transferee (the person instrument is transferred to) becomes holder

fictitious payee

when an instrument is made out to someone that has no interest in it. It can be a person or firm that does not exist or identifiable person with no interest. Not treated as a forgery

promissory note

written promise made by one person (the maker) to pay a fixed sum of money to another person (the payee or a subsequent holder) on demand or on a specified date

personal defense

(limited defense) used to avoid payment to an ordinary holder of a negotiable instrument, but not an HDC

universal defense

(real defense)are valid against all holders, including HDC and holders through HDC 1.forgery 2.fraud in execution 3 material alteration

Reasons for personal defense

1.breach of contract or warranty 2.lack of consideration (such as I promise to pay you $1,000) or failure to deliver goods 3. fraud (unless HDC) 4. illegality 5. mental incapacity 6. discharge of payment or cancellation

presentment warranty

Any person who presents an instrument for payment or acceptance impliedly warrants that: 1. he is entitled to enforce the instrument or authorized to obtain payment or acceptance on behalf or person who is entitled 2. the instrument has not been altered 3. he has no knowledge that the signature of the drawere is unauthorized

transfer warranty

Implied warranties, made by any person who transfers an instrument for consideration to subsequent transferees and holders who take the instrument in good faith 1. transferor is entitled to enforce the instrument 2. all sigs are authorized and authenic 3. instr. hasn't been altered 4. instr. is not subject to a defense or claim of any party that can be asserted against the transferor 5. transferor has no knowledge of any insolvency proceedings against the maker, the drawer, acceptor of the instr

principal

In agency law, a person who agrees to have another, called the agent, act on his behalf.

signature

Under the UCC "any symbol executed or adopted by a party with a present intention to authenticate a writing

check

a draft drawn y a drawer ordering the drawee bank or financial institution to pay a certain amount of money to the holder on demand

CD

a note of a bank in which a bank acknowledges a receipt of money from a party and promises to repay the money, with interest, to the party on a certain date

bearer

a person in the possession of an instrument payable to bearer or indorsed in blank

acceptor

the person (the drawee) who accepts a draft and who agrees to be primarily responsible for its payment

acceleration clause

allows a payee or other holder of a time instrument to demand payment of the entire amount due, with interest, if a certain event occurs, such as a default in payment of an installment when due

draft

an instrument (such as a check) drawn on a drawee (such as a bank) that orders the drawee to pay a certain sum of money, usually to a third party (the payee), on demand or at a definite future time

restrictive indorsement

any indorsement on a negotiable instrument that requires the indorsee to comply with certain instructions regarding the funds involved. A restrictive indorsement does not prohibit the further negotiation of the instrument

bearer instrument

any instrument that is not payable to a specific person, including instruments payable to the bearer or to cash.

holder

any person in the possession of an instrument dranw, issued, or indorsed to him or her ,to his or her order, to bearer, or in blank

extension clause

clause in a time instrument that allows the instrument"s date of maturity to be extended into the future

bankers acceptance

negotiable instrument that is commonly used in international trade. A banker's acceptance is drawn by a creditor against the debtor, who pays the draft at maturity. The drawer creates a draft without desgnating a payee. The draft can pass through many parties hands before a bank (drawee) accepts it, transforming the draft into a banker's acceptance. Acceptances can be purchased and sold in a way similar to securities

order instrument

negotiable instrument that is payable "to the order of an identified person" or "to an identified person or order"

imposter

one who by his appearance or use of mail, internet, or telephone induces maker or drawer to issue instrument in the name of impersonated payee. Not considered forged and drawer may recover a portion of the loss from bank

maker

one who promises to pay a certain sum to the holder of a promissory note or certificate of deposit

payee

person to whom an instrument is made payable

agent

person who agrees to represent or acct for another, called prinicipal

accommodation party

person who signs an instrument for the purpose of lending his name as credit to another party on the instrument accommodation indorser 2, accommodation maker

indorser

person who transfers an instrument by signing (indorsing) it and delivering it to another person

antecedent claim

preexisting claim. In negotiable instruments law, taking an instrument in satisfaction of an antecedent claim is taking the instrument for value-that is, for valid consideration

shelter principle

principle that the holder of a negotiable instruemtn who cannot qualify as a holder in due course (HDC) but who derives his title thrugh an HDC , acquires the rights of an HDC

indorsement

signature placed on an instrument for the purpose of transferring one;s ownership rights in the instrument

negotiable instrument

signed writing that contains an unconditional promise or order to pay an exact sum of money, on demand or at an exact future time, to a specific person or order, or to bearer

presentment

the act of presenting an instrument to the party liable on the instrument to collect payment; presentment also occurs when a person presents an instrument to a drawee for acceptance

acceptance

the drawee's signed agreement to pay a draft when presented

issue

the first transfer, or delivery, of an instrument to a holder

drawer

the party that initiates a draft (writes a check, for example) thereby ordering the drawee to pay

drawee

the party that is ordered to pay a draft or check. With a check, a financial institution is always the drawee