Final Review - Final Review 1. A negotiable instrument is a...

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Final Review 1. A negotiable instrument is a special form of contract that satisfies the requirement est. by article 3 of the UCC. Also called commercial paper. It is also important for the conduct of business and personal affairs. The main function of them is to make it easier for transactions and serve as a sub for money, act as credit devices, or act as record-keeping devices. 2. There are four main types of negotiable instruments. a. Drafts – Which is a 3 party instrument, is an unconditional written order by one party (the drawer) that orders a second party (the drawee) to pay money to a 3 rd party (the payee). b. Checks – A distinct form of draft on a financial institution and payable on demand. Has to be backed by a financial institution. c. Promissory Note – A two-party instrument that is an unconditional written promise by one party to pay money to another party. Promissory notes usually arise when one party borrows money from another party. The note is evidence of (1) the extension of credit and (2) the borrower’s promise to repay
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Final Review - Final Review 1. A negotiable instrument is a...

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