1 Time Drafts and Sight Drafts A time draft is a draft payable at a definite

1 time drafts and sight drafts a time draft is a

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1. Time Drafts and Sight Drafts A  time draft  is a draft payable at a definite future time.  A  sight  (or demand)  draft  is payable on sight. 2. Trade Acceptances trade acceptance  is a draft often used in sales of goods.  The seller is both the drawer and the payee, and the draft orders the buyer to pay a specified sum of money to the seller, usually at a stated time in the future. 3. Checks check  is a draft, drawn on a bank and payable on demand.
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CHAPTER 24:  THE FUNCTION AND CREATION OF NEGOTIABLE INSTRUMENTS           223 B. P ROMISSORY  N OTES   AND  CD S  (P ROMISES   TO  P AY ) promissory note   (or simply   note ) is a written promise between two parties.   Notes are used in a number of credit transactions and often bear the name of the transaction involved. A  certificate of deposit  (CD) is a type of note issued by a bank. A NSWER   TO  V IDEO  Q UESTION  L TR . A Who is the maker of the promissory note discussed in the video?  A promissory note is a promise made by one person (the maker of the promise) to another (the payee).  In the video, the note is payable to Onyx Advertising.  Thus, Onyx is the payee, and Vexnet (the party who will owe money upon the completion of advertising campaign) is the maker. BASIC TYPES OF NEGOTIABLE INSTRUMENTS INSTRUMENTS CHARACTERISTICS PARTIES Orders to Pay Draft An order by one person to another  person or to bearer. Drawer—the person who signs or  makes the order to pay. Check A draft drawn on a bank and pay- able on demand. a   Checks include: a.  Cashier’s check—a draft in  which the drawer and drawee  are the same bank or branches  of the same bank. b. Traveler’s check—an instrument drawn or payable at or through  a bank that requires, as a con- dition to payment, a counter- signature by a person whose  signature appears on the  instrument. Drawee—the person to whom the  order to pay is made. Payee—the person to whom pay- ment is ordered. Promises to Pay Promissory note A promise by one party to pay  money to another party or to  bearer. Maker—the person who promises to pay. Payee—the person to whom the  promise is made. Certificate of deposit (CD) A note made by a bank acknowl-
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224           INSTRUCTOR’S MANUAL TO ACCOMPANY  BUSINESS LAW , ELEVENTH EDITION edging a deposit of funds made  payable to the  holder  of the note. b    a. Under the UCC, “banks” include savings banks, savings and loan associations, credit unions, and trust companies.
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