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Article 3 of the UCC
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revised Article 3
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| Question | Answer |
|---|---|
| Article 3 of the UCC | A model code that establishes rules for the creation of, transfer of, enforcement of , and liability on negotiable instrument. |
| revised Article 3 | a revision of the UCClaw of negotiable instruments that reflects modern commercial practices |
| Draft | A three part instrument that is an unconditional written order by one party that orders the second party to pay money to the third |
| Drawer of draft | the person who writes an order for draft |
| drawee of a draft | the person who pays the their party |
| payee of a draft | the party who receives the money from the draft |
| time draft | a draft payable at a designated future date |
| sight draft | a draft payable on sight also called a demand draft |
| trade acceptance | A sight draft that arises when credit is extended ( by a seller to a buyer) with the sale of goods. The seller is both the drawer and the payee and the buyer is the drawee |
| check | A distinct form of draft drawn on a financial institution and payable on demand |
| drawer of a check | the checking account holder writer of check |
| drawee of check | the financial institution of the check being written from |
| payee of a check | the party to which the check is being made out too |
| Promissory Note | A two Party negotiable instrument that is an unconditional written promise by one party to pay money to another party |
| Maker of a note | the person who promises to pay (borrower) |
| Payee of the note | lender |
| time note | A not payable at a specific time |
| demand note | a note payable on demand |
| collateral | Security against a payment |
| Certificate of Deposit | A two party instrument that is a special from of note where a party gives money to a financial institution for a certain amount of time being paid back with interest |
| Maker of CD | the financial institution(barrowor) |
| Payee of a CD | the Party who the CD is made payable to |
| Permanency Requirement | A requirement of negotiable instruments that says they must be in a permanent state, such as written on ordinary paper |
| Portability Requirement | A requirement of negotiable instruments that says they must be able to be easily transported between areas |
| Signature requirement | A negotiable instrument must be signed by the drawer or maker |
| Unconditional promise or order to pay requirement | A requirement that says a negotiable instrument must contain either an unconditional promise to pay |
| order to pay | a drawer's unconditional order to a drawee to pay a payee |
| Promise to pay | a Maker's (barrorwer's )unconditional undertaking to repay a debt to a payee |
| unconditional | not conditional or limited. Promises to pay and orders to pay must be unconditional in order for them to be negotiable |
| fixed amount of money | A requirement that a negotiable instrument contain a promise or an order to pay a fixed amount of money |
| fixed amount requirement | a requirement of a negotiable instrument that ensures that the value of the instrument can be determined with certainty |
| demand instrument | an instrument payable on demand |
| time instrument | an instrument payable at a fixed date on or before the start date at a time readily ascertainable when the promise or order is issued |
| Nonnegotiable contract | a contract that fails to meet the requirements of negotiable instrument and no subject to UCC article 3 |
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