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Negotiable Instruments

commercial paper

instruments that contain a promise to pay money. (ie - checks)

negotiable instruments

a commercial paper that is fully transferable

notes

a written promise to pay a specific amount of money

drafts

an instrument used to show someone is requiring someone else to pay money. a check is the most common.

maker

the issuer of a promissory note

payee

the person receiving the money

drawer

the person who issues the draft

drawee

the person who pays the draft (ie - the bank)

issuer

the maker of the promissory note

holder in due course

someone who has given value for an instrument in good faith

negotiation

transfer of an instrument by someone other than the issuer. to be negotiated, order paper must be indorsed and then delivered to the transferee.

indorsement

the signature of the payee

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