Introduction

Question 1

Approach for Commercial Paper Question

Answer 1

1. Identify the type of paper
2. Identify the Parties
3. Determine if instrument is negotiable
4. Determine if instrument was properly negotiated
5. Determine if transferee is holder in due course
6. Determine if P’s cause(s) of action are payable
7. Determine any defenses
8. If D liable, may liability pass to anyone else?

Question 2

Note

Answer 2

Promise to pay (2 party instrument)
Maker- persn to pay
Payee- person entitled to payment

Certificate of deposit- not issued by financial institution

• financial institution acknowledges receipt of money and
• financial institution promises to pay the payee

Question 3

Draft

Answer 3

An order to pay money- 3 party
Drawer- person ordering payment
Drawee- Person to make payment
Payee- person to receive payment

Question 4

Check

Answer 4

Financial institution is the drawee and it is payable on demand

Question 5

Types of Checks

Answer 5

Ordinary Check
Certified Check- ordinary check which bank has accepted
Cashier’s Check- drawer and drawee are same bank; person buying the check is the remitter
Teller’s Check- check drawn by one bank on another bank; person buying check is remitter
Traveler’s Check- demand instrument requiring countersignature by a person whose specimen signature already appears on instrument

Question 6

What is Commercial Paper

Answer 6

Written instrument for payment of money