Beruflich Dokumente
Kultur Dokumente
31-1 Copyright 2013 by The McGraw-Hill Companies, Inc. All rights reserved.
P A R T
Commercial Paper
Negotiable Instruments Negotiation and Holder in Due Course Liability of Parties Checks and Electronic Transfers
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C H A P
E R
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Negotiable Instruments
Lee Iacocca, Chairman and CEO of Chrysler Corporation, quoted in the New York Times (1983)
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Learning Objectives
Explain advantages of commercial paper and the requirements to qualify as a negotiable instrument Identify different types of negotiable instruments and the key features Apply UCC rules for situations when the terms of an instrument are ambiguous or inherently conflicting
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Overview
Commercial paper refers to checks, promissory notes, & certificates of deposit
Basically a contract for payment of money
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Negotiability
Purpose of negotiability is to decrease risk of transfer (assignment of commercial paper contract) so the instrument will be accepted as a substitute for money Thus, (1) the contract for payment of money must meet requirements for negotiability, and (2) the person who acquires instrument must qualify as a holder in due course
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A holder in due course takes instrument free of all defenses and claims except those that concern its validity
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An instrument payable to bearer or to cash (bearer paper) may be negotiated or transferred by delivery of possession without indorsement [3 201(b)]
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Thought Questions
Do you use negotiable instruments? How do you do your banking?
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