1. Introduction to Negotiable Instruments1. Introduction to Negotiable Instruments.doc

NEGOTIABLE INSTRUMENTS ( A negotiable instrument is a (1) written instrument, (2) signed by the maker or drawer of the instrument, (3) that contains an unconditional promise or order to pay (4) a fixed amount of money (with or without interest in a specified amount or at a specified rate) (5) on demand or at an exact future time (6) to a specific person, or to order, or to its bearer. TYPES OF NEGOTIABLE INSTRUMENTS ( Draft: An unconditional order to pay (e.g., a check) by which the party creating the draft (the drawer) orders another party (the drawee), typically a bank, to pay money to a third party (the payee). ( Time Draft: A draft payable at a time certain. ( Sight Draft: A draft payable on presentment. ( Trade Acceptance: A draft that is drawn by a seller of goods ordering the buyer to pay a specified sum of money to the seller, usually at a specified future time. The buyer accepts the draft by signing and returning it to the seller. ( Promissory Note: A written promise made by one person (the maker) to pay a fixed sum of money to another person (the payee) on demand or at a specified future time. ( Certificate of Deposit: A note by which a bank or similar financial institution acknowledges the receipt of money from a party and promises to repay the money, plus interest, to the party or the party’s designee, on a certain date. NEGOTIABILITY: WRITING SIGNATURE ( Written Form: A negotiable instrument must be (1) written on material that lends itself to permanence, and (2) portable. ( Signature: Any symbol (1) made manually or by means of a device or machine, (2) using any name, including a trade or assumed name, word, mark, or symbol (3) executed or adopted by the signer with a present intention to authenticate a writing. ( A negotiable instrument must be signed by (a) the maker, or her authorized agent, if the instrument is a note or a certificate of deposit, or (b) the drawer, or his authorized agent, if the