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- #Chapter 31 negotiable instruments quiz business law how to#
- #Chapter 31 negotiable instruments quiz business law code#
Article 3, Part 3 of the Uniform Commercial Code explains the law regarding the enforceability of negotiable instruments and Article 3 part 4 explains the liability of the parties.Īnyone with an interest in the negotiable instrument, such as a bank, can enforce its payment when payment becomes due.
#Chapter 31 negotiable instruments quiz business law how to#
Given the importance of negotiable instruments, all parties should understand how to enforce a negotiable instrument and make sure your rights are protected. Without the laws in place that protect both the payor and payee of negotiable instruments, our economy would not be able to function the way that it currently does. On a smaller scale, you can also pay your electric company bill with a check instead of mailing cash. For example, a business can mail a check for payment rather than sending a large amount of money. Negotiable instruments are critical to our economy because they allow you to do business and to be certain you'll receive money for services or goods without actually transferring any cash. or different laws govern the use of these instruments. For example, physical paper and coin money, fund transfers, and investment securities are not negotiable instruments. There are several types of common financial documents that are not negotiable instruments and, therefore, not subject to the same laws and regulations. Nothing else is required of the parties other than the transfer of money.Payment is made on demand or at a certain time.The promise or order to pay is unconditional.Generally, a written instrument must meet the following conditions to become a negotiable instrument: A note is a promise of payment such as a certificate of deposit or promissory note. A draft is a written order for payment and includes items such as personal, business, and cashier checks. Notes and drafts are two types of common negotiable instruments. Negotiable instruments are written documents that promise to pay an exact amount of money. The UCC is not a federal law it is a set of proposed uniform laws that states adopt for consistency across jurisdictions.
#Chapter 31 negotiable instruments quiz business law code#
Articles 3 and 4 of the Uniform Commercial Code (UCC) have been enacted into law by every state and provides the rules for negotiable instruments. Have you ever wondered what law applies when you write a check or purchase a certificate of deposit (CD) from a bank? It involves state law and the Uniform Commercial Code.Ĭhecks and certificates of deposit are types of negotiable instruments.