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| a written order to pay a sum of money, either to a specified party or to the person who holds it. They include drafts, bills of exchange, and some promissory notes, and checks. |
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In the broadest sense, almost any agreed upon medium of exchange could be considered a negotiable instrument.
In day-to-day banking, a negotiable instrument usually refers to checks, bills of exchange, and some types of promissory notes. |
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| payable to the bearer, or it may be an instrument with highly specified terms. |
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| the number of the check being written. |
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| the date the check is written. |
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| spaces aloud for the amount of check to entered in both numbers and words. |
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| valid signature of the maker of the check. |
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| optional entry to note the checks purpose. |
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| show the check number, the bank routing number, and the account number. |
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| an order signed by one party that is addressed to another party directing the drawee to pay someone the amount indicated on the draft. |
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a negotiable and unconditional written order, such as a check, draft, or trade agreement, addressed by one party to another.
The receiver of the bill must pay the specified sum or deliver specified goods on demand or at a specified time.
Bills of Exchange are a common form of internationally negotiable instruments. |
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| a written promise to pay at a fixed or determinable future time a sum of money to a specified individual. |
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| Elements of Negotiability |
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| when you present a check to a bank for payment, the bank has to assure that the check meets certain legal requirement. |
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| sometimes called an open endorsement, is the least secure of the four main types of endorsement. |
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| limits the use of the instrument to a means specified by the endorser. " for deposit only. |
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| sometimes called a special endorsement, transfers the check to another. |
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| attempt to limit the liability of the endorser without limiting an instrument's further negotiability. "without recourse" |
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| Federal Reserve Act of 1913 |
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| also established the structure of our banking system, the Federal Reserve Act of 1913 also established the fundamental relationship between the Federal Reserve and banks, as well as among banks. |
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| Uniform Commercial Code of 1958 |
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| established a consistent code for commercial law transactions. |
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| Expedited Availability Act of 1987 |
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| Passed to combat an abuse of the check payment system practiced by a few banks. |
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a consumer makes purchases but must pay the account in full at the end of the month.
A charge card must be paid off every month. |
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| allow consumers to pay all or part of their bills each month and finance the unpaid balance. |
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are commonly used at an automated teller machine (ATM).
- Consumers can get cash, make transfers and deposits, or perform almost any other banking function at the machine by inserting the card and entering a personal identification number (PIN). |
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| transfer money from a person's designated account to the account of the retailer. |
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| are credit, debit, or other types of cards with embedded microchips. |
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a digitally guaranteed type of electronic check to be transmitted on the Internet.
Electronic Tokens - monetary system based on the exchange of digital money via computer. |
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| EFT (electronic funds transfer) |
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| occur between banks, between banks and the federal reserve, between banks and the government, and between banks and consumers. |
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| Automated Clearing Houses (ACHs) |
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| magnetic tapes exchange among banks read streams of data into computers, ideal for large volumes of smaller payments such as payrolls or recurring payments. |
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| funds transfer system run by the Federal Reserve, handles transfers for federal funds, interbank dealings, and securities transactions. |
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| A ________ is almost any agreed-upon medium of exchange. |
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| The party on which an order for the payment of money is drawn. |
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| One to whom money is paid |
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| One that draws, especially one that draws an order for the payment of money. |
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| A _________ endorsement limits the use of the instrument to a means specified by the endorser. |
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| A ___________ endorsement is an attempt to limit the liability of the endorser, without limiting an instruments further negotiability. |
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| A ___________ endorsement is also called an Open endorsement. It is the least secure of all the types of endorsements and only requires the signature of the holder. |
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| A ___________ endorsement transfers the check to another qualified party. |
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