Types of Negotiable Instruments

Types of Negotiable Instruments

Note • A promise to pay money. • Maker = Promises to pay money • Payee = Person maker promises to pay

Sample Note (simple)

Sample Note (detailed)

(continued)

Certificate of Deposit (CD) • Special type of note: • 1. Bank acknowledges receipt of money. • 2. Bank promises to repay the money.

Draft • An order to pay money. • Drawer – Orders the payment of money • Drawee – Person to pay the money • Payee – Person entitled to the money

Sample Draft

Check • Special type of draft: • 1. Bank is the drawee, and • 2. Payable on demand.

Ordinary Check

Certified Check Drawee (Lincoln) has accepted the check.

Cashier’s Check Drawer and drawee are the same bank (Peoples Bank)

Teller’s Check Drawer (Community Bank) and Drawee (Wells Fargo) are different banks.

Traveler’s Check Sign when purchase Sign again when cash

Remotely Created Item