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Posted August 24, 2013 by advocateguru in Articles
 
 

TYPES OF NEGOTIABLE INSTRUMENTS

Draft: Anunconditionalordertopaybywhichtheparty creating the draft (the drawer) orders another party (the drawee),typicallyabank,topaymoneytoathirdparty (thepayee) — e.g., a check.

 

 

Check: Adraftorderingadraweebankandpayable on demand.

 

 

Time Draft:A draft payable ata time certain.

 

 

Sight Draft: Adraftpayableonpresentment.

 

 

TradeAcceptance: Adraftthatisdrawnbyaseller of goods ordering the buyer to pay a specified sum of money to the seller, usually at a specified future time. Thebuyeracceptsthedraftbysigningandreturningit to the seller.

 

 

PromissoryNote: Awrittenpromisemadebyoneperson (themaker) to pay a fixed sum of money to another person (thepayee) ondemandorataspecifiedfuturetime.

 

 

CertificateofDeposit: Anotebywhichabankorsimilar financial institution acknowledges the receipt of money from a party and promises to repay the money, plus interest, to the party on a certain date.


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