Negotiable Instruments Vocabulary

Fill in the blank: A ________ is a document guaranteeing the payment of a specific amount of money to a specified person or assignee.

• Negotiable Instrument

• Invoice

• Receipt

• Contract

Fill in the blank: A ________ is a bill of exchange drawn on a drawer’s specified financial institution to be payable to the payee.

• Check

• Invoice

• Receipt

• Voucher

Fill in the blank: A ________ is a written promise made by one person (maker or issuer) to pay a fixed sum to another person (payee) on demand or at a specified time in the future.

• Promissory Note

• Cheque

• Bill of Lading

• Invoice

Fill in the blank: A ________ is an instrument containing an unconditional order, signed by the maker, directing a party to pay a certain sum of money only to, or to the order of, a certain party or to the bearer of the instrument.

• Bill of Exchange

• Promissory Note

• Cheque

• Bond

Fill in the blank: ________ occurs when a promissory note, bill of exchange or check is transferred to any person making the person the holder of the instrument.

• Negotiation

• Endorsement

• Assignment

• Acceptance

Fill in the blank: ________ is the act of a person who is holder of a negotiable instrument signing his or her name on the instrument, thereby transferring title or owner.

• Endorsement

• Assignment

• Mortgage

• Hypothecation

Fill in the blank: ________ is the termination of the instrument and liability of the parties.

• Discharge

• Acceptance

• Endorsement

• Negotiation

Fill in the blank: ________ is a holder who has taken the instrument under the following conditions: instrument is complete and regular upon its face, individual became the holder before it was overdue, individual took it in good faith and for value and at the time it was negotiated, the individual had no notice of any infirmity in the instrument or defect in the title of the person negotiating it.

• Holder in Due Course

• Bearer

• Endorser

• Payee

Fill in the blank: ________ are generally defenses applicable to the underlying agreement or between the original parties to the underlying agreement.

• Personal Defenses

• Real Defenses

• Statutory Defenses

• Universal Defenses

Fill in the blank: ________ are justifications for a maker or drawer not to honor a negotiable instrument even if it has been transferred to a holder in due course.

• Real Defenses

• Personal Defenses

• Conditional Defenses

• Equitable Defenses