BUSA 310 Lecture 7 Negotiable instruments two types 1 Notes loans promissory notes 2 Drafts check Maker maker of the note Payee someone owed money Draft pay to the order of someone else Drawee person who pays the draft Drawer one that makes the draft Checks can be endorsed and paid over many times Holder in due course last person before converting instrument into money Non negotiable instruments Paychecks prevents fraud IN ORDER TO BE NEGOTIABLE 1 Signed in writing 2 Signed by the maker or the drawer 3 Unconditional promise to pay 4 Some certain 5 Payable on demand 6 Payable to the order of the bearer Rules 1 Words over numbers 2 Handwritten over typed or printed 3 Typed over printed Negotiable Holder in due course always has the right to be paid unless 1 Signature forged 2 Bankruptcy discharge of the debt 3 Maker of the check is underage under 18 in most states 4 Signed under duress 5 Deceived fraudulently Ch 15 Secure Transactions UCC article 9 anything that is not attached to real estate except fixtures Ensure that you have a right to the property against anyone else first priority over goods Security Agreements Financing statement 3 elements 1 What the goods are 2 Person you re securing them against 3 Who you are Place to file county court house or secretary of state or both Good for five years unless you refile 6 months prior to fifth year anniversary Modular homes last for 30 years PMSI promissory note Default if they cant pay the money then you can take the inventory and resell as a commercially acceptable price or sue for the money Ultimate security interest is if you have the actual property Risk if you re holding security you have obligation to make sure security is safe If owner of the bonds doesn t act with due speed and due diligence they could lose money