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 CheckSign when purchase

Sign again when cash

Remotely Created Item