A written instrument or document such as a check, draft, promissory note, or a certificate of deposit, that manifests the pledge or duty of one individual to pay money to another.
Commercial paper is ordinarily used in business transactions, since it is a reliable and expedient means of dealing with large sums of money and minimizes the risks inherent in using cash, such as the increased possibility of theft. One of the most significant aspects of commercial paper is that it is negotiable, which means that it can be freely transferred from one party to another, either through endorsement or delivery. The terms commercial paper and negotiable instrument can be used interchangeably.
Since commercial paper constitutes Personal Propertyit is transferable by sale or gift and can be loaned, lost, stolen, and taxed. Commercial paper is a specific type of property primarily governed by article 3 of the Uniform Commercial Code UCCwhich is What Is Short-term Paper effect in all 50 states, the District of Columbia, and the Virgin Islands.
Although Louisiana has not enacted all the articles of the UCC, What Is Short-term Paper has adopted article 3. The UCC identifies four basic kinds of commercial paper: The most fundamental type of commercial paper is a promissory note, a written pledge to pay money. A promissory note is a two-party paper. The maker is the individual who promises to pay while the payee or holder is the person to whom payment is promised.
The payee can be either a specifically named individual or merely the bearer of the instrument who has it in his or her physical possession when he or she seeks to be paid according to its terms. A note payable to "bearer" can be paid to the person who presents it for remuneration.
Such an instrument is said to be bearer paper. A promissory note that is payable on demand can be redeemed by the payee at any time, whereas a time note has a date for payment on its face that establishes the date when the holder will have What Is Short-term Paper enforceable right to receive payment under it.
There is no obligation to pay a time note until the date designated on its face. The ordinary purpose of a promissory note is to borrow money. Promissory notes should not be confused with credit or loan here, which are separate instruments that are usually signed at the same time as promissory notes, but which merely describe the terms of the transactions.
A promissory note serves as documentary evidence of a debt. What Is Short-term Paper can be endorsed and sold at a discount to other parties, and each subsequent endorser becomes secondarily liable for the amount specified on the face of the instrument. A number of Consumer Credit dealings are funded through the use of promissory notes. Certain types of promissory notes are sold at a discount, such as U.
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Such an instrument is sold for an amount below its face value and can subsequently be redeemed on the due date or date of maturity for the entire face amount. The interest obtained by the holder of the instrument is the difference between the purchase price and the redemption price.
In certain instances, bonds that are not redeemed immediately upon maturity accumulate interest following the due date and are ultimately worth more than their face value when redeemed at a later time.
If such bonds are cashed in before maturity, the holder receives less than the face value. A draft, also known as a bill What Is Short-term Paper exchange, is a three-party paper ordering the payment of money. The drawer is the individual issuing the order to pay, while the drawee is the party to whom the order to pay is given. As What Is Short-term Paper the case of a promissory note, the payee is either a specified individual or the bearer of the draft who is to receive payment according to its terms.
The draft is made payable on demand or on a certain date. A common example of a draft is a cashier's check. A draft is often used in business to obtain payment for items that must be shipped over long distances.
Drafts are often the preferred method of payment for purchasers who want to examine goods prior to payment or who do not have the necessary funds available here the time of sale. Essay Site Online Masters Esl Writers vendor might have reservations concerning the buyer's credit and desire payment as soon as possible.
The procedure ordinarily followed in such instances is that upon shipment of the goods, the seller receives a bill of lading from the carrier. The bill of lading also serves as a certificate of title to the goods, which is ordinarily in the seller's name. Upon shipment, the seller draws a draft against the buyer-drawee, who is required to pay the draft. The seller's bank is named as the payee. The seller endorses the bill of lading to the payee and attaches the bill to the draft.
The seller can either negotiate these instruments to the payee at a discount or What Is Short-term Paper them as security for a loan. Subsequently, the papers are endorsed by the seller's bank and delivered to a correspondent bank in the community where the buyer is located. The correspondent bank seeks payment of the draft from the buyer and when payment is made, the bank transfers ownership of the goods from seller to buyer by endorsing the bill of lading to the buyer.
The buyer can then obtain the goods from the carrier upon presentation of the bill of lading, which demonstrates his or her title to the shipped goods. A check is a specific kind of draft, which is drawn on a bank and payable on demand to a particular individual or to the bearer, in which case it can be written payable to "cash. An individual who opens a checking account is engaged in a contractual relationship with a bank.
The individual agrees to deposit money therein, while the bank agrees that it is indebted to the depositor for the amount in the account, in addition What Is Short-term Paper promising to more info checks written for payment against the account when there are sufficient funds on hand to do so. A certificate of deposit, frequently referred to as a CD, is a written recognition by a bank of the acquisition of a sum of money from a depositor for a designated period of time at a specified interest rate, coupled with a promise of repayment.
The bank is both the maker and the drawee, and the individual making the deposit is the payee.
Financial instruments typically with original maturities of less than nine months. Short-term paper is typically issued at a discount and provides a low-risk. Short Research Papers: How to Write Academic Essays. Jerz > Writing > Academic > Research Papers [ Title Even a very short paper is the result of a process. Define short-term paper: a negotiable paper (such as a note or bill) that matures within a three to six months period. Commercial paper is a short-term debt security issued by financial companies and large corporations. The corporation promises the buyer a return, or profit. Definition of Short-Term Paper in the Legal Dictionary - by Free online English dictionary and encyclopedia. What is Short-Term Paper?
Ordinarily, certificates of deposit come in specific denominations that vary according to the length of the term that the bank will hold the funds and are available only for large sums of money. They are used mainly by corporations and individuals as savings devices since they generally bear higher interest rates than ordinary savings accounts.
They must, however, be left on deposit for the designated time period. Ordinarily, a CD can be cashed in prior to the date of maturity, but some interest will be forfeited. Depending upon the provisions of the CD, however, a bank may have the legal right to refuse to close an account before the expiration of the designated date of maturity. There are basic requirements for the negotiability of commercial paper.
The instrument must be in writing and signed by either its maker or its drawer. In addition, it must be either an unconditional promise, as in the case of a promissory note, or an order to pay a specific amount of money, such as a draft. It must be payable either on demand or at a fixed time to order or to bearer. The requirement that the instrument must be in writing can be met in various ways.
The paper can be printed, typed, engraved, or written in longhand, either in ink, pencil, or What Is Short-term Paper. Ordinarily, specimens of commercial paper can be obtained from banks or stationery stores. Similarly, there are a number of ways to comply with the signature requirement. The signature may legally be either handwritten, typed, printed, or stamped by a machine. Individuals link are unable to write their names can sign with a simple mark, such as an X.
Also permissible are initials, a symbol, a business or Trade Nameor an assumed name. The pledge or order for payment must be unconditional to insure certainty that the instrument will be paid, since it is used in place of money and as a means of obtaining credit.
When What Is Short-term Paper paper includes an unconditional promise or order, supplementary facts can be mentioned that will not defeat its negotiability. For example, the paper can indicate the transaction was secured by a mortgage. It might mention a specific account or fund out of which payment is expected, although not required. Ordinarily, such a collateral statement is made for purposes of accounting and does not create a conditional promise or order to pay.
Payment can, however, be limited to the total assets of a partnership, unincorporated association, or trust. A promise to pay is conditional when it indicates that it is either subject to or governed by another article source. When payment is conditional, negotiability is terminated and the instrument is not commercial paper.
The holder of the paper cannot rely upon the face of the document to establish and fix his or her right to payment. A paper does not qualify for treatment as a negotiable instrument if payment of it is to be made exclusively from a particular fund, unless such instrument is issued by a government or division thereof. In dealing with a promissory note, practically any terms that state a definite promise What Is Short-term Paper suffice to make the instrument legally enforceable.
QTC issues a range of short-term paper to meet its clients funding requirements. Short-term paper is issued under QTC’s Domestic. Commercial paper – though a short-term obligation – is issued as part of a continuous rolling program, which is either a number of years long (as in Europe). Define Short Term Paper. Short Term Paper synonyms, Short Term Paper pronunciation, Short Term Paper translation, English dictionary definition of Short Term Paper. n. A term paper is usually assigned to students as a research assignment that covers most of the material given over an academic term: a semester, or a whole academic year.
The phrase "I promise to pay" clearly demonstrates an unconditional pledge of payment; whereas an IOU is not deemed definite enough to warrant payment and, therefore, is not a negotiable instrument.
There must be an order to pay in a check or a draft. A mere request, as in "I wish you would pay," is insufficient. Language used for courtesy, such as "please pay," does not, however, defeat What Is Short-term Paper order. Suitable language to instruct payment would be "pay to the order of X. In certain instances, it might be necessary to compute interest, check this out in the case of a promissory note that bears a certain annual rate.
A provision for interest does not impair the determination of the actual sum. In addition, certainty regarding the amount is not altered by the fact that the interest rate can differ before or after default or before or after a particular date.
The amount payable remains a fixed sum even in the event that it is paid in installments, or reduced by agreement of payment prior to a set time or increased following the date of payment.
In addition, the certainty of the sum is not affected by a provision for collection of expenses and lawyer's fees. The sum must be payable in money, which is a medium of exchange adopted by governments; otherwise, the document is not considered commercial paper.
An instrument must be payable either on demand or at a set time in What Is Short-term Paper to have negotiability. Papers that are payable on demand are payable upon presentation, such as checks. When a note or a draft is payable on, or prior to, a fixed date or for a set period thereafter, it is considered to be negotiable at a definite time. When an instrument is payable on or before a certain date, payment is required no later than the date indicated, although it can be made prior to that date.
Similarly, a paper made payable at an established time after sight is payable at a definite time. After sight means that upon presentation of the instrument to the maker by the holder, payment will occur after the expiration of the time designated on the note.
The payee of a note due one week after sight must be paid by the maker within a week of the date it is presented for payment. It need not be paid immediately upon presentation, since the terms of the note do not make it a demand instrument. If the time provided for payment of an instrument is definite except for the presence of an acceleration clause, the time of payment of the instrument is still What Is Short-term Paper definite.
That is, a note can provide that the time for payment will be accelerated if a certain event takes place or at the option of one of the parties to the agreement without destroying its negotiability. Also acceptable are extensions of the payment period, which can be made at the choice of the holder, maker, or acceptor, or immediately when a particular act occurs. An instrument retains its negotiable quality even if it is undated, antedated, or postdated.
An undated instrument takes effect immediately upon delivery to the payee.