Wiley CPAexcel Exam Review 2014 Study Guide, Regulation

Module 28: Commercial Paper

Overview

Coverage of commercial paper includes the types of negotiable instruments, the requirements of negotiability, negotiation, the holder in due course concept, defenses to a claim of liability, and the rights of parties to a negotiable instrument. The functions of commercial paper are to provide a medium of exchange that is readily transferable like money and to provide an extension of credit. It is easier to transfer commercial paper than contract rights and not subject to as many defenses as contracts are. To be negotiable, an instrument must

1. Be written

2. Be signed by the maker or drawer

3. Contain an unconditional promise or order to pay

4. State a fixed amount in money

5. Be payable on demand or at definite time

6. Be payable to order or bearer

A. General Concepts of Commercial Paper

B. Types of Commercial Paper

C. Requirements of Negotiability

D. Interpretation of Ambiguities in Negotiable Instruments

E. Negotiation

F. Holder in Due Course

G. Rights of a Holder in Due Course

H. Liability of Parties

I. Additional Issues

J. Banks

K. Electronic Fund Transfer Act and Regulation E

L. Fund Transfers under UCC Article 4A

M. Transfer of Negotiable Documents of Title

N. Agencies Involved in Banking

Key Terms

Multiple-Choice Questions

Multiple-Choice Answers and Explanations

Simulations

Simulation Solutions

These requirements must be present on the face of the instrument. Instruments that do not comply with these provisions are nonnegotiable and ...