Check 21 defines a substitute check as a paper reproduction of the original check that conforms to
specific requirements. The substitute check must have:
1 contains a clear replication of the front and back of the original paper check.
2 bears an MICR line with all the information on the original check’s MICR line.
3 conforms w/ generally applicable industry standards for paper stock, dimensions, and other general
qualities.
4 is suitable for automated processing in the same maner as the original paper check
Check 21 provides the guidelines for the issuance and use of substitute checks the act also allows for the
use of digital or paper substitutions for the original paper check.
When money is transferred by an electronic terminal, telephone, or computer, this transfer is called eft
electronic fund transfers.
The secured party must take three steps to create the security interest:
1 The two parties create a security agreement and either (a) there is a record of the security agreement
(usually a written agreement that describes the collateral and is signed by the debtor) or (b) the secured
party is in possession of the collateral.
2 the secured party must give value to get the security agreement.
3. the debtor has a right in or to the collateral.
When attachment occurs, the creditor becomes a secured party with an interest in the collateral.
The secured party must give value. What exactly does it mean to give value? According the the ucc value
is consideration
Perfection is a series of legal steps a secured party takes to protect its rights in the collateral for other
creditors that wish to have their debts satisfied through the same collateral.
Termination statement is an amendment to a financing statement that provides that the debtor has no
obligation to the secured party.
Secured transaction is a transaction in whih the payment of a debt is guaranteed by a personal property
owned by the debtor.
A financing statement is the document utilized to perfect a security interest by filing.
A purchase money security interest is created when a debtor uses money borrowed from the secured
party to purchase the collateral.
The transfer of collateral to the secured party for the purpose of perfection is called pledge.
According to Uniform Commercial Code (UCC) Section 3-401(a), _____ leads to liability on a
negotiable instrument. signature on the instrument
Who among the following is secondarily liable for a negotiable instrument?
An endorser
Issuers and acceptors have a certain type of liability, while drawers and endorsers have another type
of signature liability. If it is not possible to
tell the status of the party, the general rule is that the party is considered a(n):
endorser
Who among the following is primarily liable for a negotiable instrument?
A person who promises to pay
Presentment is defined in the Uniform Commercial Code (UCC) as:
making a demand for the drawee to pay.
Which of the following statements is true of an accommodation party?
As a maker, an accommodation party has secondary liability.
