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Negotiable Instrument: An unconditional promise or order to pay a fixed amount of money, with or without interest.
Drafts
Drafts are negotiable instruments that order payment to be made.
Notes
Notes are instruments that promise payment in the future.
Negotiable instruments are both more secure and more easily regulated than the use of cash.
Organization of Article 3
Article 3 is divided into subparts that deal with a broad spectrum of negotiable instruments.
Part 1, Article 3
Article 3 only applies to instruments that are payable to the bearer or to order at the time that they are issued.
Warranties
Article 3 provides specific warranties including: That the signatures on the instrument are authentic and authorized That the instrument has not been altered
That the person who transferred the instrument has no knowledge of an insolvency proceeding concerning the transaction
Stock
Stock represents ownership interest in companies.
Common Stock
Common stock is the stock that a company issues in order to raise capital. This stock is sold on stock exchanges around the world.
Preferred Stock
Preferred stock is a class of stock that entitles the person who possesses it with priority when it comes to paying dividends.
Article 9
Article 9 of the UCC concerns secured transactions. A secured transaction is any promise to pay on a loan that is guaranteed by some form of collateral.