Michigan Laws > Chapter 440 > Act 174 of 1962 > Article 3 – Negotiable Instruments


Part 1	General Provisions and Definitions
Part 2	Negotiation, Transfer, and Endorsement
Part 3	Enforcement of Instruments
Part 4	Liability of Parties
Part 5	Dishonor
Part 6	Discharge and Payment

Terms Used In Michigan Laws > Chapter 440 > Act 174 of 1962 > Article 3 - Negotiable Instruments

Acceptor: means a drawee who has accepted a draft. See Michigan Laws 440.3103
Administrator: means the secretary of state or any individual designated by the secretary of state to act in his or her place. See Michigan Laws 257.1302
Advice and consent: Under the Constitution, presidential nominations for executive and judicial posts take effect only when confirmed by the Senate, and international treaties become effective only when the Senate approves them by a two-thirds vote.
Affidavit: A written statement of facts confirmed by the oath of the party making it, before a notary or officer having authority to administer oaths.
Amendment: A proposal to alter the text of a pending bill or other measure by striking out some of it, by inserting new language, or both. Before an amendment becomes part of the measure, thelegislature must agree to it.
Appeal: A request made after a trial, asking another court (usually the court of appeals) to decide whether the trial was conducted properly. To make such a request is "to appeal" or "to take an appeal." One who appeals is called the appellant.
Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
Attachment: A procedure by which a person's property is seized to pay judgments levied by the court.
Bank: means a person engaged in the business of banking and includes a savings bank, savings and loan association, credit union, and trust company. See Michigan Laws 440.1201
Bankruptcy: Refers to statutes and judicial proceedings involving persons or businesses that cannot pay their debts and seek the assistance of the court in getting a fresh start. Under the protection of the bankruptcy court, debtors may discharge their debts, perhaps by paying a portion of each debt. Bankruptcy judges preside over these proceedings.
Bearer: means a person in control of a negotiable electronic document of title or a person in possession of an instrument, a negotiable tangible document of title, or a certificated security payable to bearer or indorsed in blank. See Michigan Laws 440.1201
Beneficiary: A person who is entitled to receive the benefits or proceeds of a will, trust, insurance policy, retirement plan, annuity, or other contract. ^{Source: OCC}
Bequest: Property gifted by will.
Blighted area: means a portion of a municipality, developed or undeveloped, improved or unimproved, with business or residential uses, marked by a demonstrated pattern of deterioration in physical, economic, or social conditions, and characterized by such conditions as functional or economic obsolescense of buildings or the area as a whole, physical deterioration of structures, substandard building or facility conditions, improper or inefficient division or arrangement of lots and ownerships and streets and other open spaces, inappropriate mixed character and uses of the structures, deterioration in the condition of public facilities or services, or any other similar characteristics which endanger the health, safety, morals, or general welfare of the municipality, and which may include any buildings or improvements not in themselves obsolescent, and any real property, residential or nonresidential, whether improved or unimproved, the acquisition of which is considered necessary for rehabilitation of the area. See Michigan Laws 125.72
Blighted property: means property that meets any of the following criteria:

(i) The property has been declared a public nuisance in accordance with a local housing, building, plumbing, fire, or other related code or ordinance. See Michigan Laws 125.72

Consumer: means an individual who enters into a transaction primarily for personal, family, or household purposes. See Michigan Laws 440.1201

Consumer account: means an account established by an individual primarily for personal, family, or household purposes. See Michigan Laws 440.3103

Consumer transaction: means a transaction in which an individual incurs an obligation primarily for personal, family, or household purposes. See Michigan Laws 440.3103

Contract: A legal written agreement that becomes binding when signed.

Corporation: A legal entity owned by the holders of shares of stock that have been issued, and that can own, receive, and transfer property, and carry on business in its own name.

Creditor: includes a general creditor, a secured creditor, a lien creditor, and any representative of creditors, including an assignee for the benefit of creditors, a trustee in bankruptcy, a receiver in equity, and an executor or administrator of an insolvent debtor's or assignor's estate. See Michigan Laws 440.1201

Customer: means the owner or operator of a motor vehicle. See Michigan Laws 257.1302

Damages: Money paid by defendants to successful plaintiffs in civil cases to compensate the plaintiffs for their injuries.

Defendant: includes a person in the position of defendant in a counterclaim, cross-claim, or third-party claim. See Michigan Laws 440.1201

Defendant: In a civil suit, the person complained against; in a criminal case, the person accused of the crime.

Delivery: means either of the following:

(i) With respect to an electronic document of title, a voluntary transfer of control. See Michigan Laws 440.1201

Dependent: A person dependent for support upon another.

Development area: means that portion of a blighted area to which a development plan is applicable. See Michigan Laws 125.72

Development plan: means a plan for the rehabilitation of all or any part of a blighted area. See Michigan Laws 125.72

Devise: To gift property by will.

Drawee: means a person ordered in a draft to make payment. See Michigan Laws 440.3103

Drawer: means a person who signs or is identified in a draft as a person ordering payment. See Michigan Laws 440.3103

Entitlement: A Federal program or provision of law that requires payments to any person or unit of government that meets the eligibility criteria established by law. Entitlements constitute a binding obligation on the part of the Federal Government, and eligible recipients have legal recourse if the obligation is not fulfilled. Social Security and veterans' compensation and pensions are examples of entitlement programs.

Equitable: Pertaining to civil suits in "equity" rather than in "law." In English legal history, the courts of "law" could order the payment of damages and could afford no other remedy. See damages. A separate court of "equity" could order someone to do something or to cease to do something. See, e.g., injunction. In American jurisprudence, the federal courts have both legal and equitable power, but the distinction is still an important one. For example, a trial by jury is normally available in "law" cases but not in "equity" cases. ^{Source: U.S. Courts}

Escrow: Money given to a third party to be held for payment until certain conditions are met.

Evidence: Information presented in testimony or in documents that is used to persuade the fact finder (judge or jury) to decide the case for one side or the other.

Federal Reserve System: The central bank of the United States. The Fed, as it is commonly called, regulates the U.S. monetary and financial system. The Federal Reserve System is composed of a central governmental agency in Washington, D.C. (the Board of Governors) and twelve regional Federal Reserve Banks in major cities throughout the United States. ^{Source: OCC}

Fee simple: Absolute title to property with no limitations or restrictions regarding the person who may inherit it.

Fiduciary: A trustee, executor, or administrator.

Fiscal year: The fiscal year is the accounting period for the government. For the federal government, this begins on October 1 and ends on September 30. The fiscal year is designated by the calendar year in which it ends; for example, fiscal year 2006 begins on October 1, 2005 and ends on September 30, 2006.

Forgery: The fraudulent signing or alteration of another's name to an instrument such as a deed, mortgage, or check. The intent of the forgery is to deceive or defraud. ^{Source: OCC}

Fraud: Intentional deception resulting in injury to another.

Freedom of Information Act: A federal law that mandates that all the records created and kept by federal agencies in the executive branch of government must be open for public inspection and copying. The only exceptions are those records that fall into one of nine exempted categories listed in the statute. ^{Source: OCC}

Gift: A voluntary transfer or conveyance of property without consideration, or for less than full and adequate consideration based on fair market value.

Good faith: except as otherwise provided in article 5, means honesty in fact and the observance of reasonable commercial standards of fair dealing. See Michigan Laws 440.1201

Guarantor: A party who agrees to be responsible for the payment of another party's debts should that party default. ^{Source: OCC}

Holder: means any of the following:

(i) A person in possession of a negotiable instrument that is payable either to bearer or to an identified person that is the person in possession. See Michigan Laws 440.1201

in writing: shall be construed to include printing, engraving, and lithographing; except that if the written signature of a person is required by law, the signature shall be the proper handwriting of the person or, if the person is unable to write, the person's proper mark, which may be, unless otherwise expressly prohibited by law, a clear and classifiable fingerprint of the person made with ink or another substance. See Michigan Laws 8.3q

Injunction: An order of the court prohibiting (or compelling) the performance of a specific act to prevent irreparable damage or injury.

Insolvency proceedings: includes an assignment for the benefit of creditors or other proceeding intended to liquidate or rehabilitate the estate of the person involved. See Michigan Laws 440.1201

Insolvent: means any of the following:

(i) Having generally ceased to pay debts in the ordinary course of business other than as a result of a bona fide dispute. See Michigan Laws 440.1201

Jurisdiction: (1) The legal authority of a court to hear and decide a case. Concurrent jurisdiction exists when two courts have simultaneous responsibility for the same case. (2) The geographic area over which the court has authority to decide cases.

Lease: A contract transferring the use of property or occupancy of land, space, structures, or equipment in consideration of a payment (e.g., rent). ^{Source: OCC}

Liabilities: The aggregate of all debts and other legal obligations of a particular person or legal entity.

Lien: A claim against real or personal property in satisfaction of a debt.

Litigation: A case, controversy, or lawsuit. Participants (plaintiffs and defendants) in lawsuits are called litigants.

Maker: means a person who signs or is identified in a note as a person undertaking to pay. See Michigan Laws 440.3103

Material fact: means a fact that is used by a person as a premise on which a conclusion is based. See Michigan Laws 257.1302a

Mechanic trainee: means an individual who desires to become a motor vehicle mechanic, a specialty mechanic, or a master mechanic and receives a permit from the administrator under this act. See Michigan Laws 257.1302a

Money: means a medium of exchange authorized or adopted by a domestic or foreign government. See Michigan Laws 440.1201

Mortgage: The written agreement pledging property to a creditor as collateral for a loan.

Motor vehicle: means a vehicle that is self-propelled, a vehicle that is propelled by electric power, a motorcycle, or a trailer as those terms are defined in the Michigan vehicle code, 1949 PA 300, MCL 257. See Michigan Laws 257.1302a

Municipality: means a county, city, village, or township in the state. See Michigan Laws 125.72

Municipality: means a city, village, or township. See Michigan Laws 125.133

Obligation: An order placed, contract awarded, service received, or similar transaction during a given period that will require payments during the same or a future period.

Order: means a written instruction to pay money signed by the person giving the instruction. See Michigan Laws 440.3103

Organization: means a person other than an individual. See Michigan Laws 440.1201

Participating: means , with respect to a municipality, that the municipality is a member of a joint planning commission. See Michigan Laws 125.133

Partnership: A voluntary contract between two or more persons to pool some or all of their assets into a business, with the agreement that there will be a proportional sharing of profits and losses.

Party: means a party to an instrument. See Michigan Laws 440.3103

Person: means an individual, corporation, business trust, estate, trust, partnership, limited liability company, association, joint venture, government, governmental subdivision, agency, or instrumentality, public corporation, or any other legal or commercial entity. See Michigan Laws 440.1201

Person: means an individual, corporation, limited liability company, partnership, association, or any other legal entity. See Michigan Laws 257.1302a

person: may extend and be applied to bodies politic and corporate, as well as to individuals. See Michigan Laws 8.3l

Personal property: All property that is not real property.

Plaintiff: The person who files the complaint in a civil lawsuit.

Pleadings: Written statements of the parties in a civil case of their positions. In the federal courts, the principal pleadings are the complaint and the answer.

Probation: A sentencing alternative to imprisonment in which the court releases convicted defendants under supervision as long as certain conditions are observed.

Project: means all of the undertakings authorized in this act for the rehabilitation of a blighted area. See Michigan Laws 125.72

Promise: means a written undertaking to pay money signed by the person undertaking to pay. See Michigan Laws 440.3103

Prosecute: To charge someone with a crime. A prosecutor tries a criminal case on behalf of the government.

Public use: when used with reference to land reserved for public use means only such uses as are for the general use and benefit of the public as a whole, such as schools, libraries, public institutions, administration buildings, parks, boulevards, playgrounds, streets, alleys, or easements for sewers, public lighting, water, gas, or other similar utilities. See Michigan Laws 125.72

Purchase: means taking by sale, lease, discount, negotiation, mortgage, pledge, lien, security interest, issue or reissue, gift, or any other voluntary transaction creating an interest in property. See Michigan Laws 440.1201

Purchaser: means a person that takes by purchase. See Michigan Laws 440.1201

Real property: means land, buildings, improvements, land under water, waterfront property, and any and all easements, franchises and hereditaments, corporeal or incorporeal, and every estate, interest, privilege, easement, franchise and right therein, or appurtenant thereto, legal or equitable, including rights of way, terms for years, and liens, charges, or incumbrances by mortgage, judgment, or otherwise. See Michigan Laws 125.72

Real property: Land, and all immovable fixtures erected on, growing on, or affixed to the land.

Record: means information that is inscribed on a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable form. See Michigan Laws 440.1201

Recourse: An arrangement in which a bank retains, in form or in substance, any credit risk directly or indirectly associated with an asset it has sold (in accordance with generally accepted accounting principles) that exceeds a pro rata share of the bank's claim on the asset. If a bank has no claim on an asset it has sold, then the retention of any credit risk is recourse. ^{Source: FDIC}

Registered elector of the municipality: means a registered elector residing in the municipality or, if the municipality is a township, a registered elector residing in the portion of the township outside the limits of any village. See Michigan Laws 125.133

Remainder: An interest in property that takes effect in the future at a specified time or after the occurrence of some event, such as the death of a life tenant.

Remedy: means any remedial right to which an aggrieved party is entitled with or without resort to a tribunal. See Michigan Laws 440.1201

Remitter: means a person who purchases an instrument from its issuer if the instrument is payable to an identified person other than the purchaser. See Michigan Laws 440.3103

Remotely created consumer item: means an item drawn on a consumer account, which is not created by the payor bank and does not bear a handwritten signature purporting to be the signature of the drawer. See Michigan Laws 440.3103

Repair: means the reconditioning, adjustment, alteration, maintenance, or diagnosis of the operating condition of a motor vehicle, with or without the replacement of any component or subassembly of a motor vehicle, for compensation or under the terms of a warranty. See Michigan Laws 257.1302a

Representative: means a person empowered to act for another, including an agent, an officer of a corporation or association, and a trustee, executor, or administrator of an estate. See Michigan Laws 440.1201

Rescission: The cancellation of budget authority previously provided by Congress. The Impoundment Control Act of 1974 specifies that the President may propose to Congress that funds be rescinded. If both Houses have not approved a rescission proposal (by passing legislation) within 45 days of continuous session, any funds being withheld must be made available for obligation.

Restitution: The court-ordered payment of money by the defendant to the victim for damages caused by the criminal action.

Right: includes remedy. See Michigan Laws 440.1201

Security interest: means an interest in personal property or fixtures which secures payment or performance of an obligation. See Michigan Laws 440.1201

Service of process: The service of writs or summonses to the appropriate party.

Signed: includes any symbol executed or adopted by a party with present intention to adopt or accept a writing. See Michigan Laws 440.1201

State: means a state of the United States, the District of Columbia, Puerto Rico, the United States Virgin Islands, or any territory or insular possession subject to the jurisdiction of the United States. See Michigan Laws 440.1201

state: when applied to the different parts of the United States, shall be construed to extend to and include the District of Columbia and the several territories belonging to the United States; and the words "United States" shall be construed to include the district and territories. See Michigan Laws 8.3o

Statute: A law passed by a legislature.

Surety: includes a guarantor or other secondary obligor. See Michigan Laws 440.1201

Term: means a portion of an agreement that relates to a particular matter. See Michigan Laws 440.1201

Trial: A hearing that takes place when the defendant pleads "not guilty" and witnesses are required to come to court to give evidence.

Trustee: A person or institution holding and administering property in trust.

Unauthorized signature: means a signature made without actual, implied, or apparent authority. See Michigan Laws 440.1201

Uniform Commercial Code: A set of statutes enacted by the various states to provide consistency among the states' commercial laws. It includes negotiable instruments, sales, stock transfers, trust and warehouse receipts, and bills of lading. ^{Source: OCC}

United States: shall be construed to include the district and territories. See Michigan Laws 8.3o

Variable Rate: Having a "variable" rate means that the APR changes from time to time based on fluctuations in an external rate, normally the Prime Rate. This external rate is known as the "index." If the index changes, the variable rate normally changes. Also see Fixed Rate.

Veto: The procedure established under the Constitution by which the President/Governor refuses to approve a bill or joint resolution and thus prevents its enactment into law. A regular veto occurs when the President/Governor returns the legislation to the house in which it originated. The President/Governor usually returns a vetoed bill with a message indicating his reasons for rejecting the measure. In Congress, the veto can be overridden only by a two-thirds vote in both the Senate and the House.

writing: includes printing, typewriting, or any other intentional reduction to tangible form. See Michigan Laws 440.1201