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Simple English definitions for legal terms
mercantile paper
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A quick definition of mercantile paper:
Mercantile paper, also known as commercial paper, refers to written or printed documents that represent a debt and can be bought and sold. These documents can include checks, certificates of deposit, and promissory notes. They are often used by companies to meet their immediate cash needs. Some types of mercantile paper are negotiable, meaning they can be transferred to another person who then becomes the owner of the debt.
A more thorough explanation:
Mercantile paper is a type of commercial paper that refers to any written or printed document or instrument that represents a debt. It includes commercial documents or negotiable instruments that are used in business transactions. These instruments are considered negotiable because they can be transferred from one person to another, and the transferee acquires the rights to the debt.
Examples of mercantile paper include:
- Checks
- Promissory notes
- Certificates of deposit
- Bills of exchange
These instruments are used in business transactions to facilitate the exchange of goods and services. For example, a company may issue a check to pay for goods or services received from another company. The check can be transferred to a third party, who can then deposit it into their own account.
Mercantile paper is governed by Article 3 of the Uniform Commercial Code (UCC), which sets out the rules for negotiable instruments. The UCC defines commercial paper as any instrument, other than cash, that is used to pay a debt. However, the term has been in use for much longer and is commonly used in business and legal contexts.