Distinguish between a note and a certificate of deposit. How are they alike? How are they different? Explain your answer
Promissory notes and CD's are alike in that they are each two-party instruments in which one party, the maker, promises to pay a second party, the payee, a stated sum of money. They are different in that with a certificate of deposit, the maker is always a bank. UCC Section 3-104(j): A "certificate of deposit" is a written acknowledgment by a bank of receipt of money with an engagement to repay it. A "note" is an instrument involving two parties in two capacities. One party, the maker, promises to pay a second party, the payee, a stated sum of money, either on demand or at a stated future date. It can be a time note, payable at a definite time, or a demand note payable upon the request or demand of the payee or holder.
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