business laws: negotiable instruments

8/17/2019 Business Laws: Negotiable Instruments

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Nature of Negotiableinstruments

Presented by: Rao Atif Bari


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NEGOTIABLE INSTRUMENTS

• What is negotiable?

– Negotiable means transferable. – The negotiation that goes on refers to the transfer of t

instrument between two people, or from one bank to aeven from one country to another.

• What is an instrument?

– In the broadest sense, almost any agreed-upon mediuechange could be considered a negotiable instrumen

– In day-to-day banking, a negotiable instrument usuallychecks, drafts, bills of echange, and some types of prnotes.


3/11

FORMS OF NEGOTIABLEINSTRUMENTS

• A negotiable instr!ent is a "ritten ord#ro!ising to #ay a s! of !oney$

• It !ay be a bearer instr!ent% "&i'& is#ayable to t&e bearer % or it !ay be aninstr!ent "it& &ig&ly s#e'i(ed ter!s$


4/11

)*E)+S

• Most 'o!!on for! of negotiable instr!

• Preferred !et&od of #ay!ent for !any d

• O,er 'on-enien'e% safety% and a re'ord otransa'tions


5/11

STAN.AR. FEATURES OF PERSONAL)*E)+S

A

For simulation use only

&aria &ills'" (iver !treet)ettisville, *+ $#%%#-'

Pettisville BankPettisville, Ohio

'# $#/' $'""%

$Pay to the

order of

D

Date

For

Check Number

Date

Amount

Amount

SignatureMemo

Identiication Numbers

Pa!ee


6/11

.RAFTS

• A draft is a t&ree/#arty instr!ent si!ilar to a '&e'0$

• .rafts are negotiable instr!ents t&at order #ay!ent to be

• A draft is an order signed by one #arty 1t&e drawer % or draftet&at is addressed to anot&er #arty 1t&e drawee2 dire'ting t&edra"ee to #ay to so!eone 1t&e payee2 t&e a!ont indi'atedt&e draft$

• T&e #ay!ent !ay be at sig&t or at so!e de(ned ti!e$

• Most drafts are sed for t&e #r'&ase of goods and ser-i'es t&e transa'tion goes beyond t&e bonds of U$S$ ban0ing la"$


7/11

BILLS OFE3)*ANGE

• A bill of e4'&ange is a negotiable and n'ondition"ritten order% s'& as a '&e'0% draft% or trade agraddressed by one #arty to anot&er$

•

T&e re'ei-er of t&e bill !st #ay t&e s#e'i(ed s!deli-er s#e'i(ed goods on de!and or at a s#e'i(e

• Bills of e4'&ange are a 'o!!on for! of internationegotiable instr!ents$

PROMISSOR5


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PROMISSOR5NOTES

• A #ro!issory note is a "ritten #ro!ise to #ay at a

(4ed or deter!inable ftre ti!e a s! of !oney tos#e'i(ed indi-idal$

• T&ese t"o/#arty instr!ents are legally bindingdo'!ents "it& !any s#e'i(ed ter!s t&at -ary

"idely$

• Commercial paper % a s&ort/ter! 1678 days or fe"er2note or daft issed by a 'or#oration or go-ern!ent%a 'o!!on in-est!ent instr!ent$


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Notes

• Notes are instr!ents t&at #ro!ise #ay!t&e ftre$

•

Negotiable instr!ents are bot& !ore seand !ore easily reglated t&an t&e se o'as&$

•


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)as& -erss Negotiable Instr!ents

• )rren'y is designed to be anony!os a#ass freely fro! #erson to #erson$

• Negotiable instr!ents% on t&e ot&er &abe 'on-erted into 'as& at so!e #oint$


11/11

T&an0s

business laws: negotiable instruments

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