Download - 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.
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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$
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)*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
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STAN.AR. FEATURES OF PERSONAL)*E)+S
A
For simulation use only
&aria &ills'" (iver !treet)ettisville, *+ $#%%#-'
Pettisville BankPettisville, Ohio
'# $#/' $'""%
$Pay to the
order of
D
Date
For
Check Number
Date
Amount
Amount
SignatureMemo
Identiication Numbers
Pa!ee
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.RAFTS
• A draft is a t&ree/#arty instr!ent si!ilar to a '&e'0$
• .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"$
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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$
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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$
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T&an0s